strombacksecuriesagreement.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    SECURITIES
PURCHASE AGREEMENT

    


    This SECURITIES PURCHASE AGREEMENT,
dated as of September 29, 2009 (this "Agreement") is
entered  into  by  and  among  Ecology
Coatings, Inc.,  a  Nevada corporation (the "Company"),
Stromback Acquisition Corporation, an Illinois corporation (the "Purchaser") and
Richard Stromback.  The parties, intending to be legally bound, hereby
agree as follows:

    


    WHEREAS, the Company desires
to sell to Purchaser, and the Purchaser desires to purchase from the Company up
to three thousand (3,000) five (5.0%) percent Cumulative Convertible Preferred
Shares of the Company at a price per share of One Thousand and 00/100 dollars
($1,000/00) (the “Convertible Preferred Stock”) containing the terms set forth
in the Certificate of Designation attached as Exhibit “A” hereto (the
“Certificate of Designation”).
The amounts in excess of $240,000.00 invested by Stromback Acquisition
Corporation to Company under this agreement is not guaranteed and will be
subject to Stromback Acquisition Corporation’s sole and absolute
discretion.

    


    NOW, THEREFORE, in
consideration of the mutual promises herein made, and in consideration of the
representations, warranties and covenants herein contained, the Company and
Purchaser agree as follows:

    


    1. Sale of Convertible Preferred
Stock.  Subject to the terms and conditions of this Agreement,
Company hereby agrees to sell to Purchaser and Purchaser hereby agrees to
purchase from Company up to three thousand (3,000) shares of the Convertible
Preferred Stock at a price of One Thousand and 00/100 dollars ($1,000/00) per
share. Upon the execution of this Agreement (the "First Closing"):

    


    
      	
              a.  

            	
              The
      Company shall deliver or cause to be delivered to Purchaser
      the  following:  (i) this Agreement duly executed by
      the Company; (ii) a certificate evidencing that number of shares of
      Convertible Preferred Stock being  purchased by
      Purchaser,  registered in the name of Purchaser; (iii)
      the  Registration  Rights  Agreement  [attached]
      duly executed by the Company and (iv) and Warrant (the "Warrant")
      [attached], registered in the name of Purchaser and giving Purchaser the
      right to acquire the number of shares of the Company’s common stock (the
      “Common Stock”) upon the  exercise  of
      the  Warrant; and

            


    

    


    
      	
              b.  

            	
              Purchaser
      shall deliver or cause to be delivered to the Company the following: (i)
      this Agreement duly executed by Purchaser;  (ii)
      the  purchase  price for the
      Shares  being  purchased  by
      Purchaser,  by check,  wire transfer,  or
      any  combination  thereof,  payable to
      Company,  and (iii)
      the  Registration  Rights  Agreement  duly  executed
      by Purchaser.

            


    

    


    2. Additional Closings. After
investment of the initial $240,000.00 Purchaser, in Purchaser’s sole and
absolute discretion, may purchase up to 2760 additional Convertible Preferred
Shares on or before six (6) months  after the First Closing
(the  "Additional  Closing(s)"),  subject  to
the  same  procedures  as
provided  in  Section  1.

    


    3. Conversion. The Convertible
Preferred Stock can be converted at Purchaser’s option at any time into shares
of the Company’s Common Stock at a conversion price equal to seventy-seven (77%)
percent of the average closing price of the Company’s common stock as quoted on
the Over the Counter Bulletin Board, or, where applicable, other national
exchange, for the five (5) business days preceding the First Closing or, as
applicable, any Additional Closing (the “Conversion Price”).

    


     

    4. Warrants. Upon the First
Closing, and each Additional Closing(s) thereafter, the Company shall issue
Purchaser a warrant to purchase that number of shares of the Company’s Common
Stock which is equal to six (6%) percent of the total dollar amount invested by
Purchaser at the respective Closing (the “Warrant”). Thus, for the avoidance of
doubt, should Purchaser invest One Million and 00/100 dollars ($1,000,000/00)
(e.g., purchases 1,000 shares of the Convertible Preferred Stock), the Company
shall issue Purchase a warrant to purchase sixty thousand (60,000/00) shares of
the Company’s Common Stock. The exercise price of a Warrant shall be equal to
the Conversion Price.

