Exhibit 10.1

 

Execution Version

 

 

SECURITIES PURCHASE AGREEMENT

 

by and between

 

MOLYCORP, INC.

 

and

 

MOLIBDENOS Y METALES S.A.

 

Dated as of January 31, 2012

 

 

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SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of January 31,
2012, is entered into by and between Molycorp, Inc., a Delaware corporation (the
“Company”), and Molibdenos y Metales S.A., a company established under the laws
of Chile (the “Purchaser”).

 

BACKGROUND

 

A.            Pursuant to the terms of that certain Memorandum of Understanding,
dated as of July 19, 2011 (the “MOU”), by and between the Company and the
Purchaser, and following the satisfactory completion of the Purchaser’s due
diligence review as contemplated thereby, the Purchaser desires to make an
investment in the Company.

 

B.            Consequently, the Company desires to sell to the Purchaser, and
the Purchaser desires to purchase from the Company, 12,500,000 newly issued
shares (the “Investment Shares”) of the Company’s common stock, par value $0.001
per share (the “Common Stock”), all on the terms and subject to the conditions
set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

 

ARTICLE I:  DEFINED TERMS

 

1.1          Defined Terms.

 

When used in this Agreement, the following terms will have the meanings assigned
to them below:

 

“Affiliate” means with respect to any Person, a Person that directly or
indirectly controls, is controlled by, or is under common control with, any such
Person.  The term “control” (including the terms “controlled by” or “under
common control with”) means, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through ownership of voting securities, membership interests, by
contract or otherwise.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Annual Report” means the Company’s Annual Report on Form 10-K for the year
ended December 31, 2010, as filed with the SEC.

 

“Applicable Market Value” means $28.38 per share, which is the average VWAP for
the 20 consecutive Trading Days ending on the Trading Day immediately preceding
the date of this Agreement.

 

“Beneficial Ownership” and “Beneficially Own” and derivations thereof are
defined in accordance with the term “beneficial ownership” as defined in Rule
13d-3 under the Exchange Act.

 

“Board” has the meaning set forth in Section 3.1(a)(iii).

 

“Business Day” means any day other than a Saturday, Sunday or other day in the
City of New York, New York, USA, on which banking institutions are authorized by
Law to close.

 

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“Bylaws” has the meaning set forth in Section 3.1(a)(iii).

 

“Certificate of Incorporation” has the meaning set forth in Section 3.1(a)(i).

 

“CFIUS” has the meaning set forth in Section 6.2(a).

 

“Claim” means any action, charge, suit, claim, complaint, cause of action,
written demand or notice of violation, investigation or proceeding before or by
any Governmental Entity or arbitrator.

 

“Closing” has the meaning set forth in Section 2.3.

 

“Closing Date” has the meaning set forth in Section 2.3.

 

“Common Stock” has the meaning set forth in the Background Paragraphs.

 

“Common Stock Equivalents” means any securities of the Company or its
subsidiaries that entitle the holder thereof to acquire at any time Common
Stock, including any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable
for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“Company” has the meaning set forth in the Preamble.

 

“Consent” means any consent, approval, authorization, order, qualification,
filing, clearance (including any negative clearance), waiver or registration.

 

“End Date” has the meaning set forth in Section 9.1(b).

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as
amended.

 

“FINSA” means Section 721 of the Defense Production Act of 1959 (50 U.S.C. App.
2170), as amended by The Foreign Investment and National Security Act of 2007,
(P.L. 110-49, 121 Stat. 246), and implementing Regulations Pertaining to
Mergers, Acquisitions and Takeovers by Foreign Persons (31 C.F.R. Part 800).

 

“GAAP” means United States generally accepted accounting principles.

 

“General Enforceability Exceptions” has the meaning set forth in Section 4.2(a).

 

“Governmental Entity” means any domestic or foreign federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, or any court or tribunal.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.

 

“ICC” has the meaning set forth in Section 10.8.

 

“Indemnification Agreement” means the Indemnification Agreement by and between
the Company and the Purchaser Director, in substantially the same form as the
indemnification agreements entered into between the Company and each of its
current directors.

 

“Investment Shares” has the meaning set forth in the Background Paragraphs.

 

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“Law” means any law, common law, statute, code, ordinance, regulation or other
requirement of any Governmental Entity.

