EXCHANGE AGREEMENT
EXCHANGE AGREEMENT dated September 30, 1998 between WESTMARK GROUP
HOLDINGS, INC. ("Westmark"), a Delaware corporation, and MEDICAL INDUSTRIES OF
AMERICA, INC., f/k/a Heart Labs of America, Inc. ("MIOA"), a Florida
corporation.
Preliminary Statement
The parties have asserted various rights and claims among themselves
with respect to, among other things:
A. A Stock Purchase Agreement between Westmark and MIOA dated November 21,
1995, and amendments thereto dated December 4, 1995, December 19, 1995,
January 5, 1996 and January 16, 1996 (collectively the "Stock Purchase
Agreement"), copies of which are attached to this Agreement as
Composite Exhibit A;
B. A Settlement Agreement, Modification to Settlement Agreement and
Amendment to Modified Settlement Agreement between Westmark and MIOA
dated January 23, 1997, March 31, 1997, and June 26, 1997, respectively
(collectively the "Settlement Agreement"), copies of which are attached
to this Agreement as Composite Exhibit B;
C. 200,000 Shares of Westmark Series C Preferred Stock ($3.50 stated value
per share) issued to MIOA (the "Series C Preferred Stock"), represented
by Certificate No. 1, a copy of which is attached to this Agreement as
Exhibit C (the "Westmark Series C Preferred Stock Certificate");
D. 200,000 Shares of MIOA Series B Preferred Stock ($10.00 stated value
per share) issued to Westmark (the "Series B Preferred Stock"),
represented by Certificate No. __, a copy of which is attached to this
Agreement as Exhibit D (the "MIOA Series B Preferred Stock
Certificate");
E. A Westmark promissory note payable to MIOA, issued pursuant to the
Settlement Agreement, with a current balance of approximately
$1,707,555 (the "Promissory Note"), a copy of which is attached to this
Agreement as Exhibit E; and
F. 333,458 shares of Westmark Common Stock issued by Westmark to MIOA (the
"Old Westmark Common Stock"), represented by Certificate Nos. 5294-4
and 5506-1, copies of which are attached to this Agreement as Composite
Exhibit F (the "Old Westmark Common Stock Certificates").
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In connection with the foregoing, Westmark commenced an action (the
"Declaratory Judgment Action") in Xxxx Xxxxx Xxxxxx Xxxxxxx Xxxxx, Xxxx Xx. 00
000000 AG, on June 23, 1998, The controversies with respect to the Agreements,
securities and Promissory Note described in items 1 through 6 above and set
forth in the Declaratory Judgment Action are collectively 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. Immediately after entering into this Agreement, Westmark shall
voluntarily dismiss the Declaratory Judgment Action. Westmark and MIOA shall
exchange mutual general releases (the "Mutual Releases") with each other, which
releases shall except only those obligations provided for in this Exchange
Agreement and Exhibits E, H, I, J and K attached to it. The forms of the Mutual
Releases are attached to this Agreement as Composite Exhibit G.
3. In satisfaction of the Promissory Note, Westmark hereby assigns and
delivers all of its interest in 172,750 shares of the Series B Preferred Stock
to MIOA. As additional consideration for satisfaction of the Promissory Note,
Westmark has paid MIOA $165,000 and shall pay $112,500 to MIOA (the "Additional
Payment") upon execution of this Agreement, at which time MIOA shall return to
Westmark the check for $150,000 delivered to MIOA on or about August 31, 1998.
4. Immediately after entering into this Agreement, MIOA shall file with
the Secretary of State of Florida a properly executed Articles of Amendment to
Articles of Incorporation which shall be in the form attached hereto as Exhibit
H (the "Series B Articles of Amendment"). As the holder of all of the Series B
Preferred Stock issued and outstanding as of the date hereof, Westmark hereby
consents to the modifications to the terms and conditions of the Series B
Preferred Stock as set forth in the Series B Articles of Amendment. As between
the parties, all terms and conditions of the Series B Preferred Stock shall be
governed by the Series B Articles of Amendment upon execution and delivery of
this Agreement, and such terms shall be deemed contractually so modified as of
the date hereof.
5. Westmark hereby irrevocably waives any and all rights to payment of
Series B Preferred Stock unpaid accrued dividends.
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6. Simultaneously with the execution of this Agreement Westmark and
MIOA agree that the 200,000 shares of Series C Preferred Stock shall be
converted into 350,000 shares of Westmark common stock (the "New Westmark Common
Stock"). Upon conversion of the Series C Preferred Stock MIOA shall have no
rights or claims whatsoever relating to or arising from the Series C Preferred
Stock. Westmark agrees that upon receipt of an opinion of counsel retained by
MIOA, which counsel is reasonably acceptable to Westmark, stating that the Old
Westmark Common Stock and the New Westmark Common Stock may be sold by MIOA
without registration under the Securities Act of 1933, as amended, in reliance
on Rule 144 promulgated thereunder and that the requirements of paragraphs (c),
(e), (f) and (h) of Rule 144 do not apply to such sale by virtue of paragraph
(k) of Rule 144, Westmark shall authorize its transfer agent to rely upon such
opinion of counsel for purposes of issuing new certificates representing the Old
Westmark Common Stock and the New Westmark Common Stock without any restrictive
legend thereon or the placement in its records of any stop order related
thereto. The law firm of Mirkin & Xxxxx, P.A. shall be deemed reasonably
acceptable to Westmark for purposes of the preceding sentence.
7. MIOA hereby irrevocably waives any and all rights to payment of
Series C Preferred Stock unpaid accrued dividends.
8. Simultaneously with the execution of this Agreement, Westmark shall
issue to MIOA a warrant for the purchase of 100,000 shares of the common stock
of Westmark, at an exercise price of $3.25 per share, exercisable for two years
from the date of this Agreement, which warrant shall be in the form attached
hereto as Exhibit I.
9. (a) "Adjusted Fully Diluted Earnings Per Share" means fully diluted
earnings per share based upon the consolidated net income of the Company
calculated in accordance with generally accepted accounting principles, as
reported by Westmark in its relevant filings with the Securities and Exchange
Commission pursuant to the reporting requirements of the Securities Exchange Act
of 1934, eliminating gains and losses from sales, exchanges and other
dispositions or write-downs of assets not in the ordinary course of Westmark's
mortgage business (including, without limitation, those arising from this
Agreement), and any other nonrecurring items, regardless of whether categorized
as an extraordinary item and other non-cash expenses. For purposes of this
calculation, fully diluted shares shall exclude any warrants held by MIOA.
(b) If Westmark's Adjusted Fully Diluted Earnings Per Share
for the year ended December 31, 1998 are less than $0.40, MIOA shall have the
right, but not the obligation, to require Westmark to repurchase shares of the
Old Westmark Common Stock and the New Westmark Common Stock (the "1998 MIOA
Put") at a purchase price of the greater of $4.82 per share or Market Price per
share (as defined in the next sentence) on the last business day of 1998 (the
"1998 Purchase Price Per Share"), provided that the 1998 Purchase Price Per
Share shall not exceed $5.73 per share. The aggregate number of shares of Old
Westmark Common Stock and New Westmark
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Common Stock which MIOA may require Westmark to repurchase pursuant to the 1998
MIOA Put shall be limited to that number of shares which is the quotient of
$333,333 divided by the 1998 Purchase Price Per Share. Market Price shall be the
last reported sales price regular way or, in case no such reported sales takes
place on such day, the average of the closing bid and asked prices regular way,
on the principal national securities exchange in the United States on which
Westmark common stock is listed or admitted to trading, or if it is not listed
or admitted to trading on any such national securities exchange, the average of
the highest reported bid and lowest reported asked price as furnished by the
National Association of Securities Dealers, Inc. through its automated quotation
system ("Nasdaq") or a similar organization if Nasdaq is no longer reporting
such information. In order to exercise the 1998 MIOA Put, MIOA must notify
Westmark in writing of its intent to do so prior to 5PM on the thirtieth day
following the date of the filing of Westmark's 1998 Form 10-KSB (the "1998 MIOA
Put Notice"). Westmark shall provide MIOA at the address set forth herein with a
copy of Westmark's 1998 Form 10-KSB within two business days of filing same,
together with a copy of this Paragraph. Westmark shall pay the 1998 Purchase
Price Per Share into escrow prior to 5PM on the fifth business day following the
date of receipt of the 1998 MIOA Put Notice. The Escrow Agent shall disburse the
1998 Purchase Price Per Share to MIOA in immediately available funds at the
address set forth herein within two business days of receipt by the Escrow Agent
from MIOA of the certificates representing the relevant shares and from Westmark
the 1998 Purchase Price Per Share.
(c) If Westmark's Adjusted Fully Diluted Earnings Per Share
for the period January 1, 1999 through June 30, 1999 are less than $0.45, MIOA
shall have the right, but not the obligation, to require Westmark to repurchase
shares of the Old Westmark Common Stock and the New Westmark Common Stock (the
"First 1999 MIOA Put") at a purchase price of $5.73 per share (the "1999
Purchase Price Per Share"). The aggregate number of shares of Old Westmark
Common Stock and New Westmark Common Stock which MIOA may require Westmark to
repurchase pursuant to the First 1999 MIOA Put shall be limited to that number
of shares which is the quotient of $333,333 divided by the 1999 Purchase Price
Per Share. In order to exercise the First 1999 MIOA Put, MIOA must notify
Westmark in writing of its intent to do so prior to 5PM on the thirtieth day
following the date of the filing of Westmark's Second Quarter 1999 Form 10-QSB
(the "First 1999 MIOA Put Notice"). Westmark shall provide MIOA at the address
set forth herein with a copy of Westmark's Second Quarter 1999 Form 10-QSB
within two business days of filing same, together with a copy of this Paragraph.
Westmark shall pay the 1999 Purchase Price Per Share into escrow prior to 5PM on
the fifth business day following the date of receipt of the First 1999 MIOA Put
Notice. The Escrow Agent shall disburse the 1999 Purchase Price Per Share to
MIOA in immediately available funds at the address set forth herein within two
business days of receipt by the Escrow Agent from MIOA of the certificates
representing the relevant shares and from Westmark the 1999 Purchase Price Per
Share.
(d) If Westmark's Adjusted Fully Diluted Earnings Per Share
for the period July 1, 1999 through December 31, 1999 are less than $0.55, MIOA
shall have the
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right, but not the obligation, to require Westmark to repurchase shares of the
Old Westmark Common Stock and the New Westmark Common Stock at a purchase price
of $5.73 per share (the "Second 1999 MIOA Put") at the 1999 Purchase Price Per
Share. The aggregate number of shares of Old Westmark Common Stock and New
Westmark Common Stock which MIOA may require Westmark to repurchase pursuant to
the Second 1999 MIOA Put shall be limited to that number of shares which is the
quotient of $333,334 divided by the 1999 Purchase Price Per Share. In order to
exercise the Second 1999 MIOA Put, MIOA must notify Westmark in writing of its
intent to do so prior to 5PM on the thirtieth day following the date of the
filing of Westmark's 1999 Form 10-KSB (the "Second 1999 MIOA Put Notice").
Westmark shall provide MIOA at the address set forth herein with a copy of
Westmark's 1999 Form 10-KSB within two business days of filing same, together
with a copy of this Paragraph. Westmark shall pay the 1999 Purchase Price Per
Share into escrow prior to 5PM on the fifth business day following the date of
receipt of the Second 1999 MIOA Put Notice. The Escrow Agent shall disburse the
1999 Purchase Price Per Share to MIOA in immediately available funds at the
address set forth herein within two business days of receipt by the Escrow Agent
from MIOA of the certificates representing the relevant shares and from Westmark
the 1999 Purchase Price Per Share.
(e) The rights provided for in the 1998 MIOA Put, the First
1999 MIOA Put, and the Second 1999 MIOA Put (collectively the "MIOA Puts") are
subject to the prior exercise by Westmark of the rights provided for in
Paragraphs 10 and 11 of this Agreement (the "Westmark Call Rights"), and may
only be exercised if and to the extent Westmark has not given written notice
pursuant to Paragraphs 10 and/or 11 hereof of its intent to exercise its rights
pursuant to the Westmark Call Rights prior to MIOA's giving written notice
pursuant to this paragraph of its intent to exercise its rights pursuant to any
of the MIOA Puts.
(f) Westmark shall secure its potential obligations pursuant
to this Paragraph with the remaining 27,250 shares of the Series B Preferred
Stock and a Contingency Reserve Fund as provided for in a Security Agreement,
the form of which is attached to this Agreement as Exhibit J.
10. Westmark shall have the right, but not the obligation, to
repurchase the Old Westmark Common Stock and the New Westmark Common Stock (the
"Westmark Call"), at the 1999 Purchase Price Per Share, except during time
periods when ongoing tender offers, mergers or other sales transactions afford
MIOA the opportunity to sell such common stock at a price higher than $5.73 per
share. Other sales transactions referred to in the preceding sentence shall be
limited to those negotiations or other similar process wherein MIOA shall have
received a bona fide written letter of intent, and shall be deemed invalid for
purposes of this Paragraph if not consummated within ninety days from the date
of the letter of intent. In order to exercise the Westmark Call, Westmark must
notify MIOA in writing of its intent to do so (the "Westmark Call Notice").
Westmark shall pay the 1999 Purchase Price Per Share into escrow within one
business day of sending the Westmark Call Notice. MIOA shall then deliver the
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certificates representing the relevant shares prior to 5PM on the fifth business
day following the date of receipt of the Westmark Call Notice into escrow. The
Escrow Agent shall disburse the 1999 Purchase Price Per Share to MIOA and the
relevant certificates to Westmark within two business days of receipt by the
Escrow Agent from Westmark of the 1999 Purchase Price Per Share and the relevant
certificates from MIOA.
11. Westmark shall have the right, but not the obligation, to exchange
any or all of the 27,250 shares of Series B Preferred Stock held by Westmark,
based on its stated value of $10.00 per share, for the Old Westmark Common Stock
and the New Westmark Common Stock (the "Westmark Exchange Option"), at a
purchase price of $5.73 per share (or the greater of $4.82 per share or the
Market Price per share on the last business day of 1998, not to exceed $5.73 per
share, if the exchange is in satisfaction of the 1998 MIOA Put pursuant to
Paragraph 9(b) of this Agreement). During time periods when ongoing tender
offers, mergers or other sales transactions afford MIOA the opportunity to sell
such common stock at a price higher than $5.73 per share, the Westmark Exchange
Option may not be exercised in satisfaction of transactions other than the 1998
MIOA Put, the First 1999 MIOA Put, or the Second 1999 MIOA Put. The Westmark
Exchange Option may be exercised at any time in full or partial satisfaction of
the 1998 MIOA Put, the First 1999 MIOA Put, or the Second 1999 MIOA Put, in
accordance with the terms of Paragraph 9 of this Agreement. In order to exercise
the Westmark Exchange Option, Westmark must notify MIOA in writing of its intent
to do so (the "Westmark Exchange Notice"). Westmark shall deposit certificates
representing the applicable price per share into escrow within one business day
of sending the Westmark Exchange Notice. MIOA shall deliver the relevant shares
of common stock into escrow within five business days of receipt of the Westmark
Exchange Notice. The Escrow Agent shall disburse the relevant certificates of
Westmark common stock to Westmark and the relevant certificates of Series B
Preferred Stock to MIOA within two business days of receipt by the Escrow Agent
from Westmark of the certificates representing the applicable price per share
and from MIOA of the relevant certificates of common stock.
12. Xxxxxxxxx Xxxxxxx, P.A. shall initially act as Escrow Agent
pursuant to Paragraphs 9, 10 and 11 of this Agreement. The Escrow Agent may at
any time resign hereunder by giving written notice of its resignation to all
parties hereto at least thirty (30) days prior to the date specified for such
resignation to take effect, and upon the effective date of such resignation, all
cash, documents and all other property (collectively the "Property") then held
by the Escrow Agent hereunder shall be delivered by it to such persons as may be
designated in writing by all parties hereto, whereupon all its prospective
obligations as Escrow Agent hereunder shall cease and terminate. The Escrow
Agent's sole responsibility thereafter shall be to keep safely all property then
held by it and to deliver same to a person designated by all parties hereto or
in accordance with the directions of a final order or judgment of a court of
competent jurisdiction. In addition, the Escrow Agent shall be discharged of its
prospective duties and obligations hereunder upon its interpleading in a court
of competent jurisdiction all of
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the funds and property then held by it hereunder. All parties hereto hereby
submit to the personal jurisdiction of said court (but solely for the purpose of
implementing this Agreement) and waive all rights to contest said jurisdiction.
However, the Escrow Agent's resignation and/or interpleading of the Property
shall not in any manner affect or impair any of its obligations under Paragraph
9 of this Agreement. Westmark shall be individually obligated to reimburse the
Escrow Agent for all its fees, costs and expenses in connection herewith,
including reasonable counsel fees. Westmark and MIOA shall be jointly and
severally obligated to indemnify the Escrow Agent and hold it harmless against
any claim asserted against it or any liability, loss or damage incurred by it in
connection herewith, including attorney's fees and costs. Nothing herein
contained shall be deemed to obligate the Escrow Agent to deliver any
securities, cash, instruments, documents or any other property referred to
herein, unless the same shall have first been received by the Escrow Agent
pursuant to this Agreement. MIOA acknowledges that the Escrow Agent is counsel
for Westmark and agrees that no action taken by the Escrow Agent under this
Agreement shall affect or impair the right of the Escrow Agent to represent such
party(ies) in any matter, including an interpleader action pursuant to this
Agreement.
13. Except as otherwise required by law, the terms of this Agreement
shall remain confidential until the parties simultaneously issue press releases
announcing the Agreement. The press release of each party shall be subject to
approval of the other party, which approval shall not be unreasonably withheld.
14. 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 MIOA: Xxxx X. Xxxxxxx, President
Medical Industries of America
0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000
with a copy to: E. Xxxxxxxx Xxxxx, III, Esq., Sr. Vice President
Medical Industries of America
0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000
If to Westmark: Westmark Group Holdings, Inc.
0000 X. Xxxxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxxx, CEO
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with a copy to: Xxxxxxxxx Traurig, P.A.
000 X. Xxxxxxx Xxxxx, Xxxxx 000-Xxxx
Xxxx Xxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
or to such other address as any of the parties hereto may designate by notice
to the others.
15. (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. At the request of any party, each party will
execute and deliver any additional documents and perform in good faith such acts
as reasonably may be required in order to consummate the transactions
contemplated by this Agreement and to perfect the conveyance and transfer of any
property or rights to be conveyed or transferred.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, and 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.