    


    5. Budgetary Authority.
Purchaser shall have approval authority over fifty (50%) percent of the proceeds
of the First Closing, or, as applicable, any Additional Closing up to a maximum
of Five hundred thousand dollars ($500,000.00) in total (the "Discretionary
Investment").  Purchaser will advise and make recommendations to the
Company as to the use of such Discretionary Investment, which shall include
recommendations as to the Company’s investor relations and shareholder
communications programs as well as other company debts and payables per its
existing agreements.  The Company shall not employ nor withhold the
Discretionary Investment without the prior approval of the
Purchaser.  Upon approval or recommendation of the Discretionary
Investment from the Purchaser, the Company shall make the approved
payments within three (3) business days of the request of the Purchaser.  
   The Company's failure to abide by the terms and conditions of
this paragraph five (5) or paragraph nine (9) shall constitute a material
breach of this Securities Purchase Agreement and result in liquidated damages
for Purchaser equal to four times the amount of Discretionary Investment
funds.   In the event the Company fails to abide by the terms and
conditions of this paragraph five (5) or paragraph nine (9) it is
understood and agreed that Purchaser has the unequivocal right to obtain timely
injunctive relief to protect the rights of Purchaser.  
 Notwithstanding the foregoing, Purchaser shall not have authority pursuant
to this paragraph five (5) to bind or obligate the Company with respect to any
material agreement.

    


    6. Representations and Warranties of
Company. Company hereby represents and  warrants  to
Purchaser  in
the  First  Closing  that  the  statements
contained in the following paragraphs of this Section 6 are all true and correct
as of the date of this  Agreement and the Closing Date, and to
Purchaser in an Additional Closing that the statements  contained in
the following paragraphs of this  Section  6 are all true
and  correct  as of the date of the  Additional
Closing:

    


     

    
      	
              a.  

            	
              Organization and Standing:
      Articles and Bylaws. Company is a corporation  duly
      organized,  validly  existing and in good standing
      under the laws of
      the  State  of  Nevada  and  has
      all  requisite  corporate  power  and
      authority to carry on its business as now
  conducted.

            


    

    


    
      	
              b.  

            	
              Corporate  Power.  Company  has
      all  requisite  legal and corporate power to enter
      into,  execute,  deliver and perform this Agreement
      and the Registration Rights Agreement (the "Registration  Rights
      Agreement") of even date herewith between Company and Purchaser. This
      Agreement and the Registration Rights  Agreement
      (the  "Transaction  Documents") have been duly
      executed by the Company and  constitute  the
      legal,  valid and binding  obligations  of
      Company, enforceable in accordance with their terms, except as the same
      may be limited by (i)
      bankruptcy,  insolvency,  moratorium,  and
      other laws of general application affecting
      the  enforcement  of  creditors'  rights
      and (ii)  limitations  on the
      enforceability  of
      the  indemnification  provisions of
      the  Registration  Rights Agreement as limited by
      applicable securities laws.

            


    

    


     

    
      	
              c.  

            	
              Authorization.

            


    

    


     

    
      	
              i.  

            	
              Corporate
      Action.  All corporate and legal action on the part of
      Company, its officers, directors and shareholders necessary for the
      execution and delivery of this Agreement, the Registration Rights
      Agreement, the sale and issuance of the Convertible Preferred Stock and
      Common Stock,  and the performance of Company's obligations
      hereunder have been taken.

            


    

    


    
      	
              ii.  

            	
              Valid
      Issuance.  The Convertible Preferred Stock and Common
      Stock, when issued in compliance with the provisions of this Agreement and
      the Warrant, will be duly and validly issued, fully paid and
      nonassessable, free and clear of all liens and encumbrances; provided,
      however, that the Convertible Preferred Stock, the Common Stock and
      Warrants may be subject to restrictions on transfer under state and/or
      federal  securities  laws as set forth
      herein,  and as may be required by future changes in such
      laws.

            


    

    


     

    
      	
              d.  

            	
              Government Consent,
      Etc. No consent,  approval,  order or
      authorization of, or designation,  registration, declaration or
      filing with, any federal,  state, local or other governmental
      authority on the part of Company is required in connection  with
      the valid execution and delivery of this Agreement, the Registration
      Rights Agreement or the offer, sale or issuance of the Convertible
      Preferred Stock, the  Common Stock and the
      Warrant  other  than,  if  required,  filings
      or qualifications under the Nevada Securities Act, as amended (the
      "Nevada  Law"), or other  applicable  blue
      sky laws,  which filings or qualifications,  if
      required,  will be timely filed or obtained by
      Company.  The execution,  delivery and performance of
      the Transaction Documents by the Company and the consummation by the
      Company of the transactions  contemplated thereby do not and
      will not conflict  with,  or constitute a default (or
      an event that with notice or lapse of time or both would become a default)
      under, or give to others any rights of
      termination,  amendment,  acceleration  or  cancellation  (with
      or without notice,  lapse of time or both) of, any agreement
      filed (or incorporated by reference) as an exhibit to the SEC Reports (as
      defined below).