 

“Lien” means any security interest, pledge, lien, bailment (in the nature of a
pledge or for purposes of security), mortgage, deed of trust, grant of a power
to confess judgment, conditional sale or title retention agreement (including
any lease in the nature thereof), charge, claim, encumbrance, easement,
reservation, restriction, right of first refusal or first offer or option.

 

“Losses” has the meaning set forth in Section 7.4(e)(i).

 

“Material Adverse Effect” means any event, change, effect, circumstance,
condition, development or occurrence, individually or in the aggregate, causing,
resulting in or having a material adverse effect on (a) the financial condition,
business, assets, properties, results of operations or prospects of the Company
and its subsidiaries, taken as a whole, or (b) the legality, validity or
enforceability of this Agreement or on the Company’s ability to perform any of
its material obligations hereunder; provided, that Material Adverse Effect shall
not include any event, change, effect, circumstance, condition, development or
occurrence resulting from:  (i) any changes in general United States or global
political, economic or market conditions, unless such changes have a materially
disproportionate adverse effect on the Company and its subsidiaries, taken as a
whole, as compared to a majority of the other similarly situated companies
operating in the same industry; (ii) any changes in conditions generally
affecting the industry in which the Company operates, unless such changes have a
materially disproportionate adverse effect on the Company and its subsidiaries,
taken as a whole, as compared to a majority of the other similarly situated
companies operating in such industry; (iii) any changes in Law or applicable
accounting regulations or principles or the interpretations thereof; (iv) acts
of terrorism, war (whether or not declared) or civil unrest, or escalations
thereof, or natural disasters, unless such acts or disasters have a materially
disproportionate adverse effect on the Company and its subsidiaries, taken as a
whole, as compared to a majority of the other similarly situated companies
operating in the same industry; (v) any announcement of the transactions
contemplated by this Agreement; (vi) a party’s compliance with the terms of, or
taking any action contemplated by, this Agreement; (vii) any changes in the
price or trading volume of the Common Stock (provided that any event, change,
effect, circumstance, condition, development or occurrence that may have caused
such changes will not be excluded under this proviso); or (viii) any failure, in
and of itself, by the Company to meet any internal or published projections,
forecasts, estimates or predictions in respect of revenues, earnings or other
financial or operating metrics for any period (provided that any event, change,
effect, circumstance, condition, development or occurrence that may have caused
such failure will not be excluded under this proviso).

 

“Material Permits” has the meaning set forth in Section 4.9.

 

“Material Subsidiaries” has the meaning set forth Section 4.1(b).

 

“MOU” has the meaning set forth in the Background Paragraphs.

 

“Mountain Pass Facility” means the rare earth mining and processing operations,
facilities and other infrastructure and related assets located in Mountain Pass,
California and owned by the Company’s Material Subsidiary, Molycorp Minerals,
LLC, a Delaware limited liability company.

 

“Nomination Requirements” has the meaning set forth in Section 7.3(b).

 

“Nondisclosure Agreement” has the meaning set forth in Section 6.1.

 

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“Order” means any judgment, writ, decree, injunction, order, compliance
agreement or settlement agreement of or with any Governmental Entity or
arbitrator.

 

“Percentage Limitation” has the meaning set forth in Section 7.2(a).

 

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a Governmental Entity (or any department, agency
or political subdivision thereof).

 

“Post-Closing Standstill Period” means the period of time commencing on the
Closing Date and ending on the two-year anniversary of the Closing Date.

 

“Pre-Closing Standstill Period” means the period of time commencing on the date
of this Agreement and ending (a) immediately prior to the Closing or (b) upon a
valid termination of this Agreement pursuant to Article IX, whichever occurs
first.

 

“Premium” means ten percent (10%).

 

“Project Phoenix Phase 1” has the meaning set forth in Section 4.9.

 

“Project Phoenix Phase 2” has the meaning set forth in Section 4.9.

 

“Prospectus” means the prospectus included in a Registration Statement
(including a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A, Rule 430B or Rule 430C promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Investment Shares covered by a
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

“Purchase Price” means the aggregate amount equal to (a) the number of
Investment Shares, multiplied by (b) (i) the Applicable Market Value, multiplied
by (ii) the Premium.  The Purchase Price equals $390,225,000.00 (or $31.218 per
Investment Share).

 

“Purchaser” has the meaning set forth in the Preamble.

 

“Purchaser Director” has the meaning set forth in Section 7.3(b).

