ex101.htm


    EXHIBIT
10.1

    


    SECURITIES
PURCHASE AGREEMENT

    


    THIS
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
_____________________________  _____, 2010 by and between Shrink
Nanotechnologies, Inc., a Delaware corporation (the “Company” or “Borrower”) and the subscribers
identified herein and on the signature pages hereto (each a “Subscriber” and collectively
the "Subscribers").

    


    Principal
Amount of 12% Convertible
Notes:                                                                           $_____________________

    


    Number of
Common shares Underlying
Notes:                                                                           ______________________

    


    No. Class
A
Warrants:                                                                                                               
   ______________________

    


    RECITALS

    


    WHEREAS, subject to the terms
and conditions set forth in this Agreement and pursuant to Rule 506 of
Regulation D and Section 4(2) of the Securities Act (as defined below), the
Company desires to offer and sell to certain accredited investors at face value,
an aggregate initially (and if not oversubscribed) of up to $3,000,000 principal
amount (the "Purchase
Price" or “Principal
Amount”) of subordinated 12% Convertible Promissory Notes, a form of
which is annexed hereto as Exhibit
1 (each,
a  “Note”),
which are convertible into shares of the Company's Common Stock, $0.001 par
value (the "Common
Stock") at a per share conversion price initially set at $.50 per share
as more fully set forth in the Note (“Conversion Price”), together
with Class A Common Stock Purchase Warrants to purchase Common Stock (the “Warrant Shares”), initially
exercisable at $1.00 per share, substantially in the form as annexed hereto as
Exhibit
2 (the “Class A
Warrants”).  The
Notes, shares of Common Stock issuable upon conversion of the Notes (the “Shares”), Class A Warrants and
Warrant Shares, are sometimes collectively referred to herein as the "Securities";

    


    NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and
for other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the Company and the Subscribers agree as
follows:

    


    1. Agreement to
Purchase.

     

    1.1           Closing
Date.                                The
“Closing Date” shall be
the date that the Purchase Price is transmitted by wire transfer or otherwise
credited to or for the benefit of the Company. This offering may be consummated
in one or more closings from time to time and each such date a “Closing
Date.”  The consummation of the transactions contemplated herein for
the first Closing Date shall take place not later than March 31, 2010 upon the
satisfaction or waiver of all conditions to closing set forth in this
Agreement.  Thereafter, additional closings may be held from time to
time for a period of up to 60 days or until $3,000,000 of Notes and Class A
Warrants are sold.

    


    1.1.1           Oversubscriptions.  The
Company may accept subscriptions in excess of $3,000,000 at its exclusive
option.

    


    1.2           Closing.   Subject
to the satisfaction or waiver of the terms and conditions of this Agreement, on
each Closing Date, each Subscriber closing thereupon shall purchase and the
Company shall issue to each Subscriber, a Note in the Principal Amount
designated on the signature page hereto for the Purchase Price indicated thereon
and a Class A Warrant exercisable for 50% of the number of Shares initially
issuable upon conversion of the Note (e.g. 50,000 Class A Warrants for each
$50,000 Principal Amount of Notes sold).

    


    2. Representations,
Warranties and Covenants of the Subscriber.  Each Subscriber
represents and warrants to the Company, and covenants for the benefit of the
Company and each other Subscriber, as follows:

     

    (a) The
Subscriber is an "accredited investor" as defined under Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act");

     

    (b) The
Subscriber is acquiring the Notes and Class A Warrants for its own account and
not with a view to any distribution of any of the Securities in violation of the
Securities Act;

     

    (c) The
Subscriber acknowledges that it has significant prior investment experience,
including investment in non-listed and non-registered securities, and that the
Subscriber recognizes the highly speculative nature of this
investment.  In particular, and without limitation, the Subscriber
represents that it understands that the Company’s securities have suffered
significant illiquidity and that its current Common Stock price is not
necessarily indicative of the Company’s value and that other restricted
shareholders are eligible to sell securities pursuant to Rule 144 of the
Securities Act. The Subscriber represents that it has been furnished with, and
has reviewed, all of the Company’s securities filings, its most recent private
offering circular, and all documents and other information regarding the Company
that the Subscriber had requested or desired to know and all other documents
which could be reasonably provided have been made available for the Subscriber’s
inspection and review;

     