            


    

    


    
      	
              e.  

            	
              SEC Reports; Financial
      Statements.  The Company has filed all
      reports  required  to be filed by it under
      the  Securities  Exchange  Act of
      1934,  as
      amended  ("1934  Act"),  including  pursuant
      to Section 13(a) or 15(d) thereof,  for
      the  twelve  months  preceding  the  date  hereof  (the  foregoing
      materials  being  collectively  referred  to
      herein as the "SEC  Reports")  on a
      timely  basis or has  received a
      valid  extension of such time of filing and has filed any such
      SEC Reports prior to the expiration of any such extension.  As
      of their respective  dates, the SEC Reports complied in all
      material  respects with the  requirements of the
      Securities Act of 1933, as amended (the "1933 Act") and the 1934 Act and
      the rules and  regulations  of
      the  Securities and Exchange Commission
      ("Commission")  promulgated thereunder,  and none of
      the SEC Reports, when filed,  contained  any
      untrue  statement  of a material  fact or
      omitted to state a material  fact  required to be
      stated  therein or  necessary in order to make the
      statements therein, in light of the circumstances under which they were
      made, not misleading.  The financial  statements of
      the Company  included in the
      SEC  Reports  comply  in  all  material  respects  with  applicable   accounting
      requirements  and the
      rules  and  regulations  of
      the  Commission  with  respect thereto as in
      effect at the time of filing. Such financial  statements have
      been prepared in accordance with generally accepted
      accounting  principles applied on
      a  consistent  basis  during the
      periods  involved,  except as may
      be  otherwise specified in such financial  statements
      or the notes thereto, and fairly present in
      all  material  respects  the  financial  position  of  the  Company  and  its
      consolidated  subsidiaries  as of and for the
      dates  thereof  and the results of
      operations  and cash flows for the periods then
      ended,  subject,  in the case of unaudited statements,
      to normal, year-end audit
adjustments.

            


    

    


    
      	
              f.  

            	
              Private Placement.
      Assuming the accuracy of the Purchaser’s representations and warranties
      set forth in Section 7, no registration under the 1933 Act is required for
      the offer, issuance and sale of the Convertible Preferred Stock, the
      Common Stock and the Warrants by the Company to Purchaser as contemplated
      hereby.

            


    

    


    
      	
              g.  

            	
              Investment  Company.  The  Company
      is not,  and is not an Affiliate  of,
      an  "investment  company"  within
      the  meaning of the  Investment Company Act of 1940,
      as amended.

            


    

    


     

    


     

    7. Representations  and  Warranties  by  Purchaser.   Purchaser
represents and warrants to Company as of the Closing Date (or Additional Closing
Date, as applicable) as follows:

    


    
      	
              a.  

            	
              Investment
      Intent:  Authority. This Agreement is made with Purchaser
      in reliance upon Purchaser's  representation to
      Company,  evidenced by Purchaser's execution of this Agreement,
      that Purchaser is acquiring the Convertible Preferred Stock, the Warrants
      and the Common Stock for investment for  Purchaser's own
      account, not as nominee or agent, for investment and not with a view to,
      or for resale in connection  with, any distribution or public
      offering thereof within the meaning of the 1933 Act;
      provided,  however, that by making the
      representations  herein, Purchaser does not agree to hold any of
      the Convertible Preferred Stock, the Warrants and the Common Stock for any
      minimum or other  specific term and reserves the right to
      dispose of the Convertible Preferred
      Stock,  the  Warrants and the
      Warrant.  Shares at any time in accordance with or pursuant to a
      registration statement or an exemption under the 1933 Act. Purchaser has
      the requisite right,  power,  authority and capacity
      to enter into and perform this Agreement and the Agreement will constitute
      a valid and binding
      obligation  upon  Purchaser,  except as the
      same may be limited  by  bankruptcy,
      insolvency,  moratorium,  and other laws of
      general  application  affecting  the
      enforcement of creditors' rights.

            


    

    


    
      	
              b.  

            	
              Knowledge and
      Experience. Purchaser (i) has such knowledge and experience in
      financial and business  matters as to be capable of evaluating
      the merits and risks of
      Purchaser's  prospective  investment in the
      Convertible Preferred Stock,  the Warrants and the Common Stock;
      (ii) has the ability to bear the economic risks of
      Purchaser's  prospective  investment;  (iii)
      has had all questions which have been asked
      by  Purchaser  satisfactorily  answered by
      Company;  and (iv) has not been  offered the
      Convertible Preferred
      Stock,  the  Warrants  and the Common Stock
      by any form of
      advertisement,   article,   notice  or  other  communication  published  in  any
      newspaper,  magazine, or similar media or broadcast over
      television or radio, or any  seminar or
      meeting  whose  attendees  have
      been  invited by any such media. Purchaser represents and
      warrants that it is an "accredited investor" within the meaning of Rule
      501 of Regulation D of the Securities
Act.