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(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) Notice. Pending the consummation of the transactions
contemplated in this Agreement or prior to termination of this Agreement, each
party agrees that it will promptly advise the others of the occurrence of any
condition or event which would make any of its representations contained in this
Agreement inaccurate, incorrect, or materially misleading.
(n) Conduct. Pending consummation of the transactions
contemplated in this Agreement, each party agrees that it will not perform any
act or omit to take any act that would make any of the parties representations
contained in this Agreement inaccurate in any material respect or materially
misleading.
(o) Authority. There shall be in full force and effect on the
Closing Date resolutions of the Boards of Directors of Westmark and MIOA
approving this Agreement, the other documents executed and delivered by each of
them in connection with this Agreement, and the transactions contemplated in
them. At or prior to the Closing, each party will deliver to the other a copy of
the resolutions of its Board of Directors, approving the execution and delivery
of this Agreement and the other
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documents to be delivered pursuant to this Agreement and the consummation of
all of the transactions contemplated hereby, duly certified by an appropriate
officer.
(p) Attorney's 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.
16. MIOA represents and warrants to, and agrees with, Westmark:
(a) No Misstatements. The representations of MIOA and
information supplied by MIOA contained in this Agreement, the Exhibits attached
to it and the documents incorporated into it by reference do not contain any
untrue statement of a material fact or omit to state any fact necessary to make
such representations or information not materially misleading.
(b) Validity of Actions. MIOA (i) is duly organized, validly
existing and in good standing under the laws of its organization, and (ii) has
full power and authority to enter into this Agreement and to carry out all acts
contemplated by it. This Agreement has been duly executed and delivered on
behalf of MIOA, has received all necessary corporate authorization and is a
legal, valid and binding obligation of MIOA, enforceable against MIOA in
accordance with its terms. Entering into this Agreement and the consummation of
the transactions contemplated by it will not (i) violate any provision of the
Articles of Incorporation or Bylaws of MIOA or, (ii) conflict with or result in
any breach of in any material respect of any of the provisions of any material
agreement to which MIOA is a party or by which MIOA or any of MIOA's respective
assets are bound, or (iii) cause a breach of any applicable law, governmental
regulation, order, or other decree of any court or governmental agency.
(c) Actions Pending. With the exception of the Declaratory
Judgment Action, there are no actions, suits, proceedings or claims pending or
(to MIOA's knowledge) threatened against MIOA which, if determined adversely to
MIOA, would prevent or delay the consummation of any of the transactions
contemplated by this Agreement.
(d) Series C Preferred Stock. All of the Series C Preferred
Stock is owned absolutely by MIOA, free and clear of all liens, encumbrances and
adverse claims. There are no voting trusts, proxies, shareholder agreements or
similar contracts or understandings in effect relating to the Series C Preferred
Stock.
(e) MIOA 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.
17. WESTMARK represents and warrants to, and agrees with, MIOA:
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(a) No Misstatements. The representations of WESTMARK and
information supplied by WESTMARK contained in this Agreement, the Exhibits
attached to it and the documents incorporated into it by reference do not
contain any untrue statement of a material fact or omit to state any fact
necessary to make such representations or information not materially misleading.
(b) Validity of Actions. WESTMARK (i) is duly organized,
validly existing and in good standing under the laws of its organization, and
(ii) has full power and authority to enter into this Agreement and to carry out
all acts contemplated by it. This Agreement has been duly executed and delivered
on behalf of WESTMARK, has received all necessary corporate authorization and is
a legal, valid and binding obligation of WESTMARK, enforceable against WESTMARK
in accordance with its terms. Entering into this Agreement and the consummation
of the transactions contemplated by it will not (i) violate any provision of the
Articles of Incorporation or Bylaws of WESTMARK or, (ii) conflict with or result
in any breach of in any material respect of any of the provisions of any
material agreement to which WESTMARK is a party or by which WESTMARK or any of
WESTMARK's respective assets are bound, or (iii) cause a breach of any
applicable law, governmental regulation, order, or other decree of any court or
governmental agency.
(c) Actions Pending. With the exception of the Declaratory
Judgment Action, which shall be dismissed upon execution of this Agreement,
there are no actions, suits, proceedings or claims pending or (to WESTMARK's
knowledge) threatened against WESTMARK which, if determined adversely to
WESTMARK, would prevent or delay the consummation of any of the transactions
contemplated by this Agreement.
(d) Series B Preferred Stock. All of the Series B Preferred
Stock is owned absolutely by WESTMARK, free and clear of all liens, encumbrances
and adverse claims. There are no voting trusts, proxies, shareholder agreements
or similar contracts or understandings in effect relating to the Series B
Preferred Stock. Said shares of Series B Preferred Stock shall be free and clear
of all liens, encumbrances and adverse claims at the time of redemption,
exchange or conversion to common stock.
(e) Westmark 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.
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WITNESSES: MEDICAL INDUSTRIES OF AMERICA, INC., a
Florida corporation
Sign:__________________________ By:______________________________________
Print:_________________________ Name: E. Xxxxxxxx Xxxxx, III, Esq.
Title: Sr. Vice President
Sign:__________________________
Print:_________________________
WESTMARK GROUP HOLDINGS, INC.,
a Delaware corporation
Sign:__________________________ By:______________________________________
Print:_________________________ Name: Xxxx X. Xxxxxxxxxx
Title: President
Sign:__________________________
Print:_________________________
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STATE OF FLORIDA )
) ss.:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this _______ day of
_________________ 1998, by E. Xxxxxxxx Xxxxx, III, Esq., as Sr. Vice President
of MEDICAL INDUSTRIES OF AMERICA, INC., a Florida corporation, on behalf of the
corporation.
Notary:______________________________
[NOTARIAL SEAL] Print Name:__________________________
Notary Public, State of Florida
My commission expires:
[ ] Personally Known OR [ ] Produced Identification
Type of Identification Produced: ______________________________
STATE OF FLORIDA )
) ss.:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this ______ day of
_________________ 1998, by Xxxx X. Xxxxxxxxxx, 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:
[ ] Personally Known OR [ ] Produced Identification
Type of Identification Produced: _____________________________
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ACCEPTANCE OF ESCROW AGENT
--------------------------
Greenberg, Traurig, P.A. acknowledges receipt of the foregoing
Agreement, and agrees to act as Escrow Agent under the terms of Paragraphs 9, 10
and 11 thereof.
By:__________________________
Authorized Signatory
14
COMPOSITE EXHIBIT A
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT
This Agreement is entered into on the 21st day of November, 1995 by and
between Heart Labs of America, Inc., a Florida corporation ("HLOA") and Westmark
Group Holdings, Inc., a Colorado Corporation ("WGHI"). HLOA and WGHI mutually
covenant and agree as follows:
ARTICLE I
---------
ACQUISITION DATES AND PERFORMANCE EVENTS
----------------------------------------
1.1 Stock Purchase. HLOA covenants and agrees to purchase 1,298,398
shares of unregistered common stock of WGHI on or before November 27, 1995
("Closing Date").
1.2 Consideration. Prior to the Closing Date HLOA will convey, assign
and transfer to WGHI the following:
(a) $150,000 in certified funds on November 21, 1995.
(b) $200,000 in certified funds on November 22, 1995.
(c) $200,000 in certified funds on November 27, 1995.
(d) HLOA medical laboratory with a value of $160,000 more
particularly described in Exhibit "A" which is attached hereto and by this
reference made a part hereof.
(e) HLOA warrants for the benefit of WGHI shareholders more
particularly described in Exhibit "B" which is attached hereto and by this
reference made a part hereof.
(f) Promissory Note from HLOA to WGHI in the sum of $500,000
payable in certified funds no later than December 31, 1995. Said note shall be
secured by real property owned by HLOA and more particularly described in
Exhibit "C" which is attached hereto and by this reference made a part hereof.
(g) Two Hundred Thousand (200,000) shares of $10.00 per value
unregistered convertible preferred stock of HLOA. Said shares shall be deemed to
be validly issued, fully paid and non-assessable. Said preferred shares may be
converted to common stock of HLOA at any time within ten years after issuance,
valuing each preferred share at $10.00 for purposes of conversion into shares of
common stock of HLOA at a price per share based on the average of the bid and
asked closing prices of HLOA common stock for the thirty days prior to the
election to convert as certified by NASDAQ. In the event of the liquidation of
HLOA prior to conversion of the preferred shares, said preferred shares will
have preference over all common shares of HLOA.
1.3 Closing Date. Upon receipt of the consideration herein above set
forth WGHI shall convey, transfer and assign to HLOA 1,298,388 shares of
unregistered WGHI common stock. Said shares shall be validly issued, fully paid
and non-assessable.
1.4 Registration. HLOA and WGHI covenant and agree that each will
diligently pursue the registration of all shares including the common shares
underlying the warrants and the preferred stock to be conveyed by one party to
the other so that the registration of said shares will be effective by April 30,
1996. Each party shall file all required documentation with the Securities and
Exchange Commission including, but not limited to, a registration statement
within 30 days after the Closing Date.
1.5 Terminations, Resignations and Board Membership. Upon the timely
completion of the performance events set forth in paragraphs 1.1, 1.2 and 1.3,
Xxxxxxx X. Xxxxxxx, Xxxxxx Xxxxxxx and Xxxxx Xxxxx will execute termination
agreements including severance compensation and resignations as officers as
WGHI. In addition thereto, Xxxxxxx X. Xxxxxxx will resign as Chairman and as a
member of the Board of Directors of WGHI. Each resignation shall be expressly
conditioned upon the execution of termination agreements between WGHI and
Xxxxxxx X. Xxxxxxx, Xxxxxx Xxxxxxx and Xxxxx Xxxxx. HLOA covenants and agrees to
guarantee the performance of each termination agreement. Said termination
agreements shall be attached hereto marked Exhibits "D", "E" and "F" and by this
reference made a part hereof. WGHI agrees to appoint two interim members of the
Board of Directors of WGHI selected by HLOA including a replacement for Xxxxxxx
X. Xxxxxxx. The interim directors shall serve until the next annual meeting of
shareholders of WGHI together with Xxxxxx Xxxxxxx and Xxx Xxx.
1.6 Anti-Dilution. From and after the closing dates herein set forth,
HLOA shall be entitled to a share adjustment in the event of the issuance of
additional shares of WGHI stock, stock dividends, stock splits or any merger or
consolidation causing the dilution of outstanding shares of common stock of
WGHI. The purpose of said share adjustment shall be to provided HLOA with the
same percentage of the issued shares both before and after an event as described
hereinabove. No share adjustment shall occur with respect to the stock issuances
set forth in Exhibit "G" which is attached hereto and by this reference made a
part hereof.
1.7 Confidentiality. Except as may be required by law, the parties will
not disclose or use, and will cause their respective officers, directors,
employees, representatives and agents not to disclose or use, any information
concerning either WGHI or MLOA furnished by or on behalf of the parties in
connection with the Acquisition Agreement except disclosure and use among
themselves for the purpose of evaluating the Acquisition Agreement.
1.8 Related Party Transactions. WGHI and HLOA acknowledge that certain
principles of each party have been and now are jointly involved in various
business transactions. Said related party transactions are more particularly
described in Exhibit "H" which is attached hereto and by this reference made a
part hereof.
2
ARTICLE II
----------
COVENANTS, REPRESENTATIONS AND WARRANTIES OF
--------------------------------------------
HEART LABS OF AMERICA
---------------------
2.1 Legal Status of Corporation. HLOA is a corporation fully organized,
validly existing and in good standing under the laws of the State of Florida
with corporate power to own property and carry on its business as it is now
being conducted.
2.2 Qualification. HLOA is duly qualified to transact business as a
foreign corporation in all jurisdictions where the failure to so qualify would
have a material adverse effect on its business or properties.
2.3 Licenses. HLOA has all franchises, licenses, permits, certificates
and other governmental approvals necessary to enable it to carry on its business
in all material respects as presently conducted.
2.4 Authority of HLOA. All necessary corporate action has been taken by
HLOA to authorize the execution, delivery and performance by HLOA of this
Agreement. This Agreement is the legal, valid and binding obligation of HLOA,
enforceable against HLOA in accordance with its terms subject as to enforcement
only as to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws of general application relating to or affecting the rights of
creditors generally and to general equitable principles.
2.5 Corporate Documents. Copies of the Articles of Incorporation, all
amendments thereto and Bylaws of HLOA certified by its secretary as true,
correct and complete copies will be delivered to WGHI upon written request.
2.6 Acquisition for Investment. HLOA is acquiring the shares of capital
stock of WGHI for investment, and not with a view to or for sale in connection
with any distribution thereof.
2.7 Title of Assets and Authority. On the date(s) of closing, HLOA will
be the owners of all interest, both legal and equitable, of the assets to be
transferred to WGHI free and clear of any liens, restrictions, encumbrances,
charges, claims and rights of others except as set forth in Exhibit "I" which is
attached hereto and incorporated herein, with full power, right and authority to
sell and deliver the assets to WGHI pursuant to this Agreement. Upon delivery of
said assets, Westmark will receive title thereto fee and clear of all liens,
encumbrances, restrictions, charges, claims and rights whatsoever except as set
forth above. All requisite corporate action has been taken by HLOA to authorize
the execution, delivery and performance of this Agreement and the transactions
contemplated hereby. This Agreement is the legal, valid and binding obligation
of HLOA.
3
2.8 Compliance with Applicable Laws. The business of HLOA is not being
conducted in violation with any statute, regulation, ordinance or other law
applicable to HLOA, except for violations which would not either individually,
or in the aggregate, result in a material adverse change in the financial
condition or business of HLOA.
2.9 Litigation. HLOA warrants that there are no:
(a) Claims made or pending or threatened against or affecting
HLOA.
(b) Actions, proceedings or investigation pending or
threatened against or affecting HLOA in any court or before or by any federal,
state, municipal or any other governmental agency or instrumentality.
(c) Orders, writs, injunctions or decrees of any court or any
governmental agency or instrumentality against or affecting HLOA which might
result in any material adverse change in its assets, business operation or
conditions, financial or otherwise. HLOA is compliance with all laws and
regulations and all orders and decrees applicable to it or its business or
assets.
2.10 Material Adverse Change. HLOA warrants that there have not been
any material adverse changes in the financial condition or business of HLOA
since the date of the September 30, 1995 financial statements.
2.11 Financial Statements. HLOA hereby acknowledges that it has
received and reviewed current financial statements of WGHI including but not
limited to December 31, 1993 10K, December 31, 1994 10K, March 31, 1995 10Q,
June 30, 1995 10Q and September 30, 1995 10Q. WGHI warrants that said financial
statements are true and correct and have been prepared in conformity with
generally accepted accounting principles. WGHI further warrants that the book
values of the assets shown on the aforementioned financial statements correspond
substantially to the value of such assets for federal income tax purposes.
ARTICLE III
-----------
COVENANTS, REPRESENTATIONS AND WARRANTIES OF
--------------------------------------------
WESTMARK GROUP HOLDINGS, INC.
-----------------------------
3.1 Legal Status. WGHI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado with
corporate power to own property and carry on its business as it is now being
conducted.
3.2 Qualification. WGHI is duly qualified to transaction business as a
foreign corporation in all jurisdictions where the failure to so qualify would
have a material adverse effect on its business or properties.
4
3.3 Licenses. WGHI has all franchises, licenses, permits, certificates
and other governmental approvals necessary to enable it to carry on its business
in all material respects as presently conducted.
3.4 Authority of HLOA. All necessary corporate action has been taken by
WGHI to authorize the execution, delivery and performance by WGHI of this
Agreement. This Agreement is the legal, valid and binding obligation of WGHI,
enforceable against WGHI in accordance with its terms subject as to enforcement
only as to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws of general application relating to or affecting the rights of
creditors generally and to general equitable principles.
3.5 Corporate Documents. Copies of the Articles of Incorporation, all
amendments thereto and Bylaws of WGHI certified by its secretary as true,
correct and complete copies will be delivered to HLOA upon written request.
3.6 Acquisition for Investment. WGHI is acquiring the shares of capital
stock of HLOA for investment, and not with a view to or for sale in connection
with any distribution thereof.
3.7 Title to Shares and Authority. On the date(s) of closing, WGHI will
be the owners of all interest, both legal and equitable, of the shares to be
transferred to HLOA free and clear of any liens, restrictions, encumbrances,
charges, claims and rights of others with full power, right and authority to
sell and deliver the shares to HLOA pursuant to this Agreement. Upon delivery of
said shares, HLOA will receive title thereto fee and clear of all liens,
encumbrances, restrictions, charges, claims and rights whatsoever. All requisite
corporate action has been taken by WGHI to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated hereby. This
Agreement is the legal, valid and binding obligation of WGHI.
3.8 Compliance with Applicable Laws. The business of WGHI is not being
conducted in violation with any statute, regulation, ordinance or other law
applicable to WGHI, except for violations which would not either individually,
or in the aggregate, result in a material adverse change in the financial
condition or business of WGHI.
3.9 Financial Statements. WGHI hereby acknowledges that it has received
and reviewed current financial statements of HLOA including but not limited to
December 31, 1993 10K, December 31, 1994 10K, March 31, 1995 10Q, June 30, 1995
10Q and September 30, 1995 10Q. HLOA warrants that said financial statements are
true and correct and have been prepared in conformity with generally accepted
accounting principles. HLOA further warrants that the book values of the assets
shown on the aforementioned financial statements correspond substantially to the
value of such assets for federal income tax purposes.
5
3.10 Litigation. WGHI warrants that other than as disclosed in current
filings with the Securities and Exchange Commission, there are no:
(a) Claims made or pending or threatened against or affecting
WGHI.
(b) Actions, proceedings or investigations pending or
threatened against or affecting WGHI in any court or before or by any federal,
state, municipal or any other governmental agency or instrumentality.
(c) Orders, writs, injunctions or decrees of any court or any
governmental agency or instrumentality against or affecting Westmark which might
result in any material adverse change in its assets, business operation or
conditions, financial or otherwise. WGHI is compliance with all laws and
regulations and all orders and decrees applicable to it or its business or
assets.
3.11 Material Adverse Change. WGHI warrants that there have not been
any material adverse changes in the financial condition or business of WGHI
since the date of the September 30, 1995 10Q except as follows:
(a) The proposed Greentree acquisition did not close on
November 7, 1995 but ongoing discussions regarding the acquisition will continue
between WGHI and Greentree Mortgage Company.
(b) WGHI has received but not responded to additional comments
from the Securities and Exchange Commission but anticipates filing a second
amendment to the registration statement current on file with the Securities and
Exchange Commission.