    (d) The
Subscriber understands and acknowledges that the Notes shall be subordinate to
any existing indebtedness to Noctua Fund, L.P., which is an affiliate of the
Company, as well as interest or penalties (if any) thereon;

     

    (e) The
Subscriber acknowledges that the Securities have not been passed upon or
reviewed by the Securities and Exchange Commission.  The Subscriber
agrees that it will not sell, transfer or otherwise dispose of any of the Shares
until they are registered under the Securities Act, or unless an exemption from
such registration is available and that a legend substantially in the form as
provided in Section 4 below will be placed on the certificate(s) representing
the shares to such effect;

     

    (f) This
Agreement constitutes a valid and binding agreement and obligation of the
Subscriber enforceable against the Subscriber in accordance with its terms,
subject to limitations on enforcement by general principles of equity and
bankruptcy or other laws affecting the enforcement of creditors' rights
generally;

     

    (g) Subscriber
is not acquiring the Securities as part of a group, as such term is defined in
Section 13 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and is not
acting in concert with any person acting in such manner.  Subscriber
makes its own voting and dispositive decisions and has not agreed to grant any
proxy or enter into any form of voting trust, agreement or similar arrangement
with respect to the Shares other than as set forth in the Waiver of even date
herewith;

     

    (h) This
Agreement has been duly authorized, validly executed and delivered on behalf of
the Subscriber, and the Subscriber has full power and authority to execute and
deliver this Agreement and the other agreements and documents contemplated
hereby and to perform his obligations hereunder and thereunder; and

     

    (i)           Subscriber
has not paid any finders fees, commissions or broker fees in connection with
his/her/its investment herein and has not been solicited by means of any form of
advertisement, public dissemination or solicitation.

    


    3. Representations,
Warranties and Covenants of the Seller.  The Company
represents and warrants to the Subscriber, and covenants for the benefit of the
Subscriber, as follows:

     

    (a) Organization and
Qualification.  The Company is duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the State of
Delaware, with the requisite power and authority to own and use its properties
and assets and to carry on its business as currently conducted.  The
Company is not in any material violation of any of the provisions of its
certificate of incorporation, bylaws or other organizational or charter
documents.

     

    (b) Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated herein
and otherwise to carry out its obligations hereunder, subject to consents and
waiver of anti dilution provisions of various existing
shareholders.  The execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated thereby have
been duly authorized by all necessary corporate action on the part of the
Company and no further action is required by the Company in connection
therewith.  This Agreement has been duly executed by the Company and,
when delivered in accordance with the terms hereof, will constitute the valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies, or (ii) laws relating to the availability of specific
performance, injunctive relief or other equitable principles of general
application.

     

    (c) No Violation or
Conflict. Assuming the representations and warranties of the Subscribers
in Section 2 are true and correct, neither the issuance and sale of the
Securities nor the performance of the Company’s obligations under this
Agreement, the Note and all other agreements entered into by the Company
relating thereto by the Company will:

     

     (i) violate, conflict with,
result in a breach of, or constitute a default (or an event which with the
giving of notice or the lapse of time or both would be reasonably likely to
constitute a default) under (A) the articles or certificate of incorporation,
charter or bylaws of the Company, (B) to the Company's knowledge, any decree,
judgment, order, law, treaty, rule, regulation or determination applicable to
the Company of any court, governmental agency or body, or arbitrator having
jurisdiction over the Company or over the properties or assets of the Company or
any of its Affiliates, (C) the terms of any bond, debenture, note or any other
evidence of indebtedness, or any agreement, stock option or other similar plan,
indenture, lease, mortgage, deed of trust or other instrument to which the
Company or any of its Affiliates is a party, by which the Company or any of its
Affiliates is bound, or to which any of the properties of the Company or any of
its Affiliates is subject, or (D) the terms of any "lock-up" or similar
provision of any underwriting or similar agreement to which the Company, or any
of its Affiliates is a party except the violation, conflict, breach, or default
of which would not have a Material Adverse Effect; or

     

    (ii) result in the creation or
imposition of any lien, charge or encumbrance upon the Securities or any of the
assets of the Company or any of its Affiliates except as described herein;
or

     

    (iii) except as have been waived,
result in the activation of any anti-dilution rights or a reset or re-pricing of
any debt or security instrument of any other creditor or equity holder of the
Company, nor result in the acceleration of the due date of any obligation of the
Company.