            


    

    


     

    
      	
              c.  

            	
              Transfer  Restrictions.  Purchaser  covenants  that
      in no event will it sell,  transfer
      or  otherwise  dispose of any of
      the  Convertible Preferred Stock,  the
      Warrants  and the Common Stock  other than
      in  conjunction  with an effective registration
      statement for the same under the Securities Act or pursuant to an
      exemption  there from,  or
      in  compliance  with  Rule
      144  promulgated  under the Securities  Act
      or to a person  related  to or
      an  entity  affiliated  with said Purchaser
      and other than in compliance with the applicable securities regulation
      laws of any state.

            


    

    


    8. Registration of the Shares to be
Purchased.  The Purchaser will have such rights to have the
Common Stock registered under the Securities Act as is provided initially under
the Registration Rights Agreement.

    


    9. Stromback
Family.  Company will continue to use the services of RJS
Consulting.  Company will upon the maturity date of the promissory
note Company made to Richard Stromback offer the option to either extend the
terms of the note for an additional one year period on identical terms or
convert the outstanding principal and interest owed under the note into the
Company’s common stock at a conversion price equal to the close of the Company’s
common stock on the OTC Bulletin Board on the maturity date.  Company
agrees to extend an offer to Doug Stromback and Deanna Stromback that will allow
them upon the maturity dates of the Company’s promissory notes held by them to
either extend the terms of the notes for an additional one year period on
identical terms or convert the outstanding principal and interest owed under the
notes into the Company’s common stock at a conversion price equal to the close
of the Company’s common stock on the OTC Bulletin Board on the maturity
dates.  Upon completion of the first closing and immediately after
dispersments are made per the Discretionary Investment of the initial
$240,000.00 of investment, Richard Stromback agrees to resign as a member of the
Company’s Board of Directors by executing a resignation letter substantially in
the form of Exhibit B.  Subsequently, as long as there are no material
breaches of this agreement Richard Stromback also agrees not to seek directly or
indirectly to become a Company director, be nominated to become a Company
director and/or accept the appointment as a Company director for a period of
five years after the effective date of this Agreement.

    


    10. Legends.   Company  will  place  the  following   legends  on  each
certificate representing Shares and Common Stock:

    


    THE
SECURITIES REPRESENTED  HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED  ("ACT"),  OR
ANY  APPLICABLE  STATE SECURITIES LAWS ("BLUE SKY LAWS").
ANY TRANSFER OF SUCH SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT
UNDER THE ACT OR AS REQUIRED BY BLUE SKY LAWS IS IN EFFECT AS TO
SUCH  TRANSFER OR IN THE
OPINION  OF  COUNSEL  REASONABLY   SATISFACTORY  TO  THE  COMPANY  SUCH
REGISTRATION  IS  UNNECESSARY IN ORDER FOR SUCH TRANSFER TO
COMPLY WITH THE ACT OR BLUE SKY LAWS.

    


    The legend  set
forth  above  shall be removed  and
the  Company  shall  issue a
certificate  without such legend to the holder of the Shares and
Warrant  Shares upon which it is
stamped,  if,  unless  otherwise  required
by state  securities laws,  (i) such Shares and
Warrant  Shares are  registered  for resale under
the 1933 Act, (ii) in connection with a
sale  transaction,  such holder provides the
Company  with an opinion of counsel,  in
a  generally  acceptable  form,  to the
effect  that a
public  sale,  assignment  or  transfer
of the Shares and Common Stock may be made without registration under the 1933
Act, or (iii) such holder provides  the
Company  with  reasonable  assurances  that
the Shares and Common Stock can be sold pursuant to Rule 144 without any
restriction as to the number of  securities  acquired as of
a  particular  date that can then be  immediately
sold.  The Purchaser
acknowledges,  covenants  and  agrees to
sell  Shares and
Warrant  Shares  represented  by
a  certificate  from  which the legend has been
removed only pursuant to (i) a
registration  statement  effective under the 1933 Act or
(ii)  advice of counsel  that such sale is
exempt  from the  registration requirements  of
Section 5 of the 1993
Act,  including,  without  limitation,  a
transaction pursuant to Rule 144.