(c) WGHI entered into a consulting agreement ("Fixaris
Consulting Agreement") to commence on January 1, 1996.
ARTICLE IV
----------
CONDITIONS PRECEDENT TO OBLIGATIONS OF WESTMARK
-----------------------------------------------
4.1 The obligations of WGHI to deliver its shares of common stock
hereunder shall be subject to the following conditions precedent, the
non-occurrence of which, unless waived by WGHI, shall relieve it from all
performance under this Agreement:
(a) Representations and Warranties; Performance of
Obligations. The representations and warranties made by HLOA in this Agreement
shall be true and correct in all material respects on the Closing Date(s) with
the same force and effect as if they have been made on and as of such date(s),
subject only to changes contemplated by this Agreement, and there shall have
been no material adverse change in the financial condition of HLOA from that
reflected on September 30, 1995 financial statements or the schedules attached
thereto. HLOA
6
has performed all covenants and obligations and observed all conditions in all
material respects herein required to be performed or observed by them on or
prior to the Closing Date(s).
(b) Certificate of Officer. HLOA shall have furnished WGHI
with a Certificate of its respective President or Vice President to evidence
compliance with the conditions set forth hereinabove.
(c) Opinion of Counsel. Westmark shall have received an
opinion from counsel for HLOA dated the Closing Date(s) in a form acceptable to
WGHI.
(d) Consents, Waivers and Authorizations. All consents,
waivers and authorizations including government consents, waivers or
authorizations necessary or appropriate for the consummation of the transactions
contemplated by this Agreement shall have been obtained and shall be in the form
and substance satisfactory to WGHI.
ARTICLE V
---------
CONDITIONS PRECEDENT TO OBLIGATION OF HEART LABS OF AMERICA
-----------------------------------------------------------
5.1 The obligations of HLOA to perform this Agreement are subject to
the fulfillment, to its reasonable satisfaction, on or prior to the Closing
Date(s) of the conditions hereinafter set forth:
(a) Representations and Warranties; Performan of Obligations.
The representations and warranties made by WGHI in this Agreement delivered
hereunder shall be true and correct in all material respects on the Closing
Date(s) with the same force and effect as if they have been made on and as of
such date, subject only to changes contemplated by the Agreement.
(b) Certificate of Waiver. WGHI shall have furnished a
certificate of its President or a Vice President to evidence compliance with the
conditions set forth hereinabove.
(c) Opinion of Counsel. HLOA shall have received an opinion of
counsel to WGHI, dated the Closing in a form acceptable to HLOA.
(d) Consents, Waivers and Authorizations. All consents,
waivers and authorizations including any governmental consents, waivers and
authorizations shall be form and substance satisfactory to HLOA necessary or
appropriate for the consummation of the transactions contemplated by this
Agreement.
7
ARTICLE VI
----------
CONSUMMATION OF TRANSACTION
---------------------------
6.1 Consideration. On or before the closing date the parties shall
cause the delivery of the assets provided for herein.
6.2 Expenses. Each of the parties hereto shall pay that parties own
expenses incident to the preparation of this Agreement and the consummation of
the transaction contemplated hereby.
ARTICLE VII
-----------
ACKNOWLEDGMENTS AND UNDERSTANDINGS
----------------------------------
7.1 Receipt of Information. WGHI and HLOA mutually acknowledge that
each company has received all information necessary or appropriate for
determining whether to acquire assets in the other company. HLOA and WGHI
acknowledge that they have had an opportunity to ask questions and receive
answers from the other company and its officers and employees regarding the
terms and conditions of the Acquisition Agreement and regarding the business,
financial affairs and other aspects of the other company and further have had
the opportunity to obtain any information (to the extent either company
possesses or can acquire such information without unreasonable effort or
expense) which each company deems necessary to evaluate the investment and to
verify the accuracy of information otherwise provided.
7.2 Investment for Own Account. WGHI and HLOA mutually acknowledge that
the acquisition as hereinabove set forth will be solely for the account of the
company so acquiring and not for the account of any other person or with a view
toward any resale, fractionalized division or distribution thereof.
7.3 Restrictions on Transferability. WGHI and HLOA mutually acknowledge
and understand that the shares acquired by each company are subject to
restriction on transferability and resale and may not transferred or resold
except as permitted under the Securities Act of 1933, as amended, and the
applicable State Securities Laws, pursuant to registration or exemption
therefrom. WGHI and HLOA are aware that each company may be required to bear the
financial risks of this investment for an indefinite period of time. The shares
provided for herein have not been registered or qualified for sale or resale
under the Securities Act of 1993 or under the Securities Laws of certain states.
Accordingly, the shares are not freely tradable and must be held indefinitely or
until such time, if ever, as such shares are either registered or qualified
under applicable law or transfer may be made, in the opinion of counsel to the
company, pursuant to an exemption therefrom.
8
7.4 Investments Experience. WGHI and HLOA represent that each has
sufficient knowledge and experience in financial and business matters to
evaluate the merits and risks of the proposed Acquisition Agreement and each
company represents that it has invested in or had experience with investing in
high yield/high risk investment vehicles and private placements of securities.
WGHI and HLOA further acknowledge that each company understands that an
investment in securities may involve substantial risk of loss on the investment
and each company is able to bear the full economic risk of the investment
including the loss of the entire investment. WGHI and HLOA further acknowledge
that each company understands that shares acquired by each company are not
freely tradable and may not be transferred without compliance with Federal and
State Securities Laws and that said shares are not registered with any State
Securities Commission or United States Securities and Exchange Commission.
ARTICLE VIII
------------
INTERPRETATION AND ENFORCEMENT
------------------------------
8.1 Survival of Representations and Warranties. All of the
representations and warranties contained herein, in the exhibits or in any
certificates or other documents delivered pursuant hereto, shall not be deemed
to be waived or otherwise affected by any prior knowledge of, or any
investigation made by or on behalf, any party hereto. Each and every
representation and warranty contained herein shall survive the Closing Date for
a period of twelve months. Each covenant and each indemnification provision
contained herein shall survive Closing and remain in full force and effect in
accordance with its terms until the obligations arising thereunder have been
fully performed and discharged.
8.2 Notices. Any notice or other communication required or permitted
hereunder shall be deemed to be properly given at the time of receipt if
delivered personally or three (3) days after mailing if mailed in the United
States by certified or registered mail postage prepaid, return receipt
requested, provided such information is addressed as follows:
(a) If to WGHI:
Westmark Group Holdings, Inc.
000 XX 0xx Xxxxxx, Xxxxx 0
Xxxxxx Xxxxx, Xxxxxxx 00000
9
and
Xxxxx X. Xxxxxxxx
Attorney at Law
0000 00xx Xxxxxx, Xxxxx X
Xxxxxxxx, Xxxxxxxxxx 00000
(c) If to HLOA:
Heart Labs of America
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
In the event any party shall designate a different address by notice to
the other parties given as above provided at least five (5) days prior to the
mailing of a notice by the other, said communication shall be forwarded to the
last address so designated.
8.3 Entire Agreement and Counterparts. This Agreement contains the
entire agreement between the parties with respect to the transaction
contemplated hereby. It may be executed in any number of counterparts, each of
which shall be deemed an original but such counterparts together constitute only
one and the same instrument.
8.4 Construction. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without giving effect to any
choice or conflict of law provision or rule that would cause the application of
the laws of any jurisdiction other than the State of Florida.
8.5 Waiver or Modification. This Agreement may be modified, amended,
superceded or canceled, and compliance with any of the terms, provisions,
covenants, representations, warranties and commissions thereof may be waived
only by written instrument executed by all parties hereto, or, in the case of a
waiver, by the party waiving compliance. Such waivers or warranties and
commissions shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
8.6 Successors and Assignees. This Agreement shall be binding upon and
inure to the benefit of WGHI and its successors and permitted assigns and HLOA
and their successors and permitted assigns. No party may assign either this
Agreement or any of his or its rights, interests or obligations hereunder
without the prior written approval of the other party.
8.7 Publicity. No press release or public disclosure, written or oral,
of the transactions contemplated by this Agreement shall be made by any of the
parties hereto without the written consent of both parties and until the parties
have issued a press release or otherwise
10
publicly disclosed the transactions. This prohibition shall not apply to any
disclosure required by law.
8.8 Attorneys' Fees. In the event of any action or proceeding arising
out of or pertaining to this Agreement or the enforcement thereof, the
prevailing party shall be entitled to reasonable attorneys' fees in addition to
any other relief provided by law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Westmark Group Holdings, Inc. Heart Labs of America, Inc.
By: /s/___________________________________ By: /s/____________________________________
Name: Xxxxx Moore___________________________ Name: Xxxxxx X. Birmingham___________________
Title: Senior Vice President_________________ Title: _______________________________________
11
AMENDMENT TO STOCK PURCHASE AGREEMENT
Heart Labs of America, Inc., a Florida corporation ("HLOA") and
Westmark Group Holdings, Inc., a Colorado corporation ("WGHI") covenant and
agree to amend and modify said Stock Purchase Agreement as follows:
1.1 Stock Purchase. The purchase of 1,298,388 shares of WGHI stock by
HLOA shall occur on December 5, 1995 ("Closing Date").
1.2 Consideration. Paragraph 1.2 with respect to consideration and
transfer dates is amended as follows:
(a) $60,000 in certified funds on November 21, 1995.
(b) $90,000 in certified funds on November 30, 1995.
(c) $250,000 in certified funds on December 5, 1995 and
$150,000 in certified funds on December 11, 1995.
(d) Shall be deleted in its entirety.
(e) The exhibit reference in sub-paragraph (e) shall be
Exhibit "A" not "B".
(f) Promissory Note from HLOA to WGHI shall be in the sum
of $660,000 payable in certified funds no later than
December 31, 1995. Said Promissory Note shall be
secured by Real Property owned by HLOA and more
particularly described in Exhibit "B" which is
attached hereto and by this reference made a part
hereof together with a certificate of title to an
HLOA medical laboratory.
1.4 Registration. Shall be modified to provide that the effective date
of the registration shall be May 31, 1996. Registration statement shall be filed
no later than March 31, 1996.
1.5 Terminations, Resignations and Board Membership. The exhibit
references in paragraph 1.5 shall be Exhibits "C", "D" and "E".
1.6 Anti-Dilution. Should be modified to change the first word in the
sixth line to "provide." The exhibit reference in paragraph 1.6 shall be "F" not
"G".
2.7 Title of Assets and Authority. Beginning on line 4, remove the
language "except as set forth in Exhibit "I" which is attached hereto and
incorporated herein."
2.10 Material Adverse Change. Remove September 30, 1995 and insert June
30, 1995.
2.11 Financial Statements. Shall be amended to read as follows:
"WGHI acknowledges that it has received and reviewed current
financial statements of HLOA including, but not limited to
December 31, 1993 10K, December 31, 1994 10K, March 31, 1995 10Q
and June 30, 1995 10Q. In addition thereto, HLOA has provided WGHI
with a letter confirming the net worth of HLOA in the sum of
$5,810,813 as of June 30, 1995. HLOA warrants that said financial
statements are true and correct and have been prepared in
conformity with generally accepted accounting principles. HLOA
further warrants that the book values of the assets shown on the
aforementioned financial statements
2
correspond substantially to the value of such assets for federal
income tax purposes."
ARTICLE III
3.9 Financial Statements. Shall be amended to read as follows:
"HLOA acknowledges that it has received and reviewed current
financial statements of WGHI including, but not limited to
December 31, 1995 10K, December 31, 1994 10K, March 31, 1995 10Q
and June 30, 1995 10Q and September 30, 1995 10Q. WGHI warrants
that said financial statements are true and correct and have been
prepared in conformity with generally accepted accounting
principles. WGHI further warrants that the book values of the
assets shown on the aforementioned financial statements correspond
substantially to the value of such assets for federal income tax
purposes."
ARTICLE IV
4.1(a) Representations and Warranties; Performance of Obligations.
Should be modified to insert the dated of June 30, 1995 in place of September
30, 1995.
Except as hereinabove modified or amended, said Stock Purchase
Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date set forth below.
Westmark Group Holdings, Inc. Heart Labs of America, Inc.
By: /s/__________________________________________ By: /s/________________________________________
Name: Xxxxxx X. Stubbs_____________________________ Name: Xxxxxx X. Birmingham_______________________
Title: E. V. President______________________________ Title: President__________________________________
Date: 12/4/95______________________________________ Date: 12/4/95____________________________________
3
SECOND AMENDMENT TO STOCK PURCHASE
AGREEMENT
Heart Labs of America, Inc., a Florida corporation ("HLOA") and
Westmark Group Holdings, Inc., a Colorado corporation ("WGHI") entered into a
Stock Purchase Agreement ("Agreement") on November 21, 1995. Said Agreement was
amended on December 4, 1995. HLOA and WGHI covenant and agree to a second
amendment to said Agreement as follows:
1.1 Stock Purchase. The purchase of 1,298,399 shares of WGHI stock by
HLOA shall occur on December 19, 1995 ("Closing Date").
1.2 Consideration. Paragraph 1.2 with respect to consideration and
transfer dates is amended as follows:
(e) $158,000 on December 7, 1995 and $137,500 on
December 15, 1995.
(f) Promissory Note from HLOA to WGHI shall be in the
sum of $764,500 payable in certified funds as follows:
(i) $104,500 in certified funds on December 22, 1995.
(ii) $500,000 in certified funds no later than
December 31, 1995 (iii) $160,00 in certified funds no
later than January 15, 1996
Said Promissory Note shall be secured by two parcels of real property owned by
HLOA more particularly described in Exhibit "B" which is attached hereto and by
reference made a part hereof. Said not shall also be secured by a pledge of the
certificate of title to an HLOA medical laboratory. As additional security for
the payment of said promissory note, HLOA shall pledge to WGHI all of the above
referenced shares of WGHI in the name of HLOA. Said share certificate evidencing
ownership of 1,298,388 shares of common stock of WGHI shall be endorsed by HLOA
and delivered to WGHI to be held by WGHI Corporate Counsel, Xxxxx Xxxxxxxx,
until said Promissory Note is satisfied in full. HLOA shall retain voting
privileges with respect to said shares unless a default occurs with regard to
said Promissory Note. In the event of default, HLOA waives any interest in said
shares and the issuance thereof shall be rescinded.
1.5 Terminations, Resignations and Board Membership. Paragraph 1.5
shall be modified to provide that the appointment of two interim directors to
the board of WGHI shall occur after the receipt by WGHI of not less than
$1,050,000 from HLOA and the issuance of convertible preferred stock to WGHI.
HLOA acknowledges the appointment of Xxxxxx Xxxxxx to the Board of Directors of
WGHI.
Except as hereinabove modified or amended, said Stock Purchase
Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date set forth below.
Westmark Group Holdings, Inc. Heart Labs of America, Inc.
By: /s/________________________________________ By: /s/_________________________________________
Name: Xxxxxx X. Stubbs___________________________ Name: Xxxxxx X. Birmingham________________________
Title: Vice President_____________________________ Title: President___________________________________
Date: 12/19/95___________________________________ Date: 12/19/95____________________________________
2
THIRD AMENDMENT TO STOCK PURCHASE
AGREEMENT
Heart Labs of America, Inc., a Florida corporation ("HLOA") and
Westmark Group Holdings, Inc., a Colorado corporation ("WGHI") entered into a
Stock Purchase Agreement on November 21, 1995. Said Agreement was amended on
December 4, 1995 and on December 19, 1995. HLOA and WGHI covenant and agree to a
third amendment to said Agreement as follows:
1.2 Consideration. WGHI and HLOA mutually acknowledge and agree that
through and including January 2, 1996 HLOA had paid to WGHI a total of $675,778.
The balance of certified funds due and payable pursuant to the Agreement, as
amended, is $534,222.
HLOA has executed a Promissory Note payable to Xxxxxxx X. Xxxxxxx in the sum of
$415,000 and a Promissory Note payable to Xxxxx Xxxxx in the sum of $60,000.
WGHI covenants and agrees to credit HLOA the sum of $160,000 in consideration of
the execution of said Promissory Notes, the assumption of the payment
obligations contained in said notes and the receipt by WGHI of executed releases
from Xxxxx Xxxxx and Xxxxxxx X. Xxxxxxx, copies of which are attached hereto
marked Exhibits "A" and "B" and by this reference made a part hereof.
WGHI and HLOA mutually covenant and agree that as a result of the
credit set forth above, the balance of certified funds owed by HLOA to WGHI is
$374,222. HLOA covenants
and agrees to pay the sum of $374,222 in certified funds to WGHI no later than
January 15, 1996 with no right of further off-set or credit unless otherwise
agreed upon in writing by and between the parties.
1.5 Terminations, Resignations and Board Membership. Upon execution of
this Third Amendment to Stock Purchase Agreement by the parties, and the
reissuance by HLOA of a preferred stock certificate representing 200,000 shares
of $10.00 par value convertible preferred stock with the par value and
convertibility provisions correctly described in the attachment thereto in
accordance with 1.2(g) of the Stock Purchase Agreement, WGHI shall appoint Xxxx
Xxxxxx and Xxxxxx Xxxxxxxxx to the Board of Directors of WGHI to serve as
interim directors and nominees of HLOA until the next annual meeting of
shareholders of WGHI. Said interim directors shall serve with Xxxxxx Xxxxxxx,
Xxx Xxx and Xxxxxx Xxxxxx.
2.4 Authority of HLOA. All necessary corporate action has been taken by
HLOA to authorize the execution, delivery and performance by HLOA of this Third
Amendment to Stock Purchase Agreement and all prior amendments to said
Agreement.
3.4 Authority of WGHI. All necessary corporate action has been taken by
WGHI to authorize the execution, delivery and performance of WGHI of this Third
Amendment to Stock Purchase Agreement and all prior amendments to said
Agreement.
Except as hereinabove modified or amended, said Stock Purchase
Agreement and the amendments thereto, shall continue in full force and effect.
2
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date set forth below.
Westmark Group Holdings, Inc. Heart Labs of America, Inc.
By: _____________________________________________ By:________________________________________________
Name: _____________________________________________ Name:______________________________________________
Title:_____________________________________________ Title:_____________________________________________
Date: _____________________________________________ Date:______________________________________________
3
FOURTH AMENDMENT TO STOCK PURCHASE
AMENDMENT
Heart Labs of America, Inc., a Florida corporation ("HLOA") and
Westmark Group Holdings, Inc., a Colorado corporation ("WGHI") entered into a
Stock Purchase Agreement on November 21, 1995. Said Agreement was amended on
December 4, 1995, December 19, 1995 and January 5, 1996. HLOA and WGHI covenant
and agree to a fourth amendment to said Agreement as follows:
1.2(g) Consideration. 200,000 shares of unregistered convertible
preferred stock shall be re-issued by HLOA with no par value, but shall have a
stated value of$10.00 per share. In all other respect, the terms and conditions
contained in said paragraph shall continue in full force and effect.