 

“Registration Statement” means a registration statement that meets the
requirements set forth in Section 7.4 and covers the resale by the Purchaser of
all or a portion of the Investment Shares.

 

“SEC” means the United States Securities and Exchange Commission or any
successor agency thereto.

 

“SEC Reports” means the Annual Report and all other reports filed or furnished
by the Company with the SEC under Sections 13(a), 13(c) or 15(d) under the
Exchange Act on or after December 31, 2010.

 

“Securities” has the meaning set forth in Section 7.2(a).

 

“Securities Act” means the United States Securities Act of 1933, as amended.

 

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“Trading Day” means a full trading day (beginning at 9:30 a.m. Eastern Time and
ending at 4:00 p.m. Eastern Time) on the Trading Market.

 

“Trading Market” means the New York Stock Exchange or any successors thereto.

 

“Transfer” means, (a) when used as a verb, to sell, transfer, assign, encumber,
pledge, hypothecate, grant any right, option, profit participation or other
interest in, or otherwise dispose of, directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, or make an offer to do any of
the foregoing, and (b) when used as a noun, a direct or indirect, voluntary or
involuntary, sale, transfer, assignment, encumbrance, pledge, hypothecation,
grant of any right, option, profit participation or other interest, or other
disposition by operation of law or otherwise, and any offer to do any of the
foregoing.

 

“VWAP” means the daily volume weighted average price (based on a Trading Day
from 9:30 a.m. to 4:00 p.m. (Eastern Time) of one share of the Common Stock on
the Trading Market as reported by Bloomberg Financial L.P.

 

ARTICLE II:  ISSUANCE AND SALE OF THE INVESTMENT SHARES

 

2.1          Authorization of Issuance and Sale.

 

Subject to the terms and conditions of this Agreement, the Company has
authorized the issuance and sale of the Investment Shares to the Purchaser.

 

2.2          Agreement to Sell and Purchase.

 

At the Closing, the Company will issue and sell to the Purchaser, and the
Purchaser will purchase from the Company, the Investment Shares at the Purchase
Price, upon the terms and subject to the conditions set forth in this Agreement.

 

2.3          The Closing of the Sale.

 

The closing of the transactions contemplated by this Agreement (the “Closing”)
will take place on the second Business Day following the day upon which the last
of the conditions set forth in Article VIII (other than those that by their
terms are to be satisfied or waived at the Closing itself) is satisfied or
waived in writing at a location mutually selected by the Purchaser and the
Company at 10:00 a.m. Eastern Time (the “Closing Date”), or at such other time
as may be agreed upon by the Purchaser and the Company.  The Company and the
Purchaser may also conduct the Closing remotely through the electronic exchange
of Closing documentation.  At the Closing, on the terms and subject to the
conditions contained herein, the Company will issue, sell and deliver to the
Purchaser, and the Purchaser will purchase from the Company, the Investment
Shares free and clear of any Liens, other than any restrictions imposed by
applicable securities Laws and this Agreement.

 

2.4          Book-Entry Registration of Shares.

 

At the Closing, the Company will issue the Investment Shares to the Purchaser by
registering them in the Purchaser’s name in book-entry form with the Company’s
transfer agent.

 

2.5          Exemption from Registration.

 

The Investment Shares being purchased hereunder by the Purchaser (a) have not
been registered under the Securities Act or any applicable state and other
securities Laws, and will be issued under one or

 

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more exemptions from registration under the Securities Act and any applicable
state and other securities Laws, and (b) will be “restricted securities” (as
that term is defined in Rule 144(a)(3) promulgated under the Securities Act) and
may not be resold unless they are registered under the Securities Act and any
applicable state and other securities Laws or an exemption from registration is
available.  Accordingly, the restrictions noted in the records of the Company’s
transfer agent and any certificates evidencing the Investment Shares being
purchased hereunder by the Purchaser will, upon issuance, contain legends in
substantially the following form (in addition to any other legends required to
be placed thereon under applicable state securities Laws):

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED PURSUANT
TO THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO ANY STATE SECURITIES
LAWS  OR THE LAWS OF ANY OTHER JURISDICTION, AND MAY NOT BE SOLD, TRANSFERRED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT OR SUCH LAWS AND THE RULES AND REGULATIONS
THEREUNDER.  THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE FURTHER SUBJECT
TO TRANSFER AND OTHER RESTRICTIONS SET FORTH IN A SECURITIES PURCHASE AGREEMENT,
DATED AS OF JANUARY 31, 2012, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF
THE COMPANY AT THE COMPANY’S PRINCIPAL EXECUTIVE OFFICES.