    


    11. Indemnification of
Purchasers.  The Company will indemnify and hold Purchaser and
its directors, officers, shareholders,  partners, employees
and  agents  (each,  a  "Purchaser  Party")  harmless  from
any and all  losses,
liabilities,  obligations,  claims,
contingencies,  damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable
attorneys'  fees and costs
of  investigation  (collectively,  "Losses") that
a Purchaser Party may  suffer or incur as a result  of
or  relating  to the failure of
the  representations  and  warranties  of
the  Company to be true and correct.

    


    12. Miscellaneous.

    


     

    
      	
              a.  

            	
              Waivers and
      Amendments.  The provisions of this Agreement may only be
      amended or modified in a writing executed  by each of Company
      and Purchaser.  A waiver shall not be
      effective  unless in a writing  by the party against
      whom such waiver is to be enforced.

            


    

    


    
      	
              b.  

            	
              Governing Law. This
      Agreement and all actions  arising out of or in
      connection  with this  Agreement  shall be
      governed by and construed in accordance  with  the
      laws of
      the  State  of  Michigan,  without  regard  to
      the conflicts of law provisions  thereof.  EACH PARTY
      HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF
      ANY  DISPUTE  HEREUNDER  OR
      IN  CONNECTION  HEREWITH  OR
      ARISING  OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
      HEREBY.

            


    

    


     

    
      	
              c.  

            	
              Entire
      Agreement.  This Agreement, the Registration Rights
      Agreement  and the Warrants  constitute  the
      full and entire  understanding  and agreement between
      the parties with regard to the subjects hereof and
  thereof.

            


    

    


     

    
      	
              d.  

            	
              Survival. The
      representations,  warranties,  covenants and
      agreements  made  herein  shall  survive  the  execution  and  delivery  of
      this Agreement.

            


    

    


     

    
      	
              e.  

            	
              Notices, etc. Any
      notice,  request or other communication required or
      permitted  hereunder shall be in writing and shall be deemed to
      have been duly given (i) upon receipt
      if  personally  delivered,  (ii) three (3)
      days after being mailed by registered or certified
      mail,  postage  prepaid,  or (iii) one day
      after being sent by recognized overnight courier or by
      facsimile,  if to Purchaser,  1050 Northover Drive,
      Bloomfield Hills, Michigan, or at such other address or number as
      Purchaser shall have furnished to Company in writing, or if to Company, at
      2701 Cambridge Court, Suite 100, Auburn Hills, Michigan, or at such other
      address or number as the Company shall have furnished to Purchaser in
      writing.

            


    

    


     

    
      	
              f.  

            	
              Validity.  If
      any  provision of this  Agreement  shall be
      judicially  determined to be invalid,  illegal
      or  unenforceable,  the validity, legality and
      enforceability of the remaining  provisions shall not in any way
      be affected or impaired thereby.

            


    

    


     

    
      	
              g.  

            	
              Counterparts.
      This Agreement may be executed in any number of
      counterparts,  each of which shall be an
      original,  but all of which together shall be deemed to
      constitute one instrument.

            


    

    


     

    
      	
              h.  

            	
              Assignment.  The
      terms and  conditions of this  Agreement shall inure
      to the benefit of and be binding upon the respective  successors
      and assigns of the  parties.  Nothing in
      this  Agreement,  express  or  implied,  is
      intended  to  confer  upon
      any  party  other  than
      the  parties  hereto or their
      respective  successors  and  assigns  any  rights,  remedies,   obligations,  or
      liabilities under or by reason of this Agreement,  except as
      expressly  provided in this
Agreement.

            


    

    


     

    
      	
              i.  

            	
              Remedies.  The
      Purchaser shall have all rights and remedies set forth in
      the  Transaction  Documents  and all rights
      and  remedies  which such holders have been granted at
      any time under any other  agreement  or
      contract  and all of the rights which such holders have
      under  any
      law.  Any  person  having  any  rights  under
      any  provision  of this Agreement shall be entitled to
      enforce such rights specifically (without posting a bond or
      other  security),  to  recover  damages
      by reason of any breach of any provision of this Agreement and to exercise
      all other rights granted by law.

            


    

    


    IN WITNESS WHEREOF, the parties have
caused this Agreement to be duly executed and delivered by their proper and duly
authorized officers as of the date and year first written above.

    


    


    ECOLOGY
COATINGS, INC.

     

    /s/ Robert G.
Crockett

    By:  Robert
G. Crockett

    Its:  CEO

    


    


    STROMBACK
ACQUISITION CORPORATION

    /s/ Richard D.
Stromback

    By:
Richard D. Stromback

    Its:
President

    


    


    


    /s/ Richard
Stromback

    RICHARD
STROMBACK, Individually