2.4 Authority of HLOA. All necessary corporate action has been taken by
HLOA to authorize the execution, delivery and performance by HLOA of this Fourth
Amendment to Stock Purchase Agreement and all prior amendments to said
Agreement.
3.4 Authority of WGHI. All necessary corporation action has been taken
by WGHI to authorize the execution, delivery and performance by WGHI of this
Fourth Amendment to Stock Purchase Agreement and all prior amendments to said
Agreement.
Except as hereinabove modified or amended, said Stock Purchase
Agreement and the amendments thereto, shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date set forth below.
Westmark Group Holdings, Inc. Heart Labs of America, Inc.
By: /s/________________________________________ By: /s/______________________________________
Name: Xxxxxxx X. Paull___________________________ Name: Xxxxxx X. Birmingham_____________________
Title: Vice President_____________________________ Title: President________________________________
Date: 1/16/96____________________________________ Date: 1/16/96__________________________________
2
COMPOSITE EXHIBIT B
SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT
This Settlement Agreement ("Agreement") is entered into on the 23rd day
of January, 1997 by and between Westmark Group Holdings, Inc., a Delaware
corporation ("WGHI") and Medical Industries of America, Inc., a Florida
corporation ("MIOA") and is made in reference to the following:
RECITALS
WHEREAS, WGHI and MIOA (formally Heart Labs of America, Inc.) entered
into a Stock Purchase Agreement on or about November 21, 1995 together with
amendments thereto and;
WHEREAS, WGHI is the owner and holder of 200,000 shares of convertible
preferred stock of MIOA and;
WHEREAS, MIOA is the owner and holder of 1,667,284 shares of
unregistered common stock of WGHI and;
WHEREAS, MIOA is the owner and holder of 200,000 shares of convertible
preferred stock of WGHI and;
WHEREAS, from time to time, since November 27, 1995, MIOA has provided
additional financing to WGHI in the approximate sum of One Million Nine Hundred
Fifty-Three Thousand Dollars ($1,953,000) and;
WHEREAS, various disputes have arisen by and between the parties with
regard to loans, liabilities, stock ownership and enforcement of the terms and
conditions of the aforementioned Stock Purchase Agreement as amended and;
WHEREAS, the parties hereto wish to settle and resolve any and all
disputes, debts, damages, accounts, claims and demands whatsoever between the
parties arising from the aforementioned Stock Purchase Agreement, loans,
liabilities and stock ownership;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, and other covenants and conditions contained herein, WGHI
and MIOA mutually agree as follows:
1. CLOSING DATE. WGHI covenants and agrees that WGHI is diligently
negotiating a financing proposal that would provide capitalization to WGHI in a
minimum amount of $3,000,000 and a maximum amount of $6,000,000. For the purpose
of this Agreement, "Additional Capitalization" shall be defined as gross
proceeds. The parties hereto further mutually agree that the terms and
conditions of this Agreement and the duties and responsibilities herein
contained are subject to and expressly conditioned upon the receipt by
2
WGHI of minimum Additional Capitalization in the sum of $3,000,000 by March 15,
1997 ("First Tranche"). Upon receipt of said Additional Capitalization WGHI and
MIOA agree to do and perform the following no later than April 15, 1997 (the
"Closing Date"):
a. WGHI shall pay MIOA as follows:
(i) $1.5 million cash on or before April 15, 1997,
provided that WGHI shall have received no less than
$6,000,000 in gross proceeds as a result of
Additional Capitalization. In the event the
Additional Capitalization received by WGHI is less
than $6,000,00 but more than $5,000,000, MIOA shall
receive all proceeds in excess of $5,000,000. In the
further event the Additional Capitalization received
by WGHI is less than $5,000,000 but more than
$3,000,000, MIOA shall receive ten percent (10%) of
said Additional Capitalization. If WGHI receives no
more than $3,000,000 in Additional Capitalization by
March 15, 1997, MIOA shall receive a cash payment of
$300,000 on March 28, 1997.
(ii) WGHI shall execute a promissory note pursuant to
the schedule set forth on Exhibit "A" which is
attached hereto and by this reference made a part
hereof. Said promissory note shall bear interest at
ten percent (10%) per annum. Payments of principal
and interest shall be amortized equally over ten (10)
years, with payments commencing July 31, 1997. All
unpaid principal and interest shall be due and
payable no later than three (3) years from the date
of execution of this Agreement. The form of the
promissory note is attached hereto as Exhibit "B" and
incorporated herein. On the Closing Date an
amortization schedule will be prepared, attached
hereto as Exhibit "C" and incorporated herein.
(iii) Said promissory note shall also provide for a
principal reduction in the sum of $500,000 in the
event of the sale or disposition by WGHI of its
2
wholly owned subsidiary, Green World Technologies,
Inc. prior to the maturity date of the note,
provided, however, that WGHI shall have received a
minimum of $500,00 cash from said sale or
disposition. MIOA shall be entitled to all cash
received by WGHI up to $500,000. Said principal
reduction will occur contemporaneously with the
closing of the sale or disposition of Green World
Technologies, Inc. WGHI represents that it is
diligently pursuing the sale of Green World
Technologies, Inc. and that said company will not be
sold or disposed for less than fair market value. The
parties mutually agree that WGHI may elect to "spin
off" Green World Technologies in which event MIOA
shall not be entitled to a principal reduction unless
said "spin-off" shall result in the payment of cash
to WGHI.
(iv) Said promissory note shall further provide that
if prior to the maturity date of the note, WGHI sell
its note receivable or other collateral resulting
from the Green World Technologies, Inc. sale, or
disposition, the balance of the MIOA promissory note
shall be paid in full to the extent of the proceeds
received from the sale of said note receivable or
other collateral.
(v) Said promissory note may be pre-paid in part or
in full by WGHI without penalty.
(vi) Said promissory note shall be secured by a
mortgage on the real property described on Exhibit
"D" attached hereto and incorporated herein and if
necessary, by an assignment by WGHI to MIOA of the
Green World Technologies' note receivable or other
collateral referred to hereinabove, or a pledge of
the shares of Green World Technologies stock retained
by WGHI in the event of a "spin off" of Green World
Technologies, Inc. MIOA shall have no proprietary
rights or voting rights with respect to the
collateral in the absence of a default by WGHI. The
value of the security shall not exceed the
3
balance of the principal and interest due pursuant to
the MIOA promissory note.
b. WGHI shall endorse, assign, transfer and convey to MIOA any
and all MIOA convertible preferred stock owned by WGHI.
c. WGHI shall waive any and all rights, claims, demands or
entitlements with respect to the aforementioned Stock Purchase
Agreement, as amended.
d. WGHI shall provide quarterly financial statements of WGHI
and its subsidiaries to MIOA.
2. MIOA OBLIGATIONS. In consideration of the foregoing, MIOA covenants
and agrees to do the following:
a. MIOA shall endorse, assign, transfer and convey to WGHI any
and all WGHI shares of convertible preferred stock owned by
MIOA.
b. MIOA shall endorse, assign, transfer and convey to WGHI any
and all WGHI shares of common stock owned by MIOA. Upon
receipt of certificates representing all of the common stock
of WGHI owned by MIOA, WGHI shall reissue a certificate for
70,000 shares of common stock to MIOA in full and final
satisfaction and settlement of any and all claims with respect
to WGHI shares owned by MIOA in full and final satisfaction
and settlement of any and all claims with respect to WGHI
shares owned by MIOA except as hereinafter set forth. WGHI
further agrees that certain other shares of common stock WGHI
shall be reissued to MIOA pursuant to the schedule set forth
on Exhibit "A" which is incorporated herein. MIOA shall have
demand registration rights and "piggyback" registration rights
with respect to said shares at the expense of WGHI. All
re-issued shares shall be deemed to have been re-issued on the
date of the original issuance. MIOA covenants and agrees that
upon registration of said re-issued shares of common stock,
MIOA shall not sell, transfer or convey more than 60,00 shares
of said common stock per month, or fifteen percent (15%) of
the total required shares per month, whichever is less. In the
event WGHI completes a reverse stock split within seven (7)
months of the Closing Date and prior to the sale, transfer or
conveyance of all the reissued shares held by
4
MIOA, WGHI shall register and issue additional shares of
common stock to MIOA in the event of any diminution in value
of the remaining reissued shares thirty (30) days after the
date of the reverse stock split. MIOA shall assume the market
risk with respect to said shares prior to and thirty-one (31)
days after any reverse stock split.
c. MIOA shall waive any and all rights, claims, demands or
entitlements with respect to the aforementioned Stock Purchase
Agreement, as amended.
d. MIOA shall release and forever discharge WGHI with respect
to any rights, claims, demands or entitlements pertaining to
any money, financing, loans or other consideration given or
provided to WGHI by MIOA.
3. UNENCUMBERED SHARES. WGHI and MIOA mutually covenant and agree that
each and every share of common stock and preferred stock to be transferred,
assigned and conveyed by one party to the other shall be free and clear of all
liens, encumbrances and restrictions on transfer other than restrictions
pursuant to applicable state and federal securities laws.
4. ACCRUED DIVIDENDS AND INTEREST. On the Closing Date, WGHI and MIOA
mutually agree to waive any and all claims or demands with respect to dividends
or interest arising out of the ownership of preferred stock or any other
business relationship by and between the parties.
5. MUTUAL RELEASE. Subject to the Closing Date as hereinabove set forth
and the performance of the terms and conditions contained in this Agreement,
each party hereby forever releases and discharges the other party and each of
its heirs, officers, directors, shareholders, employees, agents, affiliates,
subsidiaries, attorneys, successors and assigns of an from any and all claims,
rights, duties, obligations, debts, liabilities, damages, injuries, actions and
causes of action of every kind and nature, foreseen and unforeseen, contingent
and accrual, liquidated and unliquidated, suspected and unsuspected, disclosed
and undisclosed, whether direct or by way of indemnity, contribution or
otherwise, arising out of or related to the aforementioned Stock Purchase
Agreement and amendments thereto, the ownership of shares of common and
preferred stock as hereinabove set forth and the business relationship by and
between the parties.
6. EXCEPTIONS TO MUTUAL RELEASE. Nothing contained in this Agreement
shall operate to release or discharge either party or its successors or assigns
from any claims, rights or causes of action arising out of or relating to a
breach of any of the obligations of the parties contained in this Agreement.
5
7. SURVIVAL OF MIOA WARRANT OBLIGATION. The parties acknowledge that
the aforementioned Stock Purchase Agreement, as amended, provided for the
issuance of warrants by MIOA for the benefit of WGHI shareholders and that said
warrants will not expire until November 21, 1997. MIOA covenants and agrees that
MIOA will have a continuing responsibility to the shareholders of WGHI with
respect to the terms and conditions of the Warrant Agreement contained in said
Stock Purchase Agreement. Said warrant terms and conditions shall survive the
termination of the Stock Purchase Agreement and amendments thereto.
8. NATURE OF AGREEMENT. The provisions contained in this Agreement
constitute a compromise of disputed issues. This Agreement shall not, in any
way, be construed as an admission by either party of any unlawful, wrongful or
invalid act.
9. AUTHORITY TO EXECUTE. Each party to this Agreement represents that
all necessary corporate action has been taken to authorize the execution,
delivery and performance by each party to this Agreement. This Agreement is the
legal, valid and binding obligation of each party, enforceable against each
party in accordance with its terms, subject as to enforcement only as to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general application relating to or affecting the rights of creditors
generally and to general equitable principles. This Agreement does not violate
any agreement or contract to which either party is a party thereto.
10. Publicity. No press release or public disclosure, written or oral,
of the transaction contemplated by this Agreement shall be made by either of the
parties hereto without the written consent of both parties and until the parties
have jointly issued a press release or otherwise publicly disclosed the
transactions. This prohibition shall not apply to any disclosure required by
law.
11. ORGANIZATION, GOOD STANDING AND QUALIFICATIONS. WGHI and MIOA are
corporations duly organized and in good standing under the laws of the state of
incorporation for each incorporation. Each party has all the requisite corporate
power and authority to own and operate its properties and assets, and to carry
on its business, to execute and deliver this Agreement and to carry out the
provisions of this Agreement. Both WGHI and MIOA are duly qualified to transact
business and are in good standing in each jurisdiction in which the failure to
so qualify would have a material and adverse effect on the business, properties,
condition (financial or otherwise) of operations of each party to perform its
obligations under this Agreement.
12. GOVERNMENTAL CONSENTS. No consent, approval, qualification, order
or authorization of or filing with any local, state or federal governmental
authority is required on the part of either WGHI or MIOA in connection with the
execution and performance of this Agreement.
6
13. NO VIOLATION,CONFLICT OR DEFAULT. The execution, delivery and
performance by WGHI and MIOA of this Agreement and consummation of the
transactions contemplated hereby will not result in any violation or default of
any provision of either corporations' Certificate of Incorporation or By-Laws,
any statute, law, regulation, order or decree applicable to either party or any
contract, commitment, agreement, arrangement or restriction of any kind to which
WGHI or MIOA is a party. WGHI has not entered into nor does WGHI contemplate
entering into any agreement that would alter or change the intent of this
Agreement.
14. LITIGATION. WGHI and MIOA each warrant that there are no legal,
administrative, governmental or arbitration proceedings pending by or before any
court, governmental administrative agency or commission or arbitrator, against
WGHI or MIOA that would prevent a consummation of the transactions contemplated
in this Agreement. The parties further mutually agree that either party may
terminate this Agreement by giving written notice of termination to the other
party, if the other party, prior to the Closing Date has: (i) a receiver of its
assets or property appointed because of insolvency; (ii) filed a voluntary or
involuntary petition in bankruptcy; (iii) made a general assignment for the
benefit of creditors or (iv) been adjudged a bankrupt; (v) instituted or
suffered to be instituted any proceeding for the reorganization or rearrangement
of its affairs.
15. FURTHER COOPERATION. Each party hereto agrees to execute,
acknowledge and/or deliver any and all documents reasonably necessary to carry
out and perform its obligations hereunder.
16. ENTIRE AGREEMENT. This Agreement contains the entire Agreement and
understanding between the parties as to the settlement of all claims and
supersedes and replaces all prior settlement negotiations and proposed
agreements, written and oral. The parties hereto acknowledge that no other party
or agent or attorney of any other party has made any promise, representation or
warranty whatsoever, express or implied, not contained in this Agreement and
each party acknowledges that it has not executed this Agreement in reliance upon
any such promise, representation or warranty not contained herein.
17. SEVERABILITY. Every provision of this Agreement is intended to be
severable. In the event any term or provision hereof is declared to be illegal
or invalid for any reason whatsoever by a tribunal of competent jurisdiction,
such illegality or invalidity shall not affect the balance of the terms and
provisions hereof, which terms and provisions shall remain binding and
enforceable.
18. NO WAIVER. The waiver, either expressed or implied, by any party
hereto of any term or condition of this Agreement, shall not constitute a
relinquishment by said party of its right to enforce the term or condition at
any later date unless this Agreement is amended in writing to so provide for an
unconditional waiver.
7
19. NO ASSIGNMENT. As a condition of this Agreement, the parties
represent and warrant that there has been no actual assignment or purported
assignment or other transfer or any claims or other matter or any interest which
has bee released by any provision of this Agreement. The parties represent and
warrant that they are the sole owners and real-party-in-interest regarding their
respective claims and matters being released by this Agreement. In the event
that any representation or warranty made by any of the parties in this paragraph
is false or incorrect, it is agreed that the party making such representation or
warranty shall indemnify the other party for any and all claims, demands, causes
of action, obligations, set-offs, liabilities, damages, losses, injuries, costs,
expenses and attorneys' fees incurred by them or any of them as a result of such
a false or incorrect representation or warranty. Further, it is agreed by the
parties that the foregoing indemnity does not require the party seeking the
indemnification to have made a payment to a third party claimant as a condition
precedent to recovery of the indemnity granted pursuant to this action.
20. ADVICE OF COUNSEL. Prior to the execution of this Agreement and any
other document to which reference is made herein, each party hereto has fully
understood and carefully read all of the provision of this Agreement. That each
party has consulted with or alternatively has had opportunity to consult with,
legal counsel of its own choice concerning the terms and conditions of this
Agreement and any other document to which reference is made herein, and such
other opportunity to participate in the drafting of this Agreement and such
other document, and that each such party to this Agreement and such other
document is voluntarily entering into this Agreement.
21. COUNTERPARTS This Agreement may be executed in any number of
original counterparts. Any such counterpart, when executed, shall constitute an
original of this Agreement, and all such counterparts together shall constitute
one and the same instrument.
22. NO MODIFICATION. No waiver, modification or amendment to any term,
condition or provision of this Agreement shall be valid or have any force or
effect unless made in writing and signed by the parties against whom the waiver,
modification or amendment is asserted.
23. GOVERNING LAW. This Agreement shall be governed by and interpreted
according to the laws of the State of Florida.
24. INTERPRETATION. None of the parties hereto, nor their respective
counsel, shall be deemed the drafter of this Agreement for purposes of
construing the provisions hereof. The language in all parts of this Agreement
shall in all cases be construed according to its fair meaning, not strictly for
or against any of the parties hereto.
25. JURISDICTION AND VENUE. In the event that any action is commenced
to seek enforcement of this Agreement or a declaration of rights thereunder, the
jurisdiction and venue for any such action shall be in Palm Beach County,
Florida.
8
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first stated above.
WESTMARK GROUP HOLDINGS, INC. MEDICAL INDUSTRIES OF AMERICA
By: /s/__________________________________________ By: /s/_________________________________________
Its: Chief Operating Officer______________________ Its: CEO__________________________________________
9
EXHIBIT "A"
WGHI and MIOA covenant and agree that the principal balance of the
promissory note referred to in this Agreement and the number of shares of common
stock to be reissued to MIOA by WGHI shall be determined by the total cash
received by MIOA by the Closing Date, March 15, 1997. The schedule set forth
below shall provide the basis for computing the principal balance of the
promissory note and the number of shares of common stock to be reissued to MIOA.