 

ARTICLE III:  THE CLOSING

 

3.1          Deliveries at the Closing.

 

(a)       At the Closing, the Company will deliver, or cause to be delivered, to
the Purchaser:

 

(i)            a copy of the Amended and Restated Certificate of Incorporation
of the Company (the “Certificate of Incorporation”) certified as of a recent
date by the Secretary of State of the State of Delaware;

 

(ii)           a certificate issued as of a recent date by the Secretary of
State of the State of Delaware certifying that the Company is in good standing
in the State of Delaware;

 

(iii)          a certificate of an executive officer of the Company, dated as of
the Closing Date, certifying (A) that a true, complete and correct copy of the
Certificate of Incorporation, as in effect on the Closing Date, is attached to
such certificate; (B) that a true, complete and correct copy of the Bylaws of
the Company (the “Bylaws”), as in effect on the Closing Date, are attached to
such certificate; (C) that true, complete and correct copies of resolutions of
the Board of Directors of the Company (the “Board”) (1) authorizing the
execution and delivery of this Agreement and the performance by the Company of
its obligations hereunder, including the issuance of the Investment Shares, (2)
appointing the Purchaser Director to serve as a Class II director effective as
of the Closing Date, and (3) approving the nomination of the Purchaser Director
as a Class II director candidate for election at the next annual meeting of the
Company’s stockholders, are attached to such certificate; and (D) as to the
matters set forth in Sections 8.3(a) and 8.3(b);

 

(iv)          a receipt duly executed by the Company evidencing receipt by the
Company of the Purchase Price (as may be reduced as provided in Section 2.1) in
cash;

 

(v)           the Indemnification Agreement duly executed by the Company; and

 

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(vi)          such other documents relating to the transactions contemplated
hereby as the Purchaser may reasonably request.

 

(b)      At the Closing, the Purchaser will deliver, or cause to be delivered,
to the Company:

 

(i)            the Purchase Price (as may be reduced as provided in Section 2.1)
in cash, by bank wire transfer of immediately available funds to an account
designated in writing by the Company;

 

(ii)           a certificate of an executive officer of the Purchaser, dated as
of the Closing Date, certifying as to the matters set forth in Sections 8.2(a)
and 8.2(b);

 

(iii)          the Indemnification Agreement duly executed by the Purchaser
Director; and

 

(iv)          such other documents relating to the transactions contemplated
hereby as the Company may reasonably request.

 

ARTICLE IV:  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

As a material inducement to the Purchaser to enter into and perform its
obligations under this Agreement, the Company represents and warrants to the
Purchaser, as of the date hereof and as of the Closing Date, as follows:

 

4.1          Organization and Qualification.

 

(a)           The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own its property and to conduct its business as
described in the SEC Reports, and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its business as
currently conducted or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not reasonably be expected to have a Material Adverse
Effect.

 

(b)           The only material subsidiaries of the Company are:  (i) Molycorp
Minerals, LLC, a Delaware limited liability company; (ii) Molycorp Metals &
Alloys, Inc., an Illinois corporation; and (iii) Aktsiaselts Molycorp Silmet, a
public limited company organized under the laws of the Republic of Estonia
(collectively, the “Material Subsidiaries”).  All of the issued shares of
capital stock or other equity interests of each Material Subsidiary held by the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company, free and
clear of all Liens except those Liens imposed by applicable securities Laws and
those Liens imposed by the transaction documents pursuant to which the Material
Subsidiaries were acquired or formed, as applicable.

 

(c)           Each Material Subsidiary of the Company has been duly organized,
is validly existing and in good standing (to the extent such concept is
recognized) under the laws of the jurisdiction of its organization, has the
power and authority to own its property and to conduct its business as described
in the SEC Reports and is duly qualified to transact business and is in good
standing (to the extent such concept is recognized) in each jurisdiction in
which the conduct of its business as currently conducted or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not reasonably be
expected to have a Material Adverse Effect.

 

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4.2          Power; Authorization; Validity and Enforceability.

 

(a)           The Company has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement.  This Agreement has
been duly authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Purchaser, represents the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be limited by any
applicable bankruptcy, reorganization, insolvency or other laws affecting
creditors’ rights generally or by general principles of equity (the “General
Enforceability Exceptions”).

