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NOTE EXCHANGE AGREEMENT

Note Purchase Agreement

NOTE EXCHANGE AGREEMENT | Document Parties: SHRINK NANOTECHNOLOGIES, INC. | AudioStocks, Inc | Noctua Fund LP | Noctua Fund Manager, LLC | Shrink Nanotechnologies, Inc | Shrink Technologies, Inc You are currently viewing:
This Note Purchase Agreement involves

SHRINK NANOTECHNOLOGIES, INC. | AudioStocks, Inc | Noctua Fund LP | Noctua Fund Manager, LLC | Shrink Nanotechnologies, Inc | Shrink Technologies, Inc

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Title: NOTE EXCHANGE AGREEMENT
Date: 6/5/2009

NOTE EXCHANGE AGREEMENT, Parties: shrink nanotechnologies  inc. , audiostocks  inc , noctua fund lp , noctua fund manager  llc , shrink nanotechnologies  inc , shrink technologies  inc
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NOTE EXCHANGE AGREEMENT

 

THIS AGREEMENT (the “ Agreement ”) is effective as of May 29, 2009 (the “ Effective Date ”) by and between Shrink Nanotechnologies, Inc., a Delaware corporation f/k/a AudioStocks, Inc. (the “ Company ”) and Noctua Fund LP (“ Noctua ”).  The Company and Noctua may be individually referred to herein as a “ Party ” and collectively as the “ Parties .”

 

RECITALS

 

WHEREAS, as of the Effective Date, the Company acquired all of the equity ownership of Shrink Technologies, Inc., a California corporation (“ Shrink ”) pursuant to a Share Exchange Agreement, resulting in Shrink becoming a wholly owned subsidiary of the Company (“ Shrink Acquisition ”); and

 

WHEREAS, Noctua is a creditor of the Company, and, prior to the date hereof and among other securities of the Company, owns a $100,000 Principal Amount of promissory note, which accrues interest at a rate of fourteen percent (14%) per annum commencing October 1, 2009 (the “ Existing Note ”) which Existing Note was issued to Noctua in an exchange transaction on May 7, 2009 whereupon Noctua exchanged certain other securities of the Company and agreed to the discharged of certain obligations owed by the Company;  and

 

WHEREAS, Noctua owns (i) a $91,000 face amount promissory note of Shrink issued in 2008, (ii) a $10,000 principal amount of note of Shrink issued on March 31, 2009, (iii) as well as an additional $10,000  note issued on April 23, 2009 (collectively, the “ Noctua-Shrink Notes ”); and

 

WHEREAS, Noctua has agreed to consent to the Shrink Acquisition hereby and to exchange its Noctua-Shrink Notes (inclusive of all interest capitalized thereon and rights relating thereto) in exchange for a new note issued by the Company, with terms identical in all material respects to those of the Existing Note (the “ New Note ” and, together with the Existing Note, the “ Noctua Notes ”),

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged, it is hereby agreed as follows:

 

AGREEMENT

 

1.            Exchange and Release .

 

a.           Noctua hereby consents to the entry of the parties into the Share Exchange Agreement, and consummation of the Shrink Acquisition thereby (and, resulting change in control of Shrink) and, hereby waives any rights or remedies or defaults, common law or otherwise as against any of the parties in connection with the taking of any of the actions relating to the consummation thereof.

 

b.           Noctua hereby tenders the Noctua-Shrink Notes to the Company and, hereby further consents to the exchange of its Noctua-Shrink Notes of Shrink along with all interest or principal thereon totaling $188,121.28 as of the Effective Date, for the issuance by the Company of the New Note to be issued in exchange therefore in the principal amount of $118,121.28.  The New Note shall be identical in form and substance to the Existing Note, with the exception of the issuance date.

 

c.           Noctua hereby discharges Shrink from any and all obligations relating to the Noctua-Shrink Notes and any liabilities or obligations relating thereto and accepts the New Note in  exchange therefore.

 

2.            Waiver of Section 1542 .     In signing this Agreement, Noctua has been advised of, understands and knowingly waives his rights under California Civil Code Section 1542 which provides as follows: A GENERAL RELEASE DOES NOT EXTEND TO OBLIGATIONS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

3.            No Further Obligations .     Noctua covenants and agrees never to commence against the Company or Shrink, any legal action or proceeding based in whole or in part upon the Services, Obligations, demands, allegations, and/or injuries released in this Agreement.

 

4.            No Admission .    This Agreement shall not be considered as an admission of liability by either Party and by entering into this Agreement, neither Party has admitted the validity of any Obligations herein released.

 

5.            Compliance with Securities Laws .    In the event of a conversion of the New Note, Noctua understands that the New Note and shares of Common Stock of the Company issuable thereunder are characterized as “restricted securities” under the federal securities laws and that under such laws and applicable regulations such securities may be resold without registration under the United States Securities Act of 1933, as amended only in certain limited circumstances. It understood that the certificates evidencing the New Note and any Common Stock issuable upon conversion thereof, will bear a legend in substantially the below form:

 

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR A LEGAL OPINION THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.”

 

In addition, the Noctua hereby represents and warrants that they are an “accredited investor” as such term is defined in the Securities Act of 1933 and Securities and Exchange Act of 1934.

 

6.            Miscellaneous .

 

a.            Necessary Acts .  Each Party to this Agreement agrees to perform any further acts and execute and deliver any further documents that may be reasonably necessary to carry out the provisions of this Agreement.

 

b.            Entire Agreement; Modifications; Waiver .  This Ag


 
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