---------------------------------------------------------------------------------------------------------------------
CASH RECEIVED PROMISSORY NOTE NUMBER OF SHARES OF COMMON STOCK TO
BY MIOA PRINCIPAL BALANCE BE REISSUED
---------------------------------------------------------------------------------------------------------------------
$300,000 $3,653,000 - 0 -
---------------------------------------------------------------------------------------------------------------------
$400,000 $3,553,000 - 0 -
---------------------------------------------------------------------------------------------------------------------
$500,000 $3,453,000 - 0 -
---------------------------------------------------------------------------------------------------------------------
$600,000 $3,253,000 - 0 -
---------------------------------------------------------------------------------------------------------------------
$700,00 $3,153,000 - 0 -
---------------------------------------------------------------------------------------------------------------------
$900,000 $3,053,000 - 0 -
---------------------------------------------------------------------------------------------------------------------
$1,000,000 $2,953,000 - 0 -
---------------------------------------------------------------------------------------------------------------------
$1,100,000 $2,723,000 40,000
---------------------------------------------------------------------------------------------------------------------
$1,200,000 $2,493,000 80,000
---------------------------------------------------------------------------------------------------------------------
$1,300,000 $2,263,000 120,000
---------------------------------------------------------------------------------------------------------------------
$1,400,000 $2,033,000 160,000
---------------------------------------------------------------------------------------------------------------------
$1,500,000 $1,803,000 200,000
---------------------------------------------------------------------------------------------------------------------
$1,600,000 $1,573,000 240,000
---------------------------------------------------------------------------------------------------------------------
$1,700,000 $1,343,000 280,000
---------------------------------------------------------------------------------------------------------------------
$1,800,000 $1,113,000 320,000
---------------------------------------------------------------------------------------------------------------------
$1,900,000 $883,000 360,000
---------------------------------------------------------------------------------------------------------------------
$2,000,000 $653,000 400,000
---------------------------------------------------------------------------------------------------------------------
A-1
MODIFICATION TO SETTLEMENT AGREEMENT
This Modification to Settlement Agreement ("Modification") is entered
into on the 31 day of March, 1997 by and between Westmark Group Holdings, Inc.,
a Delaware corporation ("WGHI") and Medical Industries of America, Inc., a
Florida corporation ("MIOA"), and is made with reference to the following:
RECITALS
WHEREAS, WGHI and MIOA entered into a Settlement Agreement
("Agreement") on the 23rd day of January 1997; and
WHEREAS, the parties desire to modify said Agreement;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, WGHI and MIOA mutually agree to modify the Agreement as
follows:
1. Paragraph 1 is hereby modified to read as follows:
WGHI covenants and agrees that WGHI is diligently negotiating
a financing proposal that would provide additional
capitalizatoin to WGHI in a minimum amount of $3,000,000 and a
maximum amount of $6,000,00. For the purposes of this
Agreement, "Additional Capitalization" shall be defined as
gross proceeds. The parties hereto further mutually agree that
the terms and conditions of this Agreement and the duties and
responsibilities herein contained are subject to and expressly
conditioned upon the receipt by WGHI of minimum Additional
Capitalization in the sum of $3,000,000 by April 21, 1197
("First Tranche"). Upon receipt of said Additional
Capitalization, WGHI and MIOA agree to do and perform the
following no later than May 21, 1997 (the "Closing Date")
2. Paragraph 1a.(i) is hereby modified to read as follows:
a. WGHI shall pay MIOA as follows:
(i) $1.5 million cash on or before May 21, 1997,
provided that WGHI shall have received no less than
$6,000,000 in gross proceeds as a result of
Additional Capitalization. In the event the
Additional Capitalization received by WGHI is less
2
than $6,000,000 but more than $5,000,000, MIOA shall
receive all proceeds in excess of $5,000,000.
In the further event the Additional Capitalization
received by WGHI is less than $5,000,000 but more
than $3,000,000, MIOA shall receive ten percent (10%)
of said Additional Capitalization. If WGHI receives
no more than $3,000,000 in Additional Capitalization
by April 21, 1997, MIOA shall receive a cash payment
of $300,000 on May 1, 1997.
3. Except as hereinabove modified, said Agreement shall continue in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Modification as of
the date first stated above.
WESTMARK GROUP HOLDINGS, INC. MEDICAL INDUSTRIES OF AMERICA
By: /s/__________________________________________ By: /s/_________________________________________
Its: Chief Operating Officer______________________ Its: CFO_________________________________________
2
AMENDMENT TO MODIFIED SETTLEMENT AGREEMENT
This Amendment is entered into on the 26th day of June, 1997 by and
between Westmark Group Holdings, Inc., a Delaware corporation ("WGHI") and
Medical Industries of America, Inc., a Florida corporation ("MIOA"), and is made
with reference to the following:
RECITALS
WHEREAS, WGHI and MIOA entered into a Settlement Agreement
("Agreement") as of the 23rd day of January, 1997 and;
WHEREAS, the parties modified said Settlement Agreement on March 31,
1997 ("Modified Settlement Agreement"), and;
WHEREAS, the parties further desires to amend said Modified Settlement
Agreement;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, WGHI and MIOA mutually agree to amend the Modified
Settlement Agreement as follows:
1. Paragraphs 1, 2 and 3 of the aforementioned Modified Settlement
Agreement are hereby deleted in their entirety.
2. Debt Repayment. WGHI acknowledges an indebtedness to MIOA in the sum
of $1,953,000, less interest in the sum of $47,000 which represents interest
forgiveness for the second quarter, 1997. Said indebtedness shall be satisfied
as follows:
A. WGHI shall execute a Promissory Note in the sum of
$1,953,000 together with interest at 10% per annum.
WGHI shall pay no less than $25,000 per month
commencing June 30, 1997 and continuing on the 30th
day of each month thereafter until June 30, 1997 at
which time the entire balance of unpaid principal and
accrued interest shall be paid in full.
B. MIOA shall be entitled to the first $300,000 received
by WGHI with respect to the receipt of additional
capitalization by WGHI in the minimum amount of
$300,000 and maximum amount of $1.5 million. In the
event of the receipt of additional capitalization by
WGHI in excess of $1.5 million, MIOA shall be
entitled to receive the first $500,000 of additional
capitalization above $1.5 million.
C. MIOA shall be entitled to 50% of any additional
capitalization received by WGHI in excess of $3
million until said indebtedness shall have been
paid in full.
D. MIOA shall also be entitled to 15% of the net cash
flow of WGHI in excess of operating expenses and
settlement payments on a consolidated basis during
the calendar year 1997 and 20% of said net cash flow
in the calendar year 1998.
E. In the event WGHI shall sell either Westmark Mortgage
Corporation or Green World Technologies, Inc., wholly
owned subsidiaries of WGHI, or in the alternative
event of a "spin-off" of either subsidiary, MIOA
shall be entitled to receive and WHGI agrees to pay
to MIOA 50% of the cash proceeds received by WGHI
resulting from a sale or "spin-off."
3. Closing Date. For the purpose of this Agreement, the closing Date
shall be June 30, 1997.
4. Anti-Dilution and Default. WGHI and MIOA mutually covenant and agree
that Paragraph 1.6 of the Stock Purchase Agreement entered into by and between
the parties on November 21, 1995, as amended, is hereby deleted and terminated
in its entirety and shall be of no further force or effect. In the event of any
default with regard to the terms and conditions of the aforementioned Promissory
Note, WGHI shall issue to MIOA, shares of common stock of WGHI with a value
equivalent to the unpaid balance of principal and accrued interest pursuant to
said Promissory Note. The unpaid indebtedness as hereinabove set forth shall
also be secured by the preferred shares of MIOA stock owned by WGHI. In the
event of default as hereinabove set forth, said preferred shares shall be
assigned, transferred and conveyed to MIOA and WGHI shall have no further rights
to conversion.
5. MIOA shall have demand registration rights with respect to the WGHI
shares of common stock owned by MIOA. Said demand registration rights shall be
incorporated in a separate agreement between WGHI and MIOA.
6. After satisfaction of the indebtedness referred to hereinabove, MIOA
shall repurchase the shares of MIOA preferred and common stock owned by WGHI and
WGHI shall repurchase the shares of WGHI preferred and common stock owned by
MIOA. The purchase price for the preferred shares shall be the stated value and
the purchase price for the common shares shall be the closing bid price on the
day prior to the repurchase.
7. Except as hereinabove amended, said Modified Agreement shall
continue in full force and effect.
2
3
IN WITNESS WHEREOF, the parties have executed this Modification as of
the date first stated above.
WESTMARK GROUP HOLDINGS, INC. MEDICAL INDUSTRIES OF AMERICA
By: /s/___________________________________ By: /s/_____________________________________
Its: C. E. O.______________________________ Its: President_______________________________
3
EXHIBIT C
WESTMARK SERIES C PREFERRED STOCK CERTIFICATE
Certificate For __________Shares From whom transferred Received Certificate No.__
_____________________________________ for _______________________ Shares
Issued to ______________________________ Dated _____________________ 19_______ on ________________________ 19 ___
________________________________________ NO. ORIGINAL NO. OF ORIGINAL __________________________________
Dated __________________ 19_____________ NO. OF SHARES __________________________________
CERTIFICATE SHARES TRANSFERRED
WESTMARK GROUP HOLDINGS, INC.
THIS CERTIFIES THAT HEART LABS OF AMERICA, INC. is hereby issued TWO HUNDRED
THOUSAND PREFERRED SHARES fully paid and non-assessable Shares of the Capital
Stock of the above named Corporation transferable only on the books of the
Corporation by the holder hereof in person or by duly authorized Attorney upon
surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunder
affixed this 17th day of September A.D. 1996.
(SEAL)
/s/Xxxx X. Xxxxxxxxxx
------------------------------- ---------------------
President Secretary and C.O.O.
For Value Received ____________________________________________________ hereby
sell, assign and transfer unto
_______________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _______________________________________________________________________
Attorney to transfer the said Shares on the books of the within named
Corporation with full power of substitution in the premises.
Dated__________________________________________ 19_____________
In presence of ________________________________________________________
EXHIBIT D
MIOA SERIES B PREFERRED STOCK CERTIFICATE
NUMBER SHARES 200,000
HEART LABS OF AMERICA, INC.
Par Value $10.00 U.S.
THIS CERTIFIES THAT Westmark Group Holdings, Inc. is the registered owner of Two
hundred thousand Series B Preferred Shares transferable only on the books of the
Corporation by the holder hereof in person or by Attorney upon surrender of this
Certificate properly endorsed.
IN WITNESS WHEREOF, said Corporation has caused this Certificate to be signed by
its duly authorized officers and its Corporate Seal to be hereunto affixed this
20th day of December A.D. 1995.
(SEAL)
/s/ Xxxx Xxxxxx /s/ Xxxxxx X. Birmingham
---------------------------- ---------------------------
Secretary President
EXHIBIT E
PROMISSORY NOTE
BALLOON PROMISSORY NOTE
U. S. $ , 1997
--------------------------- --------------------------
FOR VALUE RECEIVED, the undersigned, WESTMARK GROUP HOLDINGS, INC., a Delaware
corporation having its principal offices ____________________________________
(the "Maker"), promises to pay to the order of MEDICAL INDUSTRIES OF AMERICA,
INC., a Florida corporation having its principal offices at 1903. S. Congress
Avenue, # 400, Xxxxxxx Xxxxx, Xxxxxxx 00000 (the "Payee"), the principal sum of
_________________ ($________) (the "Principal Amount").
The Principal Amount represents the amount owed by the Maker to the Payee
pursuant to that certain Settlement Agreement dated January 23, 1997 between the
Maker and the Payee (the "Settlement Agreement"), a copy of which is attached
hereto and incorporated herein.
Payments on this Note shall be made as follows:
1 1. Principal and Interest. Payments of principal and interest shall be
amortized over one hundred twenty (120) equal consecutive monthly installments
of __________________ dollars ($____________, with the first such payment due
and payable thirty (30) days from the date hereof and each successive payment
due and payable on the same day of each successive month thereafter for
thirty-five additional months. Thirty-six months from the date hereof (________,
2000) the entire outstanding principal balance and accrued but unpaid interest
shall be due and payable in full.
2 2. Late Fee. In the event that any payment of principal due under this Note is
not paid within thirty (30) days of its due date, the Maker shall pay to the
Payee a late fee equal to five percent (5%) of the amount of such late payment,
which shall be due immediately. Any interest or late fee due hereunder which is
not paid when due shall be automatically added to principal.
3 3. Voluntary Prepayments. The Maker may at any time prepay this Note, in
whole or in part, from time to time, without premium or penalty.
4 4. Payments. Except to the extent otherwise provided herein, all payments of
principal, interest, fees and other amounts to be made by Maker hereunder shall
be made in immediately available funds to the Payee, at the above address unless
otherwise notifies in writing, not later than 2:00 p.m. on the date on which
such payment shall become due. If any payment hereunder shall be due and payable
on a day which is not a business day, such payment shall be deemed due on the
next following business day.
The Maker, for itself and its successors and assigns, to the extent it may
lawfully do so, hereby expressly waives presentment, demand, protest, notice of
protest, diligence in collection or bringing suit and any and all rights of
setoff, deduction and counterclaim, and consents that the Payee may release or
surrender, exchange or substitute any personal property or other collateral now
held or which may hereafter be held as security for the payment of amounts due
hereunder without affecting the Maker's obligations hereunder.
This Note is entitled to the benefit of the security interests granted by the
maker to the Payee as set forth in Paragraph 1(a)(iv) of the Settlement
Agreement, which security interests are documented by a mortgage, security
agreement or other applicable method used to perfect security interests (the
"Security Agreements").
An "Event of Default" shall exist, and all amounts due hereunder shall become
immediately due and payable in full, (i) automatically in the case of the
occurrence of any Event of Default described below and (ii) at the election of
the Payee upon the occurrence of any other Event of Default:
A. The Maker shall fail to pay any principal or other sum due the Payee under
this Note within thirty (30) days when the same is due, whether at stated
maturity, by acceleration or otherwise;
B. Any default shall occur under a Security Agreement and remain uncured upon
the expiration of any applicable grace period provided for therein;
C. The Maker shall make a general assignment for the benefit of creditors, admit
is inability to pay its debt as they become due, be adjudicated bankrupt or
insolvent, file a petition in bankruptcy or seeking any arrangement,
composition, readjustment or similar relief under any present or future federal,
state or province law or regulation ("Debtor Relief Laws") or an answer admitted
or not contesting the material allegations of a petition filed against it in any
such proceeding, or seek, consent to or acquiesce in the appointment of a
trustee, receiver or other fiduciary for it or any of its assets;
D. Any proceeding against the Maker seeking an adjudication of bankruptcy or
insolvency or an agreement, composition, readjustment or similar relief under
any Debtor Relief Law shall remain undismissed or unstayed, or an appointment of
a trustee, receiver or other fiduciary for the Maker or any of its assets
without the consent or acquiescence of the Maker shall not be vacated, within
sixty (60) days after the commencement of such proceeding or the appointment of
such fiduciary;
2
Following an Event of Default, the Payee shall be entitled to exercise all
rights and remedies as it may have under this Note and otherwise at law or in
equity, including, without limitation, the rights and remedies of a secured
party. All of such rights and remedies shall be cumulative and may be exercised
from time to time, concurrently or separately and without any marshaling, n such
order as the Payee may determine. No delay or omission on the part of Payee in
exercising any such right or remedy shall operate as a waiver of such right or
remedy or any other right or remedy, nor shall any such delay or omission be
deemed to bar the exercise of any right or remedy at any future time. Any
amendment of this Note or waiver of any right or remedy with respect hereto
shall be effective only if set forth in a writing signed by both the holder of
this Note and the Maker. No waiver of any default shall affect the Payee's right
to exercise any right or remedy with respect to any different or subsequent
default.
If this Note shall not be paid when due and shall be placed by the holder hereof
in the hands of any attorney for collection, through legal proceedings or
otherwise, the non-prevailing party agrees to pay reasonable attorneys' fees to
the prevailing party in such action together with reasonable costs and expenses
of collection, including, without limitation, any such attorneys' fees, costs
and expenses relating to any dissolution, liquidation, insolvency, bankruptcy,
reorganization, readjustment of debt, receivership, attachment, levy,
foreclosure or similar proceedings affecting the Maker or any party to any
instrument or agreement securing this Note or any of their respective assets
("Related Proceedings"). All such amounts shall be added to principal as they
are incurred. Nothing in this Note shall be construed as preventing the Payee
from taking all lawful actions to protect its interests in the event that any
Related Proceedings should be instituted.
This Note shall be governed by and construed and enforced in accordance with the
laws of the State of Florida. The Maker hereby irrevocably consents and submits
to the jurisdiction of the courts sitting in Palm Beach County, Florida over the
enforcement of this Note or any collateral given by the Maker with respect to
the indebtedness under this Note, hereby waiving any objection to the venue of
such courts. The Maker hereby further waives personal service of process and
agrees that a summons and complaint commencing any proceeding in any such court
shall be properly served and shall confer personal jurisdiction if served by
registered or certified mail to the Maker at its address first set forth above
in this Note or at such other address for the Maker of which the holder of this
Note shall have received written notice mailed in similar manner by the Maker to
such holder at its address set forth in this Note or at such other address as
such holder may provide the Maker by mail in similar manner.
5. Assignment. Payee shall have the unconditional right to assign its rights
under this Note in its sole and absolute discretion.
3
IN WITNESS WHEREOF, the Maker has caused this Note to be executed as of the date
first above written.
WESTMARK GROUP HOLDINGS, INC.
By: /s/____________________________________
_______________________________________
(PRINT NAME)
Its: _______________________________________
4
COMPOSITE EXHIBIT F
OLD WESTMARK COMMON STOCK CERTIFICATES
RESTRICTIVE LEGEND ON REVERSE
WESTMARK
GROUP HOLDINGS, INC.
NUMBER 5506-1 INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE SHARES 368,896
50,000,000 SHARES AUTHORIZED
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT - HEART LABS OF AMERICA, INC. - CUSIP 960577 30 2
is the owner of **THREE HUNDRED SIXTY EIGHT THOUSAND EIGHT HUNDRED NINETY SIX
Fully Paid and Non-Assessable Shares of the $0.001 Par Value Common Stock of
Westmark Group Holdings, Inc.
transferable on the books of the Corporation by the holder hereof, in person or
by duly authorized attorney, upon surrender of this Certificate properly
endorsed or accompanied by a proper assignment. This Certificate and the shares
represented hereby are issued and shall be subject to all the provisions of the
Certificate of Incorporation and the Bylaws of the Corporation, and all
amendments thereto, copies of which are on file at the principal office of the
Corporation and the Transfer Agent, to all of which the holder of this
Certificate by acceptance hereof assents. This Certificate is not valid until
countersigned by the Transfer Agent.