 

(b)           The Investment Shares have been duly authorized and, when issued
and delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable.

 

4.3          Non-Contravention; Consents.

 

The execution and delivery by the Company of, and the performance by the Company
of its obligations under, this Agreement will not contravene any provision of: 
(a) applicable Law; (b) the Certificate of Incorporation or Bylaws; (c) any
agreement or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken as a
whole; or (d) any Order.  No Consent of any Governmental Entity is required for
the performance by the Company of its obligations under this Agreement, except
for the Consents contemplated by Section 6.2(a) and as may be required by the
state securities or “blue sky” Laws and any filings required under the
Securities Act or the Exchange Act.

 

4.4          Capitalization of the Company.

 

Immediately prior to the date of this Agreement, the authorized capital stock of
the Company consisted of 350,000,000 shares of Common Stock, of which 83,895,354
shares are issued and outstanding, and 5,000,000 shares of preferred stock, par
value $0.001 per share, of which 2,070,000 shares of convertible preferred stock
are issued and outstanding.  As of the date of this Agreement, the Company has
not, and as of the Closing, the Company will not have, issued any capital stock
since its most recently filed periodic report under the Exchange Act, other than
(a) pursuant to any equity compensation or stock purchase plan that has been
approved by the Company’s Board of Directors and stockholders, (b) pursuant to
the conversion or exercise of Common Stock Equivalents, (c) in connection with
bona fide business acquisitions by the Company or any of its subsidiaries,
whether by merger, consolidation, sale of assets, sale or exchange of stock or
otherwise, each as approved by the Company’s Board of Directors, and (d) in
connection with bona fide commercial relationships of the Company or its
subsidiaries, as long as any such issuance is not primarily intended to provide
the Company with equity financing.  No Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in
the transactions contemplated by this Agreement.  As of the date of this
Agreement, except as set forth in the SEC Reports or as otherwise disclosed to
the Purchaser in writing immediately prior to its execution of this Agreement,
there are no outstanding options, warrants, script rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any subsidiary is or may become bound to issue additional shares of Common Stock
or Common Stock Equivalents.  The issuance and sale of the Investment Shares
will not obligate the Company to issue shares of Common Stock or other
securities of the Company to any Person (other than the Purchaser) and will not
result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities.  All of the
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable, have

 

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been issued in compliance in all material respects with all federal and state
securities Laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase
securities.  No further approval or authorization of any stockholder or the
Board is required for the issuance and sale of the Investment Shares.  There are
no stockholders agreements or voting agreements with respect to the Company’s
capital stock to which the Company is a party.

 

4.5          SEC Reports; Financial Statements; Listing Compliance.

 

(a)           The Company has filed or furnished, as applicable, on a timely
basis, all forms, filings, registrations, submissions, statements,
certifications, reports and documents required to be filed or furnished by it
with the SEC under the Exchange Act since December 31, 2010.  As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the SEC promulgated thereunder, as applicable, 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 the light of the circumstances under
which they were made, not misleading.

 

(b)           Except as set forth in the SEC Reports, the consolidated financial
statements (including, in each case, any notes thereto) contained in the
Company’s SEC Reports (i) were prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated (except as may be indicated in
the notes thereto or, in the case of interim consolidated financial statements,
where information and footnotes contained in such financial statements are not
required under the rules of the SEC to be in compliance with GAAP), and
(ii) complied as to form, as of their respective filing dates, in all material
respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto.  Except as set forth in
the SEC Reports, such consolidated financial statements fairly present, in all
material respects, the financial condition of the Company and its consolidated
subsidiaries at the dates of such statements and the results of their operations
for the periods covered thereby (subject, in the case of unaudited statements,
to normal year-end adjustments that were not and that are not expected to be,
individually or in the aggregate, material to the Company and its consolidated
subsidiaries taken as a whole).

 

(c)           The Company and each of its consolidated subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements by the Company in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and
(iv) the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.

 

(d)           Except as set forth in the SEC Reports, since the end of the
Company’s most recent audited fiscal year, (i) the Company is not aware of any
material weakness in the Company’s internal control over financial reporting
(whether or not remediated) and (ii) no change in the Company’s internal control
over financial reporting has occurred that has materially and adversely
affected, or is reasonably likely to materially and adversely affect, the
Company’s internal control over financial reporting.  The Company is not subject
to any significant deficiencies or material weaknesses with applicable
provisions of the Sarbanes-Oxley Act of 2002, as amended, and the rules and
regulations promulgated thereunder.

