EXHIBIT 10.4
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "Agreement") is made effective November 1,
1999 by and between Scientific NRG, Inc., a Minnesota corporation ("SNRG") and
Phileo Management Co., Inc., a Nevada corporation ("Phileo").
WHEREAS, SNRG is the holder in due course and beneficial owner of trade
accounts receivable due by various corporations more fully identified in Exhibit
"A" attached hereto and incorporated herein by reference (collectively, the
"Trade Accounts"); and
WHEREAS, Phileo owns or has the right to acquire the Secured Convertible
Promissory Note in the principal amount of $500,000 issued by Dega Technology,
Inc., a copy of which is attached hereto as Exhibit "B" and incorporated herein
by reference (the "Dega Note"); and,
WHEREAS, Phileo and SNRG wish to diversify their respective investment
portfolios by exchanging the Dega Note owned by Phileo for the Trade Accounts
owned by SNRG.
NOW, THEREFORE, IN CONSIDERATION of the mutual promises contained herein,
the benefits to be derived by each party hereunder and other good and valuable
consideration, the receipt and sufficiency of which are hereby expressly
acknowledged, Phileo and SNRG agree as follows:
1. Exchange
On the basis of the representations and warranties herein contained,
subject to the terms and conditions set forth herein, SNRG agrees to
exchange the Trade Accounts for the Dega Note.
2. Closing
The closing of the exchange contemplated by this Agreement (the "Closing")
shall occur upon the transfer of the Trade Accounts to Phileo (the
"Transfer Date"), but shall not be later than November 30, 1999. At the
Closing, Phileo shall deliver the Dega Note to SNRG and SNRG shall deliver
the Trade Accounts to Phileo.
3.1 Representations and Warranties of SNRG
SNRG hereby represents and warrants to Phileo that:
A. Organization. SNRG is a corporation validly existing and in good
standing under the laws of the State of Minnesota, with the power
and authority to carry on its business as now being conducted. The
execution and delivery of this Agreement and the consummation of the
transaction contemplated in this Agreement have been, or will be
prior to Closing, duly authorized by all requisite corporate action
on the part of SNRG. This Agreement has been duly executed and
delivered by SNRG and constitutes a binding, and enforceable
obligation of SNRG; and,
B. Third Party Consent No authorization, consent, or approval of, or
registration or filing with, any governmental authority or any other
person is required to be obtained or made by SNRG in connection with
the execution, delivery, or performance of this Agreement, or if
required, SNRG has or will obtain same prior to Closing; and,
C. Litigation. SNRG is not a defendant or a plaintiff against whom a
counterclaim has been made or reduced to judgement, in any
litigation or proceedings before any state, local or federal
government, or any department, board, body or agency thereof, which
could result in a claim against the Trade Accounts; and,
D. Status of Trade Accounts. To the best of SNRG's knowledge, the Trade
Accounts are valid and there is no claim by the debtors thereof
which would serve to restrict the collection, transfer or exchange
of the Trade Accounts as contemplated herein. Further, SNRG has not
created any option, security interest or encumbrance involving the
Trade Accounts that would give rise to any claims by third parties
or otherwise conflict with or preclude the exchange as contemplated
herein; and
E. Authority. This Agreement has been duly executed by SNRG, and the
execution and performance of this Agreement will not violate, or
result in a breach of, or constitute a default in any agreement,
instrument, judgement, order or decree to which SNRG is a party or
to which SNRG is subject.
3.2 Representations and Warranties of Phileo
Phileo hereby represents and warrants to SNRG that:
A. Organization. Phileo is a corporation validly existing and in good
standing under the laws of the State of Nevada, with the power and
authority to carry on its business as now being conducted. The
execution and delivery of this Agreement and the consummation of the
transaction contemplated in this Agreement have been, or will be
prior to Closing, duly authorized by all requisite corporate action
on the part of Phileo. This Agreement has been duly executed and
delivered by Phileo and constitutes a binding, and enforceable
obligation of Phileo; and,
B. Third Party Consent No authorization, consent, or approval of, or
registration or filing with, any governmental authority or any other
person is required to be obtained or made by Phileo in connection
with the execution, delivery, or performance of this Agreement, or
if required, Phileo has or will obtain same prior to Closing; and
C. Litigation. Phileo is not a defendant or a plaintiff against whom a
counterclaim has been made or reduced to judgement, in any
litigation or proceedings before any state, local or federal
government, or any department, board, body or agency thereof, which
could result in a claim against the Dega Note; and,
D. Status of the Dega Note. To the best of Phileo's knowledge, the Dega
Note is validly issued by Dega and there is no claim by Dega which
would serve to restrict the collection, transfer or exchange of the
Dega Note as contemplated herein. Further, Phileo has not created
any option, security interest or encumbrance involving the rights to
the Dega Note that would give rise to any claims by third parties or
otherwise conflict with or preclude the exchange as contemplated
herein; and
E. Authority. This Agreement has been duly executed by Phileo, and the
execution and performance of this Agreement will not violate, or
result in a breach of, or constitute a default in any agreement,
instrument, judgement, order or decree to which Phileo is a party or
to which Phileo is subject.
4. Conditions Precedent to Obligations of Phileo and SNRG
All obligations of Phileo and SNRG under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the following
conditions:
A. Transfer and Delivery of the Dega Note. Phileo shall have executed
proper transfer documents to assign and convey merchantable title to
the Dega Note and the underlying collateral, and delivered same
along with the original of such Note and underlying Security
Agreement to SNRG; and
B. Transfer and Delivery of the Trade Accounts. SNRG shall have taken
all action necessary to deliver the Trade Accounts to Phileo; and
C. Acceptance of Documents. All instruments and documents delivered by
Phileo and SNRG pursuant to the provisions of this Agreement shall
be satisfactory to Phileo and SNRG and their legal counsel.