IN WITNESS WHEREOF, the Corporation has caused the facsimile signatures of its
duly authorized officers and its facsimile seal to be hereunto affixed.
Dated: 8/1/96
/s/ Xxxxxx X. Birmingham /s/ Xxxx X. Xxxxxxxxxx
--------------------------------------- (SEAL) --------------------------
XXXXXX X. BIRMINGHAM, President XXXX XXXXXXXXXX, Secretary
COUNTERSIGNED
CORPORATE STOCK TRANSFER, INC.
000 - 00xx Xxxxxx, Xxxxxx, Xxxxxxxx 00000
BY_______________ /s/________________
_____________________________________
Transfer Agent Authorized Signature
Westmark Group Holdings, Inc.
Corporate Stock Transfer, Inc.
Transfer Fee: $12.00 Per Certificate
--------------------------------------------------------------------------------
The following abbreviations when used in the inscription on the
face of this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT _______ Custodian for _______
(Cust.) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gift to Minors
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
Additional abbreviations used although not in the above list
For value received _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
---------------------------------------------------
---------------------------------------------------
Please print or type name and address of assignee
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
--------------------------------------------------- Shares
of the Common Stock represented by the within Certificate and do
hereby irrevocably constitute and appoint
---------------------------------------------------
---------------------------------------------------
Attorney to transfer the said stock on the books of the within
named Corporation, with full power of substitution in the
premises.
Dated:___________________________ 19____
SIGNATURE GUARANTEED: X___________________________________
X___________________________________
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE SIGNATURE(S) MUST BE
GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings
and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO S.E.C. RULE 17 A 15.
RESTRICTIVE LEGEND ON REVERSE
WESTMARK
GROUP HOLDINGS, INC.
NUMBER 5294-4 INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE SHARES 1,298,388
15,000,000 SHARES AUTHORIZED
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT - HEART LABS OF AMERICA, INC. - CUSIP 960577 10 4
NEW CUSIP 000000000
is the owner of **ONE MILLION TWO HUNDRED NINETY EIGHT THOUSAND THREE HUNDRED EIGHTY EIGHT**
Fully Paid and Non-Assessable Shares of the No Par Value Common Stock of
Westmark Group Holdings, Inc.
transferable on the books of the Corporation by the holder hereof, in person or
by duly authorized attorney, upon surrender of this Certificate properly
endorsed or accompanied by a proper assignment. This Certificate and the shares
represented hereby are issued and shall be subject to all the provisions of the
Certificate of Incorporation and the Bylaws of the Corporation, and all
amendments thereto, copies of which are on file at the principal office of the
Corporation and the Transfer Agent, to all of which the holder of this
Certificate by acceptance hereof assents. This Certificate is not valid until
countersigned by the Transfer Agent.
IN WITNESS WHEREOF, the Corporation has caused the facsimile signatures of its
duly authorized officers and its facsimile seal to be hereunto affixed.
Dated: 12/18/95
/fs/ (SEAL) /fs/
----------------------------- -----------------------------------------
Xxxxx Xxxxx, Vice President Xxxxxxx X. Xxxxxxx, Chairman of the Board
COUNTERSIGNED
CORPORATE STOCK TRANSFER, INC.
000 - 00xx Xxxxxx, Xxxxxx, Xxxxxxxx 00000
BY_______/s/_________________________
_____________________________________
Transfer Agent Authorized Signature
Westmark Group Holdings, Inc.
Corporate Stock Transfer, Inc.
Transfer Fee: $12.00 Per Certificate
--------------------------------------------------------------------------------
The following abbreviations when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT_______ Custodian for______
(Cust.) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gift to Minors
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
Additional abbreviations used although not in the above list
For value received ______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
---------------------------------------------------
---------------------------------------------------
Please print or type name and address of assignee
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------Shares
of the Common Stock represented by the within Certificate
and do hereby irrevocably constitute and appoint
XXXX XXXXXX XXXXXXXX INC.
---------------------------------------------------
---------------------------------------------------
Attorney to transfer the said stock on the books of the within
named Corporation, with full power of substitution in the
premises.
Dated: December 20 1995 HEART LABS OF AMERICA, INC.
----------------- ---- BY ITS PRESIDENT
SIGNATURE GUARANTEED: X /s/
-------------------------
XXXXXX X. BIRMINGHAM
X
-------------------------
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE SIGNATURE(S) MUST BE
GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings
and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO S.E.C. RULE 17 A 15.
COMPOSITE EXHIBIT G
FORMS OF MUTUAL RELEASES
GENERAL RELEASE
KNOW ALL MEN BY THESE PRESENTS:
That MEDICAL INDUSTRIES OF AMERICA, INC., a Florida corporation
("MIOA"), for and in consideration of the sum of Ten Dollars ($10.00), or other
good and valuable consideration, received from or on behalf of WESTMARK GROUP
HOLDINGS, INC., a Delaware corporation ("Westmark"), the receipt and adequacy
whereof is hereby acknowledged,
HEREBY remises, releases, acquits, satisfies, and forever discharges
Westmark, and its predecessors and successors in interest, parents,
subsidiaries, officers, directors, employees and agents including counsel, of
and from all, and all manner of action and actions, cause and causes of action,
suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, executions, claims and demands
whatsoever, in law or in equity, which MIOA ever had, now has, or which any of
its predecessors and successors in interest, parents, subsidiaries, officers,
directors, employees and agents including counsel of MIOA, hereafter can, shall
or may have, whether or not presently known to MIOA, against Westmark, and its
predecessors and successors in interest, parents, subsidiaries, officers,
directors, employees and agents including counsel, for, upon or by reason of any
matter, cause or thing whatsoever, from the beginning of the world to the day of
these presents, except for Westmark's obligations provided for in the Exchange
Agreement between MIOA and Westmark of even date, and Exhibits E, H, I, and J
attached thereto.
IN WITNESS WHEREOF, the undersigned party has hereunto set its hand and
seal this 30th day of September 1998.
WITNESSES: MEDICAL INDUSTRIES OF AMERICA, INC., a
Florida corporation
Sign:_________________________ By:___________________________________
Name: E. Xxxxxxxx Xxxxx, III, Esq.
Print:________________________ Title: Sr. Vice President
Sign:_________________________
Print:________________________
1
STATE OF FLORIDA )
) ss.:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this _____________
day of _______________, 1998 by E. Xxxxxxxx Xxxxx, III, Esq., as Sr. Vice
President of Medical Industries of America, Inc., a Florida corporation, on
behalf of the corporation.
Notary:______________________________
[NOTARIAL SEAL] Print Name:__________________________
Notary Public, State of Florida
My commission expires:_______________
[ ] 1 Personally Known OR [ ] 2 Produced Identification
Type of Identification Produced: ____________________________
2
GENERAL RELEASE
KNOW ALL MEN BY THESE PRESENTS:
That WESTMARK GROUP HOLDINGS, INC., a Delaware corporation
("Westmark"), for and in consideration of the sum of Ten Dollars ($10.00), or
other good and valuable consideration, received from or on behalf of MEDICAL
INDUSTRIES OF AMERICA, INC., a Florida corporation ("MIOA"), the receipt and
adequacy whereof is hereby acknowledged,
HEREBY remises, releases, acquits, satisfies, and forever discharges
MIOA, and its predecessors and successors in interest, parents, subsidiaries,
officers, directors, employees and agents including counsel, of and from all,
and all manner of action and actions, cause and causes of action, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, executions, claims and demands whatsoever, in law or in equity, which
Westmark ever had, now has, or which any of its predecessors and successors in
interest, parents, subsidiaries, officers, directors, employees and agents
including counsel of Westmark, hereafter can, shall or may have, whether or not
presently known to Westmark, against MIOA, and its predecessors and successors
in interest, parents, subsidiaries, officers, directors, employees and agents
including counsel, for, upon or by reason of any matter, cause or thing
whatsoever, from the beginning of the world to the day of these presents, except
for MIOA's obligations provided for in the Exchange Agreement between Westmark
and MIOA of even date, and Exhibits H, I, and J attached thereto.
IN WITNESS WHEREOF, the undersigned party has hereunto set its hand and
seal this 30th day of September 1998.
WITNESSES: WESTMARK GROUP HOLDINGS, INC.,
a Delaware corporation
Sign: __________________________ By:________________________________
Name: Xxxx X. Xxxxxxxxxx
Print: __________________________ Title: President
Sign: __________________________
Print: __________________________
1
STATE OF FLORIDA )
) ss.:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this_____________
day of _______________ 1998 by Xxxx X. Xxxxxxxxxx, as President 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:___________________
[ ] 3 Personally Known OR [ ] 4 Produced Identification
Type of Identification Produced: ____________________________
2
EXHIBIT H
FORM OF
SERIES B ARTICLES OF AMENDMENT
1
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
MEDICAL INDUSTRIES OF AMERICA, INC.
Pursuant to the provisions of Section 607.1006 of the Florida Business
Corporation Act (1993), the undersigned corporation adopts the following
Articles of Amendment to its Articles of Incorporation:
1. The name of the corporation is Medical Industries of America, Inc.
(the "Corporation").
2. The following amendment to the Articles of Incorporation was adopted
by the Directors of the Corporation without shareholder action since shareholder
action was not required under the Articles of Amendment, as amended. The
following amendment to the Articles of Incorporation was adopted by the
Directors of the Corporation by the Unanimous Written Consent of Directors of
the Corporation in Lieu of a Special Meeting dated September ___, 1998, in the
manner prescribed by Sections 607.1002 and 607.1006 of the Florida Business
Corporation Act:
Section C.2 of ARTICLE III of the Articles of Incorporation of the
Corporation is hereby amended in its entirety to read as follows:
"2. Series B Preferred Stock:
a. Designation and Rank. Two hundred thousand (200,000)
shares of the Corporation's authorized preferred stock, no par value,
are hereby designated as "Series B Convertible Preferred Stock," all of
which shares shall rank equally and be identical in all respects. The
Series B Convertible Preferred Stock is sometimes referred to herein as
the "Series B Preferred Stock."
b. Dividends.
i. None.
c. Redemption. The shares of Series B Preferred Stock shall
be subject to redemption as follows:
i. The Corporation shall have the right, in its
sole discretion, upon receipt of a Notice of Conversion pursuant to
Section 2.d., or earlier without receipt of any notice of conversion
upon 10 days written notice (the "Notice of Redemption") to the holders
of the Series B Preferred Stock, to redeem in whole or in part any
shares of Series B Preferred Stock submitted for conversion,
immediately prior to conversion, or otherwise outstanding and subject
to a right of conversion.
1
ii. The Redemption Payment per Share for each
redemption of the Series B Preferred Stock shall be at a stated value
of $10.00 per share. The date of receipt by the Corporation of the
Notice of Conversion or the date of mailing by the Corporation of a
Notice of Redemption, as the case may be, shall be the "Date of
Redemption." The Corporation shall have the right to satisfy its
obligations to make the Redemption Payment per Share with shares of Old
Westmark Common Stock or New Westmark Common Stock (as defined in the
Exchange Agreement between the Corporation and Westmark Group Holdings,
Inc. dated September 30, 1998) based upon the Weighted Average Market
Price (as defined in the next two sentences) of Westmark Group
Holdings, Inc. ("WGHI") common stock for the twenty business days
preceeding the Date of Redemption. Market Price for purposes of this
paragraph shall be the last reported sales price regular way or, in
case no such reported sales takes place on such day, the average of the
closing bid and asked prices regular way, on the principal national
securities exchange in the United States on which WGHI common stock is
listed or admitted to trading, or if it is not listed or admitted to
trading on any such national securities exchange, the average of the
highest reported bid and lowest reported asked price as furnished by
the National Association of Securities Dealers, Inc. through its
automated quotation system ("Nasdaq") or a similar organization if
Nasdaq is no longer reporting such information. Weighted Average Market
Price for purposes of this Paragraph shall be the quotient of the sum
of the products of each of the last twenty business days' Market Price
preceeding the Date of Redemption multiplied by the number of shares
sold for each such day, divided by the total number of shares sold
during the twenty business days. If less than all of the outstanding
shares of the Series B Preferred Stock are redeemed at any time under
this Section 2.c., then the shares of Series B Preferred Stock held by
each holder of record shall be redeemed pro rata, according to the
number of shares of Series B Preferred Stock held by such holder,
subject, however, to such adjustment as may be equitably determined by
the Corporation in order to avoid the redemption of fractional shares.
iii. The Corporation shall effect each such
redemption by giving notice of its election to redeem, by facsimile
within one (1) business day of receipt of a Notice of Conversion from a
Subscriber, or upon the giving of a Notice of Redemption by the Company
to a Subscriber, with a copy by two-day courier, to the holder of
shares of Series B Preferred
2
Stock submitted for the conversion at the address and facsimile number
of such holder appearing in the Corporation's register for the Series B
Preferred Stock. Such Notice of Redemption shall indicate whether the
Corporation will redeem all or part of the shares of Series B Preferred
Stock submitted for conversion and the applicable redemption price. The
Corporation shall not be entitled to send any Notice of Redemption and
begin the redemption procedure unless it has the full amount of the
redemption price, in cash available in a demand or other immediately
available account in a bank or similar financial institution on the
date the redemption notice is sent to shareholders, or shares of
Westmark Old Common Stock or Westmark New Common Stock based upon the
Weighted Average Market Price (as defined in Section 2.c.ii.).
The Redemption Payment per Share shall be paid to the
holder of shares of Series B Preferred Stock redeemed within ten (10)
business days of the delivery of the Notice of Redemption to such
holder; provided, however, that the Corporation shall not be obligated
to deliver any portion of the Redemption Payment per Share unless
either the certificate(s) evidencing the shares of Series B Preferred
Stock are delivered to the Corporation or its transfer agent or the
holder notifies the Corporation or its transfer agent that such
certificate(s) have been lost, stolen, or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation
from any loss incurred by it in connection with such certificate(s).
d. Conversion. The holders of shares of Series B Preferred
Stock shall have conversion rights as follows:
i. Upon the earlier of the filing of the WGHI 1999
Form 10-KSB or the sale of all the Old Westmark Common Stock and the
New Westmark Common Stock by the Corporation, each Share of Series B
Preferred Stock will be convertible, at the option of the holder
thereof, for a period of ten (10) years from the date of issuance,
exercisable by giving written notice to the Corporation not less than
thirty (30) days prior to such Conversion Date (the "Notice of
Conversion"), subject to adjustment as provided in the following
paragraphs, into that number of shares of Common Stock equal to $10.00
(the "Stated Value") divided by the average of the Common Stock's bid
and ask price as listed by NASDAQ for the thirty (30) business days
prior to receipt by the Corporation of receipt of a Notice of
Conversion from the holder (the "Conversion Ratio").
3
ii. In the event that any dividends on the
outstanding Common Stock shall have been declared prior to, and shall
be payable subsequent to the conversion of such Series B Preferred
Stock, such dividends shall not be payable on any Common Stock into
which such Series B Preferred Stock shall have been converted.
iii. The Board of Directors of the Corporation
shall reserve a sufficient number of shares of Common Stock for
issuance upon conversion of shares of Series B Preferred Stock into
Common Stock as aforesaid.
iv. In the event that the Corporation shall at any
time or from time to time change the then outstanding shares of Common
Stock into the same or different number of shares or units of any other
class or classes of capital stock or other securities, then,
notwithstanding the provisions thereof, from and after the first such
change each holder of shares of Series B Preferred Stock shall, upon
the conversion of such shares, be entitled to receive that number of
shares or units of such other stock or security which such holder would
then have if he (1) had, prior to the first such change, converted into
shares of Common Stock, pursuant to the provisions hereof, a number of
shares of Series B Preferred Stock equal to the number then being
converted by him, and (2) had held the shares which he would have so
received or any other shares or units into which the same would
subsequently have been changed if they had then been outstanding until
the day of the conversion of the shares of Series B Preferred Stock
then being converted.
v. The Conversion Ratio shall be appropriately
adjusted to eliminate any dilution of holders of Series B Preferred
Stock by reason of any of the following events: (1) if the Corporation
pays a dividend or makes a distribution in shares of Common Stock or
other class of capital stock to holders of Common Stock, or (2) if the
Corporation subdivides its outstanding Common Stock into a greater
number of shares or combines its outstanding Common Stock into a small
number of shares.
e. Voting and Preemptive Rights.
i. Except as otherwise specifically provided by the
Florida Business Corporation Act, the holders of Series B Preferred
Stock shall not be entitled to vote on any matters required or
permitted to be submitted to stockholders of the Corporation for their
approval. Notwithstanding the foregoing, the affirmative vote or
written consent of the holders of a majority of the Series B Preferred
Stock outstanding from
4
time to time shall be required for the amendment of the Corporation's
Articles of Incorporation to authorize the issuance of additional
shares of Series B Preferred Stock.
ii. The holders of shares of Series B Preferred
Stock shall have no preemptive rights in connection with any security
of any kind which the Corporation shall at any time issue or be
authorized to issue.
f. Liquidation. The Series B Preferred Stock shall be
preferred upon liquidation over the Common Stock and any other class or
classes of stock of the Corporation (but shall rank in parity with any
other class of preferred stock of the Corporation that so provides), so
that the holders of shares of Series B Preferred Stock shall be
entitled to be paid the Stated Value before any distribution is made to
the holders of the Common Stock and junior stock upon the voluntary or
involuntary dissolution, liquidation or winding-up of the Corporation.
If, upon any such liquidation, dissolution or winding-up of the
Corporation, its net assets shall be insufficient to permit the payment
in full of the amounts to which the holders of all outstanding shares
of Series B Preferred Stock are entitled as above provided, the entire
net assets of the Corporation remaining shall be distributed among the
holders of shares of Series B Preferred Stock in amounts proportionate
to the full preferential amounts to which they and holders of shares of
preferred stock ranking in parity with the Series B Preferred Stock as
to rights and preferences are respectively entitled. For the purpose of
this Section f., the voluntary sale, lease, exchange or transfer, for
cash, shares of stock, securities or other consideration, of all or
substantially all the Corporation's property or assets to, or its
consolidation or merger with, one or more corporations shall not be
deemed to be a liquidation, dissolution or winding-up of Corporation,
voluntary or involuntary.
g. Reacquired Shares. Any shares of Series B Preferred Stock
that have been converted into shares of Common Stock or issued and
subsequently reacquired by the Corporation or redeemed or purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such
Shares upon their cancellation shall become authorized but unissued
shares of the preferred stock, no par value, of the Corporation and may
be reissued as part of a new series of preferred stock of the
Corporation to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set
forth in the Corporation's Articles of Incorporation."