    


    (d) Issuance of the
Securities.  The Securities have been, or will be, duly and
validly authorized and on the date of issuance of the Shares upon conversion of
the Notes, the Shares will be duly and validly issued, fully paid and
non-assessable and if registered pursuant to the 1933 Act and resold pursuant to
an effective registration statement will be free trading and unrestricted, free
and clear of all liens.

     

    (e) SEC Reports; Financial
Statements.  The Company has filed all reports required to be
filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof
(or such shorter period as the Company was required by law to file such reports)
(the foregoing materials, as finally amended being collectively referred to
herein as the "SEC
Reports") on a timely basis or has timely filed 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, as
amended, complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
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, except to the extent that such SEC Reports may have been
subsequently amended or supplemented to correct such misstatement or omission or
to correct information relating to the Company’s internal controls.

     

    (f) Certain Registration
Matters. Assuming the accuracy of each Subscriber’s representations and
warranties, no registration under the Securities Act is required for the offer
and sale of the Securities by the Company to the Subscriber under this
Agreement.

     

    4. Other
Agreements of the Parties.

     

    5.1           Other
Agreements of the Parties. (a) The Company and each Subscriber agrees
that the Securities may only be disposed of in compliance with state and federal
securities laws.  In connection with any transfer of the Securities
other than pursuant to an effective registration statement, to the Company, to
an affiliate of a Subscriber or in connection with a pledge as contemplated in
Section 5.1(b),
the Company may require the transferor thereof to provide to the Company with an
opinion of counsel selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Shares under the
Securities Act.  As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement.

    


    (b)           (i)
Certificates evidencing the Shares and Warrant Shares will contain substantially
the following legend, until such time as such securities are sold pursuant to an
exemption from the Securities Act registration requirements:

     

    THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

     

    (ii)  The
Notes and Class A Warrants shall bear substantially the following
legend:

     

    “NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE/EXERCISABLE, HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES. "

     

    5.2           Conversion
of Notes; Procedure.  (a)  Upon the conversion of a
Note or part thereof, the Company shall, at its own cost and expense, take all
necessary action, issue or cause the transfer agent to issue, stock certificates
in the name of Subscriber (or its permitted nominee) or such other persons as
designated by Subscriber and in such denominations to be specified at conversion
representing the number of Shares issuable upon such conversion.

     

    (b)           A
Subscriber will give notice of its decision to exercise its right to convert the
Note, interest, or part thereof by telecopying, or otherwise delivering a
completed Notice of Conversion (a form of which is annexed as “Exhibit A” to the
Note) to the Company via confirmed telecopier transmission or otherwise pursuant
to Section 13(a) of this Agreement.  Such Subscriber will not be
required to surrender the Note until the Note has been fully converted or
satisfied.  Each date on which a Notice of Conversion is telecopied to
the Company in accordance with the provisions hereof by 6 PM Eastern Time
(“ET”) (or if received
by the Company after 6 PM ET or at any time or a non-business day then the next
business day) shall be deemed a “Conversion
Date.”  The Company will exercise best efforts to issue or
cause the Company’s transfer agent to issue/transmit the Company's Common Stock
certificates representing the Shares issuable upon conversion of the Note to
such Subscriber via express courier for receipt by such Subscriber within
fourteen (14) business days after receipt by the Company of the Notice of
Conversion (such seventh day being the "Delivery Date").  In
the event the Shares are electronically transferable, then delivery of the
Shares may be made by electronic transfer (with appropriate legend) provided
request for such electronic transfer has been made by the
Subscriber.   A Note representing the balance of the Note not so
converted will be provided by the Company to such Subscriber if requested by
Subscriber, provided such Subscriber delivers the original Note to the
Company.  In the event that a Subscriber elects not to surrender a
Note for reissuance upon partial payment or conversion of a Note, such
Subscriber hereby indemnifies the Company against any and all loss or damage
attributable to a third-party claim in an amount in excess of the actual amount
then due under the Note.

     

    (c)           The
Company shall not be responsible for incidental damages or potential “lost
profits” in the event that Shares are not sold timely or at profitable rates, if
at all.