 

(e)           As of the date of this Agreement, the Company is eligible to
register the Investment Shares for resale by the Purchaser on a Registration
Statement on Form S-3 under the Securities Act.  There are no outstanding or
unresolved comments in comment letters received from the SEC’s staff with

 

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respect to the SEC Reports.  The Company does not have pending before the SEC
any request for confidential treatment of information.

 

(f)            The Company is in compliance in all material respects with the
requirements of the Trading Market for continued listing of the Common Stock
thereon.  The Company has taken no action designed to terminate, or likely to
have the effect of terminating, the registration of the Common Stock under the
Exchange Act or the listing of the Common Stock on the Trading Market, nor has
the Company received any notification that the SEC or the Trading Market is
contemplating terminating such registration or listing.  The transactions
contemplated by this Agreement will not contravene the rules and regulations of
the Trading Market.  The Company will comply with all requirements of the
Trading Market with respect to the issuance of the Investment Shares.

 

4.6          Absence of Certain Changes.

 

Since the date of the Company’s most recent audited financial statements:

 

(a)           there has been no event, occurrence or development that has had or
that would reasonably be expected to result in a Material Adverse Effect;

 

(b)           the Company has not incurred any liabilities of any nature,
whether accrued, absolute, fixed, contingent or otherwise, whether due or to
become due and whether or not required to be recorded or reflected on a balance
sheet under GAAP, other than (i) such liabilities (A) disclosed, reflected or
reserved against in the financial statements of the Company included in the SEC
Reports filed and available prior to the date hereof (including any notes
thereto) or otherwise disclosed in writing to the Purchaser immediately prior to
its execution of this Agreement or (B) incurred in the ordinary course of
business consistent with past practice since December 31, 2010, which, in the
case of clause (B), individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect, (ii) such liabilities
arising or resulting from an existing contract, or a contract entered into in
compliance with this Agreement, except to the extent that such liabilities arose
or resulted from a breach or a default of such contract, or (iii) such
liabilities which have been discharged or paid in full in the ordinary course of
business as of the date of this Agreement;

 

(c)           the Company has not altered its method of accounting;

 

(d)           except as disclosed in its SEC Reports and for regular dividends
on the Company’s outstanding preferred stock, the Company has not declared or
made any dividend or distribution of cash or other property to its stockholders
or purchased, redeemed or made any agreements to purchase or redeem any shares
of its capital stock; and

 

(e)           the Company has not issued any equity securities to any officer,
director or Affiliate or any other Person, except pursuant to its equity
compensation or stock purchase plans.

 

4.7          Offering Exemption.

 

Assuming the accuracy of the representations of the Purchaser in Article V, (a)
the offering, sale and issuance of the Investment Shares will be exempt from
registration under the Securities Act, and (b) neither the Company nor any of
its Affiliates has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would cause this offering of the Investment Shares to be integrated with prior
offerings by the Company for purposes of the Securities Act or any applicable
shareholder approval provisions of any Trading Market on which any of the
securities of the Company are listed or designated that would cause the
exemption from registration

 

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under the Securities Act to be unavailable or would cause the issuance of the
Investment Shares to violate the stockholder approval rules of any Trading
Market.  Neither the Company nor any person acting on behalf of the Company has
offered or sold any of the Investment Shares by any form of general solicitation
or general advertising.  The Company has offered the Investment Shares for sale
only to the Purchaser as an “accredited investor” within the meaning of Rule 501
under the Securities Act.

 

4.8          Brokers.

 

No investment banker, broker or finder who or which has acted on behalf, or
under the authority of, the Company will be entitled to any fee or commission
directly or indirectly from the Company in connection with any of the
transactions contemplated hereby.