5. Availability of Information
Phileo and SNRG each represent that, by virtue of their respective
business activities and economic bargaining power or otherwise, they have
been able to conduct their own due diligence and have had access to or
have been furnished with, prior to or concurrently with the execution
hereof, the information which they consider to be adequate to make a
decision to exchange the Dega Note for the Trade Accounts.
6. Private Transaction
A. Private Offering. SNRG and Phileo understand each that the exchange
contemplated herein constitutes a private, arms-length transaction
between the parties without the use or reliance upon a distribution
or securities underwriter; and,
B. Purchase for Own Account. Neither SNRG nor Phileo are underwriters
of, or dealers in, the respective securities to be exchanged
hereunder, and neither party is acting as such or participating in
the distribution of such securities; and
C. Investment Risk. Because of their financial position and other
factors, the exchange contemplated by this Agreement may involve a
high degree of financial risk, including the risk that one or both
parties may lose its entire investment; and
D. Access to Information. SNRG, Phileo and their respective advisors
have been afforded the opportunity to discuss the transaction with
legal and accounting professionals and to examine and evaluate the
financial impact of the exchange contemplated herein.
7. Termination
This Agreement may be terminated at anytime prior to the date of Closing
by either party if (a) there shall be any actual or threatened action or
proceeding by or before any court or any other governmental body which
shall seek to restrain, prohibit, or invalidate the transaction
contemplated by this Agreement, and which, in the judgment of such party
giving notice to terminate and based upon the advice of legal counsel,
makes it inadvisable to proceed with the transaction contemplated by this
Agreement, or (b) if the transaction contemplated herein has not closed by
December 31, 1999.
8. Miscellaneous
A. Authority. The officers of Phileo and SNRG executing this Agreement
are duly authorized to do so and each party has taken all action
required by law or otherwise to properly and legally execute this
Agreement.
B. Notices. Any notice under this Agreement shall be deemed to have
been sufficiently given if sent by registered or certified mail,
postage prepaid, addressed as follows:
To SNRG: Scientific NRG Incorporated
0000 XxxXxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Phileo: Phileo Management Company Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to any other address which may hereafter be designated by either party
by notice given in such manner. All notices shall be deemed to have been
given as of the date of receipt.
C. Entire Agreement. This Agreement sets forth the entire understanding
between the parties hereto and no other prior written or oral
statement or agreement shall be recognized or enforced.
D. Severability. If a court of competent jurisdiction determines that
any clause or provision of this Agreement is invalid, illegal or
unenforceable, the other clauses and provisions of the Agreement
shall remain in full force and effect and the clauses and 5provision
which are determined to be void, illegal or unenforceable shall be
limited so that they shall remain in effect to the extent
permissible by law.
E. Assignment. None of the parties hereto may assign this Agreement
without the express written consent of the other parties and any
approved assignment shall be binding on and inure to the benefit of
such successor or, in the event of death or incapacity, on
assignor's heirs, executors, administrators and successors.
F. Applicable Law. This Agreement has been negotiated and is being
contracted for in the State of Nevada, it shall be governed by the
laws of the State of Nevada, County of Xxxxx, notwithstanding any
conflict-of-law provision to the contrary.
G. Attorney's Fees. If any legal action or other preceding
(non-exclusively including arbitration) is brought for the
enforcement of or to declare any right or obligation under this
Agreement or as a result of a breach, default or misrepresentation
in connection with any of the provisions of this Agreement, or
otherwise because of a dispute among the parties hereto, the
prevailing party will be entitled to recover actual attorney's fees
(including for appeals and collection) and other expenses incurred
in such action or proceeding, in addition to any other relief to
which such party may be entitled.
H. No Third Party Beneficiary. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person, other than the
parties hereto and their successors, any rights or remedies under or
by reason of this Agreement, unless this Agreement specifically
states such intent.
I. Counterparts. It is understood and agreed that this Agreement may be
executed in any number of identical counterparts, each of which may
be deemed an original for all purposes.
J. Further Assurances. At any time, and from time to time after the
Closing, each party hereto will execute such additional instruments
and take such action as may be reasonably requested by the other
party to confirm or perfect title to the Dega Note and the Trade
Accounts, or otherwise to carry out the intent and purposes of this
Agreement.
K. Broker's or Finder's Fee; Expenses. SNRG and Phileo each warrant
that they have not incurred any liability, contingent or otherwise,
for brokers' or finders' fees or commissions relating to this
Agreement for which the other party shall have responsibility.
Except as otherwise provided herein, all fees, costs and expenses
incurred by either party relating to this Agreement shall be paid by
the party incurring same.
L. Amendment or Waiver. Every right and remedy provided herein shall be
cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently
herewith, and no waiver by any party of the performance of any
obligation by the other shall be construed as a waiver of the same
or any other default then, theretofore, or thereafter occurring or
existing. At any time prior to Closing, this Agreement may be
amended by a writing signed by all parties hereto.
M. Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
N. Facsimile. A facsimile, telecopy or other reproduction of this
instrument may be executed by one or more parties hereto and such
executed copy may be delivered by facsimile or similar instantaneous
electronic transmission device pursuant to which the signature of or
on behalf of such party can be seen, and such execution and delivery
shall be considered valid, binding and effective for all purposes.
At the request of any party hereto, all parties agree to execute an
original of this instrument as well as any facsimile, telecopy or
other reproduction hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
"Phileo"
Phileo Management Company Inc.
By: /s/ Xxxxx Xx
Name: Xxxxx Xx
Title: President
"SNRG"
Scientific NRG, Incorporated
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer
