STOCK EXCHANGE AGREEMENT
This Stock Exchange Agreement (the
“Agreement”) dated as of May 29, 2009, by and between Shrink Nanotechnologies,
Inc. a Delaware corporation (“SHRINK”) and Xxxxxxxx Xxxxx, an individual
(“Khine”). SHRINK and Khine are each hereinafter referred to
individually as a “party” and collectively as the “parties.”
WHEREAS, SHRINK and Khine have each
determined that the transactions contemplated by this Agreement, on the terms
and conditions hereof, would be advantageous and beneficial to their respective
interests.
WHEREAS, the parties desire to
consummate the transactions contemplated herein, pursuant to which SHRINK will
transfer to Khine (i) eight million eight hundred and eighty eight (8,888,888)
of its restricted par value $0.001 common shares and (ii) fifty (50) of its
Series C Preferred Shares (collectively, the “SHRINK Shares”), and in exchange
for the SHRINK Shares, Khine will transfer one hundred (100) $0.001 common
shares (the “Khine Shares”) of Shrink Technologies, Inc., a California
corporation, to SHRINK.
WHEREAS, the Khine Shares are all of
the issued and outstanding shares, including any class, of Shrink Technologies,
Inc. equity.
WHEREAS, for United States federal
income tax purposes, the transactions contemplated hereby are intended to
qualify as a tax-free reorganization under Section 368(a)(1)(B) of the Code,
together with all rules and regulations issued thereunder and this Agreement is
intended to be adopted as a plan of reorganization for purposes of Section 368
of the Code.
NOW, THEREFORE, in consideration of the
premises and the representations, warranties and agreements herein contained,
the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
SECTION 1.1. DEFINITIONS. As
used herein, the following terms shall have the following meanings:
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“Act”
means the Securities Act of 1933, as amended, and the rules and
regulations issued in respect
thereto.
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“Code”
means the Internal Revenue Code of 1986, as
amended.
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“Commission”
means the Securities and Exchange
Commission.
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“Encumbrance”
means any security interest, mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or otherwise), charge
against or interest in property to secure payment of a debt or performance
of an obligation or other priority or preferential arrangement of any kind
or nature whatsoever.
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“Law”
means any law, statute, regulation, rule, ordinance, requirement or other
binding action or requirement of any governmental, regulatory or
administrative body, agency or authority or any court of judicial
authority.
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“Order”
means any decree, order, judgment, writ, award, injunction, stipulation or
consent of or by any Federal, state or local government or any court,
administrative agency or commission or other governmental authority or
agency, domestic or foreign.
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“Person”
means any individual, corporation, general or limited partnership, joint
venture, association, limited liability company, joint stock company,
trust, business, bank, trust company, estate (including any beneficiaries
thereof), unincorporated entity, cooperative, association, government
branch, agency or political subdivision thereof or organization of any
kind.
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“Transaction
Documents” means any ancillary contracts, agreements or other documents
that are to be entered into in connection with the transactions
contemplated hereby.
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ARTICLE
II
AUTHORIZATION
AND SALE OF STOCK
Section
2.1 Authorization of the
Shares. SHRINK has authorized the issuance and exchange of the
SHRINK Shares for the Khine Shares, and Khine has agreed to exchange the Khine
Shares for the SHRINK Shares, pursuant to the terms and conditions fully set
forth in this Agreement.
Section
2.2 Exchange of Shares.
Subject to the terms and conditions hereof, contemporaneously with the execution
of this Agreement, SHRINK will issue to Khine the SHRINK Shares, in exchange for
the Khine Shares, and Khine shall cause to be transferred to SHRINK, all right,
title and interest in the Khine Shares to SHRINK, in exchange for the SHRINK
Shares.
ARTICLE
III
CLOSING
DATE; DELIVERY; CLOSING FINANCING
Section
3.1 Closing Date. The
consummation of the exchange of the SHRINK Shares and the Khine Shares (the
“Closing”) shall be held at the offices of Shrink, located at 0000 Xxxxx xxx
Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, contemporaneously with the
execution of this Agreement or at such other time and place as SHRINK and Khine
mutually agree upon in writing (the “Closing Date”).
Section
3.2 Delivery. At
the Closing, SHRINK shall deliver to Khine, certificate(s) representing the
SHRINK Shares, and Khine shall deliver to SHRINK certificate(s) representing the
Khine Shares.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF shrink
SHRINK hereby represents and warrants
to Khine, as of the date of this Agreement and as of the Closing Date, as
follows:
Section
4.1 Organization. SHRINK
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power to own,
lease and operate its property and to carry on its business as now being
conducted and is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the failure to be so qualified or
licensed would be reasonably likely to have a material adverse effect on the
business, assets (including intangible assets), liabilities, condition
(financial or otherwise), prospects, value, property or results or operations (a
"Material Adverse Effect") of SHRINK.
Section
4.2 Valid Issuance of Common
Stock. The SHRINK Shares, when issued and paid for in
accordance with this Agreement will be duly authorized, validly issued, fully
paid, and non-assessable, and issued in compliance with all applicable federal
or state securities laws.
Section
4.3 Assumption of
Debt. As of the date of this Agreement, SHRINK is presently
indebted to Noctua Fund LP in the amount of $108,125.44, and this amount is
represented in the form of two (2) secured promissory notes (the “Notes”), both
of which are attached hereto as Exhibits 1 and 2,
respectively. Subsequent to the execution and effectiveness of this
Agreement, SHRINK shall remain bound by the terms and commitments of the
Notes.
Section
4.4 Authority; No Conflict;
Required Filings and Consents.
(a) SHRINK
has all requisite corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated by this Agreement, including the
acquisition of the Khine Shares. The execution and delivery of this Agreement
and the consummation of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of SHRINK.
This Agreement has been duly executed and delivered by SHRINK, and constitutes
the valid and binding obligation of SHRINK, enforceable in accordance with its
terms, except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights generally and by general principles of
equity.
(b) The
execution and delivery by SHRINK of this Agreement does not, and consummation of
the transactions contemplated by this Agreement will not, (i) conflict with, or
result in any violation or breach of any provision of the Articles of
Incorporation or Bylaws of SHRINK, (ii) result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of any material benefit) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which SHRINK is a party or by which any
of its properties or assets may be bound, or (iii) conflict or violate any
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to SHRINK or any of its properties or
assets, except in the case of (ii) and (iii) for any such conflicts, violations,
defaults, terminations, cancellations or accelerations which would not be
reasonably likely to have a Material Adverse Effect on SHRINK and its
subsidiaries, taken as a whole.
(c) No
consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality (“Governmental Entity”) is required by
or with respect to SHRINK in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws and the laws of any foreign country, and (ii) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would be reasonably expected to have a Material Adverse Effect
on SHRINK and its subsidiaries, taken as a whole.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF XXXXX
Xxxxx hereby represents and warrants to
SHRINK, at and as of the date of this Agreement and as of the Closing, as
follows:
Section
5.1 Authority; No Conflict;
Required Filings and Consents.
(a) Khine
has all requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, including the
acquisition of the SHRINK Shares. The execution and delivery of this Agreement
and the consummation of the transactions contemplated by this Agreement have
been duly authorized by all necessary action on the part of
Khine. This Agreement has been duly executed and delivered by Khine,
and constitutes the valid and binding obligation of Khine, enforceable in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting the enforcement of creditors' rights generally and by
general principles of equity.
(b) The
execution and delivery by Khine of this Agreement does not, and consummation of
the transactions contemplated by this Agreement will not, (i) conflict with, or
result in any violation or breach of any agreement Khine has with any third
party, (ii) result in any violation or breach of, or constitute (with or without
notice or lapse of time, or both) a default (or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
material benefit) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which Khine is a party or by which any of its properties or assets
may be bound, or (iii) conflict or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Khine or any of his properties or assets, except in the case of
(ii) and (iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which would not be reasonably likely to have a
Material Adverse Effect on Khine’s business affairs, taken as a
whole.