 

4.9          Regulatory Permits.

 

To the extent required to be disclosed in the SEC Reports, the Company and the
Material Subsidiaries possess all material certificates, authorizations,
licenses and permits issued by the appropriate Governmental Entities necessary
to conduct their respective businesses as described in the SEC Reports
(collectively, “Material Permits”), and the Company believes it can obtain,
without undue burden or delay, all remaining permits necessary to complete the
initial modernization and expansion plan (described as “Project Phoenix Phase 1”
in the SEC Reports) and the second-phase capacity expansion plan (described as
“Project Phoenix Phase 2” in the SEC Reports) for the Mountain Pass Facility. 
Neither the Company nor any Material Subsidiary is in default of, or has
received any notice of proceedings relating to the suspension, revocation or
modification of, any Material Permit as it relates to Project Phoenix Phase 1 or
Project Phoenix Phase 2 that would reasonably be expected to have a Material
Adverse Effect.

 

4.10        Transactions with Affiliates and Employees.

 

Except as set forth in the SEC Reports, none of the officers, directors or
employees of the Company is presently a party to any transaction with the
Company or any of its subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
such officer, director or employee or, to the knowledge of the Company, any
entity in which any such officer, director, or employee has a substantial
interest or is an officer, director, trustee or partner of, other than (i) for
payment of salary or consulting fees for services rendered, (ii) reimbursement
for expenses incurred on behalf of the Company and (iii) for other employee
benefits, including stock option agreements under any equity compensation or
stock purchase plan of the Company.

 

4.11        Foreign Corrupt Practices Act.

 

The Company has not, and since the date of its acquisition by the Company, no
subsidiary in which the Company owns a majority of the outstanding equity has
(a) directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (b) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (c) failed to disclose fully any
contribution made by the Company (or, to the knowledge of the Company, made by
any Person acting on its behalf) which is in violation of law, or (d) violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

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4.12        Manipulation of Price.

 

The Company has not (a) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Investment Shares, (b) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Investment Shares, or (c) paid or agreed to
pay to any Person any compensation for soliciting another to purchase any other
securities of the Company.

 

ARTICLE V:  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

As a material inducement to the Company to enter into and perform its
obligations under this Agreement, the Purchaser represents and warrants to the
Company, as of the date hereof and as of the Closing Date, as follows:

 

5.1          Organization and Qualification.

 

The Purchaser is a company duly organized, validly existing and in good standing
under the laws of Chile and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business as
currently conducted or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not reasonably be expected to adversely affect the
Purchaser’s ability to perform its obligations under this Agreement.  The
Purchaser has the necessary power and authority to (a) own, operate and lease
its properties and assets as and where currently owned, operated and leased and
(b) carry on its business as currently conducted.

 

5.2          Power; Authorization; Validity and Enforceability.

 

The Purchaser has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement.  This Agreement has been duly
authorized, executed and delivered by the Purchaser and, assuming due
authorization, execution and delivery by the Company, represents the legal,
valid and binding obligation of the Purchaser, enforceable against the Purchaser
in accordance with its terms, subject to the General Enforceability Exceptions.

 

5.3          Non-Contravention; Consents.

 

The execution and delivery by the Purchaser of, and the performance by the
Purchaser of its obligations under, this Agreement will not contravene any
provision of:  (a) applicable Law; (b) the governing documents of the Purchaser;
(c) any agreement or other instrument binding upon the Purchaser or any of its
subsidiaries that is material to the Purchaser and its subsidiaries, taken as a
whole; or (d) any Order.  No Consent of any Governmental Entity is required for
the performance by the Purchaser of its obligations under this Agreement, except
for the Consents contemplated by Section 6.2(a).

 

5.4          Investment Representations.

 

(a)           The Purchaser:  (i) is an “accredited investor” as such term is
defined in Rule 501 of Regulation D promulgated under the Securities Act, has
such knowledge and experience in financial and business matters (either alone or
in conjunction with a financial advisor) that it is capable of evaluating the
merits and risks of the investment in the Investment Shares, and has the
capacity to protect its own interests; (ii) believes that the nature and amount
of the Investment Shares being purchased is consistent with the Purchaser’s
overall investment program and financial position; (iii) recognizes that there
are

 

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substantial risks involved in the acquisition of the Investment Shares,
including risk of loss of the entire amount of such investment, and that there
is no assurance that any economic, income or tax benefit will be realized from
such investment; and (iv) understands that it must be able to bear the economic
risk of an investment in the Investment Shares for an indefinite period of time
(A) because the Investment Shares will be “restricted securities” (as that term
is defined in Rule 144(a)(3) promulgated under the Securities Act) and,
therefore, must be held indefinitely unless subsequently registered under the
Securities Act and applicable state and other securities Laws or unless an
exemption from such registration is available, and (B) as a result of the
restrictions set forth in Sections 7.1 and 7.2.