     

    5.3.           Conversion
Price of Note.
The Notes shall be convertible at a fixed Conversion Price of $.50 per
share, subject to adjustment in the event of stock split, combination, stock
dividend or reorganization as provided in the Note.  In the event of a
Borrower Mandated Conversion (which may only be after an Event of Default or
after the Maturity Date), as defined in the Note, the Conversion Price shall be
reduced (but not increased) to such amount as equals 80% of the Conversion Price
then in effect (i.e. $.40 based on the initial Conversion Price).

     

    5.4           Damages.
In the event the Subscriber is entitled to receive any liquidated damages
pursuant to the Transactions, the Subscriber may elect to receive the greater of
actual damages or such liquidated damages.

     

    5.5           Existing
Notes. The Notes shall be junior and subordinated in payment and
priority, to the existing outstanding indebtedness owed to the Noctua Fund,
L.P., an entity controlled by the Company’s affiliates, along with any interest
or penalties thereon, if any.

     

    5.6           Placement
Agent Fees/Expenses.                                                                The
Company acknowledges that it may retain one or more placement agents (who are
appropriately FINRA registered) to act as its managing placement agent in
connection with the sale of Notes and Warrants.  The Company has
reserved and may pay, a cash commission of up to 6% of the amount raised and a
non-accountable expense allowance, and blue sky related costs.  The
Company may also be required to pay any legal fees (of its own as well as
placement agent counsel), escrow and disbursement costs, printing, consulting or
due diligence fees of a placement agent in connection any
financing.

     

    5. Binding
Effect; Assignment.  This Agreement is
not assignable by the Company or the Subscriber without the prior written
consent of the other party.  This Agreement and the provisions hereof
shall be binding and shall inure to the benefit of the Company and its
successors and permitted assigns with respect to the obligations of the
Subscriber under this Agreement, and to the benefit of the Subscriber and its
successors and permitted assigns with respect to the obligations of the Company
under this Agreement.

     

    6. Governing
Law; Jurisdiction.  This Agreement
shall be governed by and interpreted in accordance with the laws of the State of
California, County of San Diego, without giving effect to conflicts of law
principles that would result in the application of the substantive laws of
another jurisdiction.

     

    7. Entire
Agreement.  This Agreement constitutes the entire understanding
and agreement of the parties with respect to the subject matter hereof and
supersedes all prior and/or contemporaneous oral or written proposals or
agreements relating thereto all of which are merged herein.  This
Agreement may not be amended or any provision hereof waived in whole or in part,
except by a written amendment signed by both of the parties.

     

    8. Survival.  The
representations and warranties of the Company and the Subscriber shall survive
the Closing hereunder.

     

    


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    [Counter
Part Signature Page of Shrink Nanotechnologies, Inc., to Securities Purchase
Agreement Between Subscriber and Shrink Nanotechnologies, Inc.]

    


    IN
WITNESS WHEREOF, this Agreement was duly executed on the date first written
above and, the Company hereby issues to Subscriber such number of 12%
Convertible Notes and Class A Common Stock Purchase Warrants as is set forth on
the signature page of Subscriber, to this Agreement.

    


    SHRINK
NANOTECHNOLOGIES, INC.

    


    


    By:_______________________________________

          Name:

          Title:
President

    


    


    



    
      
        
          


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    [Counter
Part Signature Page of Subscriber, to Securities Purchase Agreement Between
Subscriber and Shrink Nanotechnologies, Inc.]

    


    __________________________________________

     Print Name of
Subscriber:

    


    __________________________________________

     (Signature)

    __________________________________________

    Print name and title, if Subscriber is
an entity

    


    Investment Amount:
$                                                                           

    (same as amount identified in the line
below)

    


    Principal Amount of

    12% Convertible Notes:
$_____________________

    


    No. Class A
Warrants:   ______________________

    


    Social Security
No./EIN:                                                                           

    


    ADDRESS FOR NOTICE

    


    Street:                                                                           

    


    City/State/Zip:                                                                           

    


    Attention:                                                                           

    


    Tel:           

    


    Fax:           

    


    


     

    


     


    
      
        
          


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    EXHIBIT
1

     

    Form of 12% Convertible
Promissory Note

     


    
      
        
          


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    EXHIBIT
2

     

    Form of Class A Common Stock
Purchase Warrant

     

    


     


    
      
        
          


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