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EXHIBIT 10.60
DEBT FOR EQUITY SWAP AGREEMENT
This Debt for Equity Swap Agreement ("Agreement") is made this 27th day of
January 1997 between Scientific NRG, Incorporated, a Minnesota corporation
("Company"), and Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, and
Xxxxxx X. Xxxxxx ("Noteholders").
WHEREAS, the Company desires to issue shares of its no par value common
stock (the "Shares") in exchange for the return and cancellation of those
certain Subordinated Cash Flow Promissory Notes dated September 30, 1996 (the
"Notes") held by Noteholders and Noteholders desire to receive the Shares in
exchange for the Notes; and
WHEREAS, the rate of exchange for the debt for equity swap shall be 1
share of no par value common stock of the Company for each $1.50 of principal
and accrued interest as of January 31, 1997 on the Notes.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Company agrees to issue to Noteholders 382,373 Shares in exchange for the
return and cancellation of the Notes and Security Agreement and release of the
UCC-1 financing statement. The amount of Shares to be issued to each Noteholder
under this Agreement is set forth on the signature page hereof.
2. Noteholders agree to accept the Shares in exchange for the Notes and to
return and cancel the Notes and Security Agreement and release the UCC-1
financing statement. Further, the Noteholders understand and agree that the
Shares will be issued with a restrictive legend to the effect that: "The shares
represented by this certificate have not been registered under the Securities
Act of 1933 (the "Act") and are "restricted securities" as that term is defined
in Rule 144 under the Act. The shares may not be offered for sale, sold or
otherwise transferred except pursuant to an effective registration statement
under the Act or pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the Company."
3. As further consideration for the execution and performance of this
Agreement, Company promises to pay in full those certain Secured Promissory
Notes dated September 11, 1996 in the aggregate principal amount of $60,000 plus
accrued interest, collectively referred to as the Bridge Loans, on or before
February 5, 1997.
4. Company and Noteholders appoint Xxxxxxx X. Xxxx, attorney at law, to act
as escrow agent on the transaction and Xx. Xxxx shall perform the following:
For the Company: As soon as feasible, upon receipt of the Shares from the
Company and sufficient funds to discharge the Bridge Loans, Xx. Xxxx shall
notify the Noteholders of the foregoing. Upon receipt of the Notes and Security
Agreement, and other documents sufficient to release the UCC-1 financing
statement, Xx. Xxxx shall immediately issue checks made payable to the holders
of the Bridge Loans and shall send the checks and the Shares to the proper
parties by Federal Express overnight courier service.
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For the Noteholders: As soon as feasible, upon receipt of the
Notes and Security Agreement, and other documents sufficient to release the
UCC-1 financing statement, Xx. Xxxx shall notify the Company of the foregoing.
Upon receipt of the Shares and funds to discharge the Bridge Loans, Xx. Xxxx
shall send the Notes and Security Agreement to the Company by Federal Express
overnight courier service. Further, Xx. Xxxx shall file with the California
Secretary of State the documents necessary to release the UCC-1 financing
statement.
In the event the foregoing does not occur on or before February
5, 1997, Xx. Xxxx shall return all documents and funds to the respective parties
delivering same, without further duty or obligation to the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date set forth above.
Scientific NRG, Incorporated
By: /s/ XXXXXXXX X. XXXXX
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Name: Xxxxxxxx X. Xxxxx
Title: President
/s/ XXXXXX X. XXXXXXXX
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Xxxxxx X. Xxxxxxxx, Noteholder [167,737 Shares]
/s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx, Noteholder [120,155 Shares]
/s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx, Noteholder [75,311 Shares]
/s/ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx, Noteholder [19,170 Shares]
Approved and Accepted:
/s/ XXXXXXX X. XXXX
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Xxxxxxx X. Xxxx, Escrow Agent