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WGHI-MIOA\Warrant\DPF\EXECUTION D
3. Except as hereby amended, the Articles of Incorporation of the
Corporation shall remain the same.
MEDICAL INDUSTRIES OF AMERICA, INC.,
a Florida corporation
By:___________________________________
E. Xxxxxxxx Xxxxx, III, Esq.
Sr. Vice President
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EXHIBIT I
FORM OF WARRANT
WGHI-MIOA\Warrant\DPF\EXECUTION D
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SHARES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT. NEITHER SUCH WARRANTS
NOR SUCH SHARES MAY BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH SUCH ACT.
WARRANT TO PURCHASE
100,000 SHARES OF COMMON STOCK,
PAR VALUE $0.005 PER SHARE,
OF
WESTMARK GROUP HOLDINGS, INC.
This Certifies that, for and in consideration of $10.00 and other good
and valuable consideration, MEDICAL INDUSTRIES OF AMERICA, INC. ("MIOA"), or its
assigns (collectively, the "Warrantholder"), is entitled to purchase from
Westmark Group Holdings, Inc., a corporation incorporated under the laws of the
State of Delaware (the "Corporation"), subject to the terms and conditions
hereof, at any time at or after 9:00 A.M., Florida time, on September 30, 1998,
the date of execution of the Exchange Agreement between the Corporation and
MIOA, and before 5:00 P.M., Florida time on the Expiration Date (as defined
herein), the number of fully paid and nonassessable shares of Common Stock, par
value $0.005 per share, of the Corporation stated above at the Exercise Price
(as defined herein).
ARTICLE I
Section 1.01: Definition of Terms. As used in this Warrant, the
following capitalized terms shall have the following respective meanings:
WGHI-MIOA\Warrant\DPF\EXECUTION D
(h) Business Day: A day other than a Saturday, Sunday or other day
on which banks in the State of Florida are authorized by law to remain closed.
(i) Common Stock: Common Stock, $0.005 par value per share, of the
Corporation.
(j) Common Stock Equivalents: Securities that are convertible into,
or exercisable or exchangeable for, shares of Common Stock.
(k) Exercise Price: $3.25 per Warrant Share as such price may be
adjusted from time to time pursuant to Article III hereof.
(l) Expiration Date: 5:00 P.M., Florida time, on the second
anniversary of the Initial Investment Date.
(m) Initial Investment Date: September 30, 1998, the date of
execution of the Exchange Agreement between the Corporation and MIOA.
(n) Person: An individual, partnership, joint venture, corporation,
trust, unincorporated organization or government of any department or agency
thereof.
(o) Sale of the Corporation: A consolidation or merger of the
Corporation with or into any other corporation or corporations (other than a
consolidation or merger in which the Corporation is the continuing Corporation),
or a sale, conveyance or disposition of all or substantially all of the assets
of the Corporation or the effectuation by the Corporation of a transaction or
series of related transactions in which more than fifty (50%) percent of the
voting power of the Corporation is disposed of.
(p) Warrant Shares: Shares of Class A Common Stock and/or securities
purchased or purchasable upon exercise of this Warrant.
ARTICLE II
DURATION AND EXERCISE OF WARRANT
Section 2.01: Duration of Warrant. The Warrantholder may exercise this
Warrant at any time and from time to time after 9:00 A.M., Florida time, on the
Initial Investment Date and before 5:00 P.M., Florida time, on the Expiration
Date. If this Warrant is not exercised on the Expiration Date, it shall become
void, and all rights hereunder shall thereupon cease.
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WGHI-MIOA\Warrant\DPF\EXECUTION D
Section 2.02: Exercise of Warrant.
(a) The Warrantholder may exercise this Warrant, in whole or in part,
by presentation and surrender of this Warrant to the Corporation at its
principal corporate office or at the office of its stock transfer agent, if any,
with the subscription form attached hereto as Exhibit A (the "Subscription
Form") duly executed and accompanied by payment of the full Exercise Price for
each Warrant Share to be purchased.
(b) Upon receipt of this Warrant with the Subscription Form fully
executed and accompanied by payment of the aggregate Exercise Price for the
Warrant Shares for which this Warrant is then being exercised, the Corporation
shall cause to be issued certificates for the total number of whole shares of
Common Stock for which this Warrant is being exercised in such denominations as
are requested for delivery to the Warrantholder registered in the name of the
Warrantholder or its nominee, and the Corporation shall thereupon deliver such
certificates to the Warrantholder. The Warrantholder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Corporation shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the Warrantholder.
(c) In lieu of exercising the Warrant in the manner set forth in
sub-paragraph 2.03(a) and (b) above, this Warrant may be exercised without
payment of any other consideration, commission, or remuneration, by presentation
and surrender of the Warrant to the Corporation, together with a written notice
of the Warrantholder's intention to effect a cashless exercise ("Notice of
Cashless Exercise") and the Subscription Form, duly executed. In the event of a
Cashless Exercise, the number of shares to be issued in exchange for the Warrant
will be computed by multiplying the number of Warrant Shares to which the
Warrantholder would otherwise be entitled (upon payment of the aggregate
Exercise Price) by a fraction, the numerator of which shall be the difference
between the Closing Bid Price (as defined in the next sentence) and the Warrant
Exercise Price, and the denominator of which shall be the Closing Bid Price. The
Closing Bid Price means the closing bid price per share of the Common Stock on
the last business day prior to the date of receipt of the Warrant, the Notice of
Cashless Exercise, and the Subscription Form, on the principal national
securities exchange in the United States on which the Common Stock is listed or
admitted to trading, or if the Common Stock is not listed or admitted to trading
on any such national securities exchange, the average of the highest reported
bid and lowest reported asked price, on such day, as furnished by the National
Association of Securities Dealers, Inc. ("Nasdaq") through its automated
quotation system or a similar organization if Nasdaq is no longer reporting such
information.
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WGHI-MIOA\Warrant\DPF\EXECUTION D
(d) In case the Warrantholder shall exercise this Warrant with respect
to less than all of the Warrant Shares that may be purchased under this Warrant,
the Corporation shall execute a new warrant in the form of this Warrant for the
balance of such Warrant Shares and deliver such new warrant to the
Warrantholder.
(e) The Corporation shall pay any and all stock transfer and similar
taxes which may be payable in respect of the issue of any Warrant Shares to the
Warrantholder.
Section 2.03: Reservation of Shares. The Corporation hereby agrees that
at all times there shall be reserved for issuance and delivery upon exercise of
this Warrant such number of shares of Common Stock from time to time issuable
upon exercise of this Warrant. All such shares shall be duly authorized, and
when issued upon such exercise, shall be validly issued, fully paid and
nonassessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale and free and clear of all preemptive
rights.
Section 2.04: Fractional Shares. The Corporation shall not be required
to issue any fraction of a share of its capital stock in connection with the
exercise of this Warrant, and in any case where the Warrantholder would, except
for the provisions of this Section 2.04, be entitled under the terms of this
Warrant to receive a fraction of a share upon the exercise of this Warrant, the
Corporation shall, upon the exercise of this Warrant and receipt of the Exercise
Price, issue the largest number of whole shares purchasable upon exercise of
this Warrant. The Corporation shall, in lieu of issuing any fractional share pay
the Warrantholder a sum in cash equal to the fair market value of any such
fractional interest as determined in good faith by the Corporation.
ARTICLE III
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article III.
Section 3.01: Mechanical Adjustments.
(a) In case the Corporation shall at any time or from time to time
after the date hereof (i) pay any dividend, or make any distribution, on the
outstanding shares of Common Stock (or Common Stock Equivalents) in shares of
Common Stock, (ii) subdivide the outstanding shares of Common Stock, (iii)
combine the outstanding shares of Common Stock into a smaller number of shares
or (iv) issue by
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WGHI-MIOA\Warrant\DPF\EXECUTION D
reclassification of the shares of Common Stock any shares of capital stock of
the Corporation, then and in each such case, the Exercise Price in effect
immediately prior to such event or the record date therefor, whichever is
earlier, shall be adjusted so that the Warrantholder shall be entitled to
receive the number and type of shares of Common Stock which such Warrantholder
would have owned or have been entitled to receive after the happening of any of
the events described above, had such Warrant been converted into Common Stock
immediately prior to the happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this Section 3.01(a) shall
become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of such subdivision, reclassification or
combination, at the close of business on the day upon which such corporate
action becomes effective.
(b) If the Corporation shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution and shall thereafter, and before such dividend or distribution is
paid or delivered to stockholders entitled thereto, legally abandon its plan to
pay or deliver such dividend or distribution, then no adjustment in the Exercise
Price then in effect shall be made by reason of the taking of such record, and
any such adjustment previously made as a result of the taking of such record
shall be reversed.
(c) As used in this Section 3.01 the term "Common Stock" shall mean and
include the Corporation's authorized Common Stock, par value $0.005 per share,
as constituted on the date hereof, and shall also include any capital stock of
any class of the Corporation thereafter authorized which shall neither be
limited to a fixed sum or percentage in respect of the rights of the holders
thereof to participate in dividends nor be entitled to a preference in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation.
(d) In the case of a Sale of the Corporation or a proposed
reorganization of the Corporation or a proposed reclassification of the capital
stock of the Corporation (except a transaction for which provision for
adjustment is otherwise made in this Section 3.01), the Warrant shall thereafter
be exercisable into the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock of the
Corporation deliverable upon exercise of such Warrant would have been entitled
upon such Sale of the Corporation, reorganization or reclassification; and, in
any such case, appropriate adjustment (as determined by the Board of Directors)
shall be made in the application of the provisions herein set forth with respect
to the rights and interest thereafter of the holders of the Warrant, to the end
that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the applicable conversion price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the exercise of
the Warrant. The Corporation shall not effect any such Sale of the Corporation
unless prior to or simultaneously with the consummation thereof
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WGHI-MIOA\Warrant\DPF\EXECUTION D
the successor Corporation or purchaser, as the case may be, shall assume by
written instrument the obligation to deliver to the Warrantholder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
each such holder is entitled to receive.
(e) Whenever the Exercise Price payable upon exercise of each Warrant
is adjusted pursuant to paragraph (a) of this Section 3.01, the Warrant Shares
shall simultaneously be adjusted by multiplying the number of Warrant Shares
initially issuable upon exercise of each Warrant (as set forth on the front page
of this Warrant) by $3.25 and dividing the product so obtained by the Exercise
Price, as adjusted.
(f) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least one cent ($.01) in
such price; provided, however, that any adjustments which by reason of this
paragraph (h) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
3.01 shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. Notwithstanding anything in this Section 3.01 to the
contrary, the Exercise Price shall not be reduced to less than the then existing
par value of the Common Stock as a result of any adjustment made hereunder.
(g) In the event that at any time, as a result of any adjustment made
pursuant to Section 3.01(a), the Warrantholder thereafter shall become entitled
to receive any shares of capital stock of the Corporation other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Section 3.01(a).
Section 3.02: Notices of Adjustment. Whenever the number of Warrant
Shares or the Exercise Price is adjusted as herein provided, the Corporation
shall prepare and deliver forthwith to the Warrantholder a certificate signed by
its President or a Vice President, or by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary, setting forth the adjusted number of
shares purchasable upon the exercise of this Warrant and the Exercise Price of
such shares after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which adjustment
was made.
Section 3.03: Form of Warrant After Adjustments. The form of this
Warrant need not be changed because of any adjustments in the Exercise Price or
the number or kind of the Warrant Shares, and Warrants theretofore or thereafter
issued may continue to express the same price and number and kind of shares as
are stated in this Warrant, as initially issued.
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WGHI-MIOA\Warrant\DPF\EXECUTION D
Section 3.04: Treatment of Warrantholder. Prior to due presentment for
registration of transfer of this Warrant, the Corporation may deem and treat the
Warrantholder as the absolute owner of this Warrant (notwithstanding any
notation of ownership or other writing hereon) for all purposes and shall not be
affected by any notice to the contrary.
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
Section 4.01: No Rights as Shareholders; Notice to Warrantholders.
Nothing contained in this Warrant shall be construed as conferring upon the
Warrantholder the right to vote or to receive dividends or to consent or to
receive notice as a shareholder in respect of any meeting of shareholders for
the election of directors of the Corporation or of any other matter, or any
rights whatsoever as shareholders of the Corporation. The Corporation shall give
notice to the Warrantholder by certified mail if at any time prior to the
expiration or exercise in full of the Warrants, any of the following events
shall occur:
(a) the Corporation shall declare any dividend or distribution with
respect to its capital stock;
(b) a dissolution, liquidation or winding up of the Corporation shall
be proposed; or
(c) a capital reorganization or reclassification of the capital stock
of the Corporation, any consolidation or merger of the Corporation with or into
another corporation, any transaction or series of transactions in which more
than fifty percent (50%) of the voting securities of the Corporation are
transferred to another person, or of any sale or conveyance to another
corporation of the property of the Corporation as an entirety or substantially
as an entirety.
Such giving of notice shall be initiated at least ten Business Days
prior to the date fixed as a record date or effective date or the date of
closing of the Corporation's stock transfer books for the determination of the
shareholders entitled to such dividend or distribution, or for the determination
of the shareholders entitled to vote on such proposed merger, consolidation,
sale, conveyance, dissolution, liquidation or winding up. Such notice shall
specify such record date or the date of closing the stock transfer books, as the
case may be.
Section 4.02: Lost, Stolen, Mutilated or Destroyed Warrants. If this
Warrant is lost, stolen, mutilated or destroyed, the Corporation may, on such
reasonable terms as to indemnity or otherwise as it may in its reasonable
discretion impose (which shall, in
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WGHI-MIOA\Warrant\DPF\EXECUTION D
the case of a mutilated Warrant, include the surrender thereof), issue a new
Warrant of like denomination and tenor as, and in substitution for, this
Warrant.
ARTICLE V
SPLIT-UP, COMBINATION,
EXCHANGE AND TRANSFER OF WARRANTS
Section 5.01: Split-Up, Combination, Exchange and Transfer of Warrants.
Subject to the provisions of Section 5.02 hereof, this warrant may be split up,
combined or exchanged for another Warrant or Warrants containing the same terms
to purchase a like aggregate number of Warrant Shares. If the Warrantholder
desires to split up, combine or exchange this Warrant, the Warrantholder shall
make such request in writing delivered to the Corporation and shall surrender to
the Corporation this Warrant and any other Warrants to be so split-up, combined
or exchanged. Upon any such surrender for a split-up, combination or exchange,
the Corporation shall execute and deliver to the person entitled thereto a
Warrant or Warrants, as the case may be, as so requested. The Corporation shall
not be required to effect any split-up, combination or exchange which will
result in the issuance of a Warrant entitling the Warrantholder to purchase upon
exercise a fraction of a share of Common Stock or a fractional Warrant. The
Corporation may require such Warrantholder to pay a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any split-up,
combination or exchange of Warrants.
Section 5.02: Transfer. This Warrant and all rights hereunder may be
sold, transferred or otherwise disposed of, in whole or in part, to any person
in accordance with and subject to the provisions of the Securities Act of 1933,
as amended (the "Securities Act"), and the rules and regulations promulgated
thereunder. Upon the delivery to the Corporation at its principal corporate
office of this Warrant along with a duly completed Assignment Form substantially
in the form of Exhibit B hereto, the Corporation shall execute and deliver a new
Warrant in the form of this Warrant, but registered in the name of the
transferee, to purchase the number of Warrant Shares assigned to the transferee.
In case the Warrantholder shall assign this Warrant with respect to less than
all of the Warrant Shares that may be purchased under this Warrant, the
Corporation shall execute a new warrant in the form of this Warrant for the
balance of such Warrant Shares and deliver such new warrant to the
Warrantholder.
Section 5.03: Restrictive Legend. Each Warrant Share issued upon
exercise of this Warrant shall bear a legend containing the following words:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD,
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WGHI-MIOA\Warrant\DPF\EXECUTION D
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH SUCH ACT."
The requirement that the above legend be placed upon certificates evidencing any
such securities shall cease and terminate upon the earliest of the following
events: (i) when such shares are transferred in an underwritten public offering,
(ii) when such shares are transferred pursuant to Rule 144 under the Securities
Act or (iii) when such shares are transferred in any other transaction if the
seller delivers to the Corporation an opinion of its counsel, which counsel and
opinion shall be reasonably satisfactory to the Corporation, or a "no-action"
letter from the Staff of the Securities and Exchange Commission, in either case
to the effect that such legend is no longer necessary in order to protect the
Corporation against a violation by it of the Securities Act upon any sale or
other disposition of such shares without registration thereunder. Upon the
occurrence of such event, the Corporation, upon the surrender of certificates
containing such legend, shall, at its own expense, deliver to the holder of any
such securities as to which the requirement for such legend shall have
terminated, one or more new certificates evidencing such securities not bearing
such legend.
ARTICLE VI
OTHER MATTERS
Section 6.01: Successors and Assigns. The terms and provisions of this
Warrant shall bind and inure to the benefit of the Warrantholder and its
successors and assigns.
Section 6.02: No Inconsistent Agreements. The Corporation will not on
or after the date of this Warrant enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Warrantholder or
otherwise conflicts with the provisions hereof. The rights granted to the
Warrantholder hereunder do not in any way conflict with and are not inconsistent
with the rights granted to holders of the Corporation's securities under any
other agreements.
Section 6.03: Entire Agreement. This Warrant and the Exhibits hereto
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior and contemporaneous arrangements or
understandings with respect thereto.
Section 6.04: Amendments and Waivers. The terms and provisions of this
Warrant, including the provisions of this sentence, may be modified or amended,
or any of the provisions hereof waived, temporarily or permanently, pursuant to
the written consent of the Corporation and the Warrantholder.
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WGHI-MIOA\Warrant\DPF\EXECUTION D
Section 6.05: Counterparts. This Warrant may be executed in any number
of counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
Section 6.06: Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Florida without giving
effect to the principles of conflicts of law. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of Florida and of the United States of America, in
each case located in the County of Florida, for any action, proceeding or
investigation in any court or before any governmental authority ("Litigation")
arising out of or relating to this Warrant and the transactions contemplated
hereby (and agrees not to commence any Litigation relating thereto except in
such courts), and further agrees that service of any process, summons, notice or
document by U.S. registered mail to its respective address set forth in this
Warrant shall be effective service of process for any Litigation brought against
it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Warrant or the transactions contemplated hereby in the
courts of the State of Florida or the United States of America, in each case
located in the County of Palm Beach, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum.
Section 6.07: Notice. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
(i) if to the Corporation. to:
Westmark Group Holdings, Inc.
0000 X. Xxxxxxx Xxxxxxx
Xxxx Xxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx, Chief Executive Officer
with a copy to:
Xxxxxxxxx Traurig, P.A.
000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000 Xxxx
Xxxx Xxxx Xxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
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(ii) if to the Warrantholder, to:
Medical Industries of America, Inc.
0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, President
All such notices, requests, consents and other communications shall be
deemed to have been given when received.
Section 6.08: Severability. Whenever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid, but if
any provision of this Warrant is held to be invalid or unenforceable in any
respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Warrant.
IN WITNESS WHEREOF, this Warrant has been duly executed by the
Corporation under its corporate seal as of the 30th day of September, 1998.
WESTMARK GROUP HOLDINGS, INC.
By:___________________________________
Name: XXXX X. XXXXXXXXXX
Title: Chief Executive Officer
Attest:______________________________
Name: XXXXXX XXXXX
Title: Chief Financial Officer
11
Exhibit A to Warrant
--------------------
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
WESTMARK GROUP HOLDINGS, INC.
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, _____________1 shares of
Class A Common Stock covered by the within Warrant and requests that the
certificates for such shares be issued in the name of and delivered to,
_______________ whose address is ______________. The undersigned herewith makes
payment in full therefor of the Exercise Price therefor (or $____________ in
the aggregate).
___________________________________________________
(Signature must conform in all respects to name of
holder as specified on the face of Warrant)
___________________________________________________
(Street Address)
___________________________________________________
(City) (State) (Zip Code)
____________________________
1 Insert here the number of shares called for on the face of this Warrant
(or, in the case of partial exercise, the portion thereof as to which
this Warrant is being exercised). In the case of partial exercise, a
new Warrant or Warrants will be issued and delivered, representing the
unexercised portion of the Warrant, to the holder surrendering the
Warrant.
Exhibit B to Warrant
--------------------
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto ____________________ the right
represented by such Warrant to purchase ___________________2 shares of Common
Stock of Westmark Group Holdings, Inc. to which such Warrant relates and
appoints _________________ Attorney to make such transfer on the books of
Westmark Group Holdings, Inc. maintained for such purpose, with full power of
substitution in the premises.
Dated: _______________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of Warrant)
_______________________________________
(Street Address)
_______________________________________
(City) (State) (Zip Code)
Signed in the presence of:
_____________________________
_____________________________
_____________________________
_______________________
2 Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial assignment, the portion thereof as to
which this Warrant is being assigned). In the case of a partial
assignment, a new Warrant or Warrants will be issued and delivered,
representing the unassigned portion of the Warrant, to the holder
surrendering the Warrant.
EXHIBIT J
SECURITY AGREEMENT
SECURITY AGREEMENT
------------------
THIS AGREEMENT (the "Agreement") is made this 30th day of September,
1998, by and between MEDICAL INDUSTRIES OF AMERICA, INC. a Florida corporation
("MIOA"), and WESTMARK GROUP HOLDINGS, INC., a Delaware corporation
("Westmark").
Q. This Security Agreement is provided for in Paragraph 9(f) of the
Exchange Agreement of even date between Westmark and MIOA (the "Exchange
Agreement") of which this Agreement appears as an exhibit. All capitalized terms
in this Security Agreement shall have the same meaning as set forth in the
Exchange Agreement unless the context requires otherwise. Pursuant to Paragraph
9(f) of the Exchange Agreement, Westmark has agreed to secure its potential
obligations to MIOA pursuant to Paragraph 9 of the Exchange Agreement (the
"Potential Debt") with (1) the remaining 27,250 shares of Series B Preferred
Stock owned by Westmark (the "Stock") and (2) a Contingency Reserve Fund
described herein.
R. To secure payment of the Potential Debt, Westmark has agreed to
(grant to MIOA a security interest in the (1) the Stock, and (2) the Contingency
Reserve Fund (collectively the "Collateral").
TERMS OF AGREEMENT
------------------
NOW, THEREFORE, in consideration of the promises herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. To secure (a) payment of the Debt, Westmark hereby grants to MIOA
a security interest in all of the Collateral, including the Contingency Reserve
Fund described as follows: On October 31, 1998, and on the last day of each
month thereafter through March of 1999, WGHI shall deposit the sum of $50,000
each month in an interest bearing money market account as a contingency reserve
fund for prospective repurchase obligations set forth in Paragraphs 9(b), (c)
and (d) of the Exchange Agreement between Westmark and MIOA of even date. Said
contingent repurchase obligations shall also be secured by the remaining 27,250
shares of Series B Preferred Stock owned by Westmark with an agreed fixed value
of $272,500. Westmark will not be obligated to make further deposits into the
reserve account unless and until Westmark becomes obligated to make any of the
contingent repurchases pursuant to paragraph 9(b), (c) and (d) of the Exchange
Agreement. If, as a result of any repurchase of common stock by Westmark, the
reserve account balance, including the value of the aforementioned Preferred
shares (calculated at $10.00 per share), falls below $333,000, Westmark will
reinstate monthly deposits in the sum of $50,000, or such lesser amount as may
be required, until the reserve account balance, including
MIOA Preferred Stock owned by Westmark is equal to $333,000. Interest accrued on
the Contingency Reserve Account during periods of time when the balance equals
or exceeds $333,000 shall be paid to Westmark immediately upon receipt.
2. The security interest in the Collateral shall be a first lien
security interest subordinate to no other liens.
3. The original Series B Preferred Stock certificates and the
Contingency Reserve Fund representing all of the Collateral shall be held on
behalf of MIOA by Xxxxxxxxx Xxxxxxx, P.A., ("Xxxxxxxxx Traurig") 000 X. Xxxxxxx
Xxxxx, Xxxxx 000X, Xxxx Xxxx Xxxxx, Xxxxxxx (the "Escrow Agent"). Simultaneously
with the execution and delivery of this Agreement, Westmark shall deliver to the
Escrow Agent all original certificates representing the Stock issued in the name
of Westmark, along with stock powers endorsed in blank. MIOA may, upon request
to the Escrow Agent and delivery by the Escrow Agent of the appropriate
Collateral to MIOA, exchange the certificates representing the Stock for
certificates of smaller or larger denominations for any purpose consistent with
the terms of this Security Agreement.
4. So long as there is no failure to make due and punctual payment of
the Potential Debt to MIOA nor any other continuing event which would constitute
an Event of Default, as hereinafter defined, under this Agreement:
(a) Westmark shall be entitled to exercise any and all voting
and/or consensual rights and powers relating or pertaining to the Stock or any
part thereof.
(b) Westmark shall be entitled to receive and retain any and
all stock and/or liquidating dividends, distributions in property, returns of
capital or other distributions made on or in respect of the Stock, whether
resulting from a subdivision, combination or reclassification of the outstanding
capital stock of MIOA or received in exchange for the Stock or any part thereof,
or as a result of any merger, consolidation, acquisition or other exchange of
assets to which MIOA may be a party or otherwise, and any and all cash and other
property received in payment of the principal of or in redemption of or in
exchange for any Stock (either at maturity, upon call for redemption or
otherwise), shall be and become part of the Collateral pledged by Westmark
hereunder and, if received by Westmark, shall be received in trust for the
benefit of MIOA or its assigns and shall forthwith be delivered to the Escrow
Agent (accompanied by proper instruments of assignment and/or stock and/or bond
powers executed by Westmark in accordance with MIOA's instructions) to be held
as Collateral subject to the terms of this Security Agreement.
(c) MIOA shall execute and deliver (or cause to be executed
and delivered) to Westmark all such proxies, powers of attorney, dividend
orders, interest
2
coupons and other instruments as Westmark may request for the purpose of
enabling Westmark to exercise the voting and/or consensual rights and powers
which it is entitled to exercise pursuant to subparagraph (a) above and/or to
receive the dividends and/or interest payments which it is authorized to receive
and retain pursuant to subparagraph (b) above.
(d) Upon the occurrence and during the continuance of an Event
of Default, all rights of Westmark to exercise the voting and/or consensual
rights and powers which it is entitled to exercise pursuant to Section 4(a)
hereof and/or to receive the dividends and interest payments which it is
authorized to receive and retain pursuant to Section 4(b) hereof shall cease,
and all such rights shall thereupon become vested in MIOA who shall have the
sole and exclusive right and authority to exercise such voting and/or consensual
rights and powers and/or to receive and retain the dividends and/or interest
payments which Westmark would otherwise be authorized to retain pursuant to
Section 4(b) hereof. Any and all money and other property paid over to or
received by MIOA pursuant to the provisions of this paragraph (d) or pursuant to
the exercise by MIOA of the voting and/or consensual rights and powers shall be
retained by MIOA as additional collateral hereunder and be applied in accordance
with the provisions of this Security Agreement.
(e) Prior to an Event of Default, MIOA shall not assert any
rights whatsoever with respect to the Collateral nor shall Westmark take any
action which would impair such rights.
5. Each of the following shall be an event of default (an "Event of
Default") hereunder:
(a) If Westmark fails to pay when due the Potential
Debt to MIOA pursuant to Paragraph 9 of the Exchange Agreement;
(b) If Westmark shall default in the performance of
any term or provision of this Security Agreement or Paragraphs 2, 3, 6, 8, or 9
of the Exchange Agreement;
(c) If Westmark shall sell, transfer or encumber, or
attempt to sell, transfer or encumber the Collateral or any interest therein,
without the prior written consent of MIOA;
(d) Filing by or against Westmark of a petition in
bankruptcy or for reorganization or similar arrangement under the Bankruptcy
Code;
(e) Making a general assignment by Westmark for the
benefit of creditors; the appointment of a receiver or trustee for Westmark or
for any substantial
3
portion of its assets; or the institution by or against Westmark of any kind of
insolvency proceedings or any proceeding for the dissolution or liquidation of
Westmark;
(f) Material falsity in any certificate, statement,
representation, warranty, or audit at any time furnished to MIOA by or on behalf
of Westmark or any indorser or guarantor or any other party liable for payment
of any indebtedness in, pursuant to, or in connection with this Agreement or
otherwise and including any omission to disclose any substantial contingent or
liquidated liabilities or any material adverse change in any facts disclosed by
any certificate, statement, representation, warranty or audit furnished to MIOA.
(g) Condemnation or seizure of any of the Collateral.
(h) Failure by Westmark to be a corporation in good
standing with the State of Florida, if formed under the laws of Florida, or if
formed under the laws of another jurisdiction, failure to be in good standing
with such jurisdiction, and to have filed all reports and other documents
required by the State of Florida or such other jurisdiction in order to preserve
its status as a corporation in good standing, provided that Westmark shall have
thirty (30) days to cure any occurrence of this Event of Default upon written
notice from MIOA of the occurrence of same;
(i) If Westmark ceases doing business as a going
concern or commences the liquidation of its business or assets.
6. Upon the occurrence of any Event of Default, MIOA may exercise all
the rights of a secured party under the Uniform Commercial Code of the State of
Florida and/or any other applicable law with respect to the Collateral. If the
proceeds of any sale or other lawful disposition by MIOA of the Collateral
subsequent to its retaking exceed the aggregate amount of the outstanding
balance of all monies owed pursuant to the Potential Debt and the expenses of
MIOA, including reasonable attorney's fees, in connection with the retaking and
disposition of the Collateral, then Westmark shall be entitled to such surplus.
If all or any of the Collateral is disposed of by private sale pursuant to any
agreement whereby all or part of the sale price is payable in installments, then
the cash price (exclusive of credit service charges, interest and any insurance
premiums) shall be credited against the indebtedness secured thereby. Neither
failure nor delay on the part of MIOA to exercise any of its rights hereunder,
in whole or in part, shall cause a waiver thereof in that or any other instance.
The provisions of this Agreement are cumulative and in addition to any other or
additional rights MIOA may have at law or in equity or under the terms of the
Exchange Agreement, or any other document collateral thereto.
4
7. Westmark shall execute, deliver, file and refile any financing
statements, continuation statements, or other security agreements MIOA may
require from time to time to confirm the lien of this Agreement with respect to
the Collateral. Without limiting the foregoing, Westmark hereby irrevocably
appoints MIOA attorney-in-fact for Westmark to execute, deliver and file such
instruments for and on behalf of Westmark.
8. (a) Xxxxxxxxx Xxxxxxx shall initially act as Escrow Agent under this
Agreement. The Escrow Agent shall acknowledge its receipt of the original
certificate(s) representing the Collateral by executing this Agreement. Westmark
shall also deliver to the Escrow Agent any and all original certificates, funds
or documents as may hereafter become part of the Collateral. The possession of
the original certificates and other documents relating to the Collateral shall
be deemed to constitute MIOA's possession thereof in order to perfect MIOA's
security interest in the Collateral.
(b) The Escrow Agent shall hold all certificates,
funds and documents representing the Collateral (collectively, the
"Instruments") subject to the following terms and conditions:
(i) If MIOA at any time instructs the Escrow Agent to
exchange any certificates representing any securities included in the Collateral
to change the denominations of such certificates, the Escrow Agent shall comply
with such request promptly by so exchanging certificates directly with MIOA. The
Escrow Agent shall give Westmark and the holder of any subsequent perfected lien
as provided in the addendum to this Security Agreement notice of any such action
within 10 days after it is completed.
(ii) Either Westmark or MIOA may give the Escrow
Agent a notice requesting the Escrow Agent to make any delivery or take any
action with respect to any Instruments that is proposed to be taken pursuant to
this Agreement. If the notice describing any such request is executed by both
Westmark and MIOA, the Escrow Agent shall promptly comply with the request.
If the notice is given by Westmark or MIOA, and is not signed by both,
the Escrow Agent shall promptly forward by hand or overnight delivery a copy of
such notice to the party that did not sign it. Thereafter, the Escrow Agent
shall refrain from taking any action with respect to such request for at least 5
business days, or until the other party authorizes the Escrow Agent in writing
to comply with such request. If the other party fails to deliver written notice
of objection to the Escrow Agent within such 5 day period, the Escrow Agent
shall be fully protected in complying with such request.
5
(c) In order to induce the Escrow Agent to act under
this Agreement, Westmark and MIOA jointly and severally agree as follows:
(i) The Escrow Agent shall not in any way be bound or
affected by any notice or modification or cancellation of this Agreement unless
in writing, signed by all parties hereto, nor shall the Escrow Agent be bound by
any modification hereof unless the same shall be satisfactory to the Escrow
Agent. The Escrow Agent shall be entitled to rely upon any judgment,
certification, demand or other writing (including but not limited to any
instructions given to it under (b), above) without being required to determine
the authenticity or the correctness of any fact stated therein, the propriety of
validity of the service thereof, or the jurisdiction of the court issuing such
judgment or order.
(ii) The Escrow Agent may act in reliance upon any
document, instrument or signature believed by it to be genuine, and the Escrow
Agent may assume that any person purporting to give any notice or instructions
in accordance with the provisions hereof has been duly authorized to do so.
(iii) The Escrow Agent may act relative hereto in
reliance upon advice of counsel in reference to any matter(s) in connection
herewith, and shall not be liable for any mistake of fact or error of judgment,
or for any acts or omissions of any kind, unless caused by the Escrow Agent's
willful misconduct or gross negligence. The Escrow Agent shall be entitled to
consult with its counsel, which shall include any attorney employed by it, and
the Escrow Agent shall not be liable for any action taken, suffered or omitted
by it in accordance with the advice (whether written or oral) of such counsel.
(iv) This Agreement sets forth exclusively the Escrow
Agent's duties with respect to any and all matters pertinent hereto. The Escrow
Agent shall not refer to, and shall not be bound by, the provisions of any other
agreement.
(v) The Escrow Agent may at any time resign hereunder
by giving written notice of its resignation to all parties hereto at least
thirty (30) days prior to the date specified for such resignation to take
effect, and upon the effective date of such resignation, all cash, documents and
all other property then held by the Escrow Agent hereunder shall be delivered by
it to such persons as may be designated in writing by all parties hereto,
whereupon all its prospective obligations as Escrow Agent hereunder shall cease
and terminate. The Escrow Agent's sole responsibility thereafter shall be to
keep safely all property then held by it and to deliver same to a person
designated by all parties hereto or in accordance with the directions of a final
order or judgment of a court of competent jurisdiction. In addition, the Escrow
Agent shall be
6
discharged of its prospective duties and obligations hereunder upon its
interpleading in a court of competent jurisdiction all of the funds and property
then held by it hereunder. All parties hereto hereby submit to the personal
jurisdiction of said court (but solely for the purpose of implementing this
Agreement) and waive all rights to contest said jurisdiction. However, the
Escrow Agent's resignation and/or interpleading of the Collateral shall not in
any manner affect or impair any of its obligations under this Agreement.
(vi) Westmark shall be individually obligated to
reimburse the Escrow Agent for all its fees, costs and expenses in connection
herewith, including reasonable counsel fees. Westmark and MIOA shall be jointly
and severally obligated to indemnify the Escrow Agent and hold it harmless
against any claim asserted against it or any liability, loss or damage incurred
by it in connection herewith, including attorney's fees and costs.
(vii) Nothing herein contained shall be deemed to
obligate the Escrow Agent to deliver any securities, cash, instruments,
documents or any other property referred to herein, unless the same shall have
first been received by the Escrow Agent pursuant to this Agreement.
(viii) MIOA acknowledges that the Escrow Agent is
counsel for Westmark and agrees that no action taken by the Escrow Agent under
this Agreement shall affect or impair the right of the Escrow Agent to represent
such party(ies) in any matter, including an interpleader action pursuant to this
Agreement.
9. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto, their respective successors and assigns.
10. This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid or unenforceable under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Agreement.
7
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: MIOA:
____________________________ MEDICAL INDUSTRIES OF AMERICA,
INC.
____________________________
By:_______________________________
Name: E. Xxxxxxxx Xxxxx, III, Esq.
Title: Sr. Vice President
WITNESSES: WESTMARK:
____________________________ WESTMARK GROUP HOLDINGS, INC.
____________________________ By:_______________________________
Name: Xxxx X. Xxxxxxxxxx
Title: President
ACCEPTANCE OF ESCROW AGENT
--------------------------
Xxxxxxxxx Traurig, P.A. acknowledges receipt of the foregoing Security
Agreement and agrees to act as Escrow Agent under its terms.
Xxxxxxxxx Xxxxxxx, P.A.
By:________________________
Xxxxxx X. Xxxxx, Esquire
8