(c) No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to Khine in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except for (i) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable federal and state securities laws and the laws
of any foreign country, and (iii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would be reasonably
expected to have a Material Adverse Effect on Khine and its subsidiaries, taken
as a whole.
Section
5.4 Restricted
Securities. Khine understands that the SHRINK Shares are characterized as
“restricted securities” under applicable U.S. federal and state securities laws
inasmuch as they are being acquired from SHRINK in a transaction not involving a
public offering and that, pursuant to these laws and applicable regulations,
Khine must hold the SHRINK Shares indefinitely unless they are registered with
the Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available. Khine further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the SHRINK
Shares, and on requirements relating to SHRINK which are outside of SHRINK's
control, and which SHRINK is under no obligation and may not be able to
satisfy.
Section
5.5 Legends. Khine
understands that the SHRINK Shares, and any securities issued in respect thereof
or exchange therefor, may bear one or all of the following legends:
(a) “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.”
(b) Any
legend required by the Blue Sky laws of any state to the extent such laws are
applicable to the shares represented by the certificate so
legended.
ARTICLE
VI
MISCELLANEOUS
Section
6.1 Governing
Law. This Agreement shall be governed in all respects by the
laws of the State of California (without reference to its conflicts of laws
principles).
Section
6.2 Survival. The
representations, warranties, covenants and agreements made herein shall survive
the closing of the transactions contemplated hereby.
Section
6.3 Successors and
Assigns. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto.
Section
6.4 Entire Agreement; Amendment;
Waiver; Modification. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof and thereof. Any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of SHRINK and
Khine. Either Party to this Agreement may unilaterally waive, in
writing, any section or portion thereof, of this Agreement. Any
modification of this Agreement must be made in writing and executed by both
Parties to the Agreement.
Section
6.5 Notices and Other
Communications. Every notice or other communication required
or contemplated by this Agreement by either party shall be delivered either by
(i) personal delivery, (ii) postage prepaid return receipt requested registered
or certified mail or the equivalent of registered or certified mail under the
laws of the country where mailed, (iii) nationally recognized overnight courier,
such as Federal Express or UPS, or (iv) facsimile with a confirmation copy sent
simultaneously by postage prepaid, return receipt requested, registered or
certified mail at such address as the intended recipient previously shall have
designated by written notice to the other party (with copies to counsel as may
be indicated on the signature page). Notice by registered or
certified mail shall be effective on the date it is officially recorded as
delivered to the intended recipient by return receipt or equivalent, and in the
absence of such record of delivery, the effective date shall be presumed to have
been the fifth (5th) business day after it was deposited in the
mail. All notices delivered in person or sent by courier shall be
deemed to have been delivered to and received by the addressee and shall be
effective on the date of personal delivery; notices delivered by facsimile with
simultaneous confirmation copy by registered or certified mail shall be deemed
delivered to and received by the addressee and effective on the date sent.
Notice not given in writing shall be effective only if acknowledged in writing
by a duly authorized representative of the party to whom it was
given.
Section
6.7 Severability. In
case any provision of this Agreement shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
Section
6.8 California Corporate
Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE
SUBJECT OF THIS AGREEMENT HAVE NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA, AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
Section
6.09 Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one instrument.
Execution and delivery of this Agreement by exchange of facsimile copies bearing
the facsimile signature of a party hereto shall constitute a valid and binding
execution and delivery of this Agreement by such party. Such facsimile copies
shall constitute enforceable original documents.
IN WITNESS WHEREOF, the parties have
executed this Agreement as of the day and year set forth in the first paragraph
hereof.
Shrink
Nanotechnologies,
Inc. Xxxxxxxx
Xxxxx
_____________________________ _______________________________
By: Xxxx
Xxxxx By:
Xxxxxxxx Xxxxx
Its:
Chief Executive Officer