 

(b)           The Purchaser is acquiring the Investment Shares for investment
purposes for its own account, not as a nominee or agent, and not with the view
to, or for resale in connection with, any distribution of any part thereof.  The
Purchaser understands that the Investment Shares have not been registered under
the Securities Act or applicable state and other securities Laws by reason of a
specific exemption from the registration provisions of the Securities Act and
applicable state and other securities Laws, the availability of which depends
upon, among other things, the bona fide nature of the investment intent and the
accuracy of the Purchaser’s representations as expressed herein.

 

(c)           The Purchaser is familiar with the Company and has been afforded
access to all information regarding the business, operations, assets, condition
(financial and otherwise), operating results, liabilities and prospects of the
Company and its subsidiaries, and the merits and risks of its investment in the
Investment Shares, in each case, to the extent the Purchaser has requested any
such information in connection with its evaluation of an investment in the
Investment Shares.  The Purchaser has had an opportunity to inspect the
Company’s facilities, and discuss with, and ask questions of, the Company’s
directors and management regarding the business, operations, assets, condition
(financial and otherwise), operating results, liabilities and prospects of the
Company and its subsidiaries and the terms and conditions of the Purchaser’s
investment in the Investment Shares, and the Purchaser is satisfied with those
inspections, discussions and the answers to its questions.

 

(d)           As of the date of this Agreement, neither the Purchaser nor any of
its Affiliates is the Beneficial Owner of any Securities.

 

5.5          Brokers.

 

The Purchaser has not directly or indirectly retained any investment banker,
broker or finder in connection with the purchase of the Investment Shares.  The
Purchaser will indemnify and hold the Company harmless against any liability,
settlement or expense arising out of, or in connection with, any actual or
claimed direct or indirect retention by the Purchaser of an investment banker,
broker or finder in connection with the purchase of its Investment Shares.

 

5.6          Independent Investigation; No Reliance.

 

In connection with its investment decision, the Purchaser and/or its
representatives have inspected and conducted such reasonable independent review,
investigation and analysis (financial and otherwise) of the Company as desired
by the Purchaser.  The purchase of the Investment Shares by the Purchaser and
the consummation of the transactions contemplated hereby by the Purchaser are
not done in reliance upon any representation or warranty by, or information
from, the Company or any of its Affiliates, employees or representatives,
whether oral or written, express or implied, except for the representations and
warranties specifically and expressly set forth in Article IV, and the Purchaser
acknowledges that the Company expressly disclaims any other representations and
warranties.  Such purchase and consummation are instead done entirely on the
basis of the Purchaser’s own investigation, analysis, judgment and assessment of
the present and potential value and earning power of the Company, as well as

 

13

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those representations and warranties by the Company specifically and expressly
set forth in Article IV.  The Purchaser acknowledges that the Company has not
made any representations or warranties to the Purchaser regarding the probable
success or profitability of the Company or its business.  The Purchaser further
acknowledges that neither the Company nor any other Person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding the Company, its business or the
transactions contemplated by this Agreement not specifically and expressly set
forth in Article IV, and neither the Company nor any other Person will have or
be subject to any liability to the Purchaser or any other Person resulting from
the distribution to the Purchaser or its representatives or the Purchaser’s use
of any such information, including any confidential information distributed on
behalf of the Company relating to its business or other publications or data
room (including any electronic or “virtual” data room) information provided or
made available to the Purchaser or its representatives, or any other document or
information in any form provided or made available to the Purchaser or its
representatives, including management presentations and/or projections, in
connection with the purchase and sale of the Investment Shares and the
transactions contemplated hereby.

 

ARTICLE VI:  PRE-CLOSING COVENANTS AND AGREEMENTS

 

6.1          Publicity.

 

Concurrently with the execution and delivery of this Agreement, the parties will
collaboratively prepare and release a joint press release regarding this
Agreement and the transactions contemplated hereby, and promptly thereafter,
Molycorp will file a Current Report on Form 8-K with the SEC regarding the
same.  Except for such joint press release and Form 8-K, neither party will
issue (or cause to be issued) any press release or other public announcement
relating to the existence or subject matter of this Agreement or the
transactions contemplated hereby, except as required by applicable Law or with
the prior written consent of the other party, which consent will not be
unreasonably withheld, conditioned or delayed.  Except as otherwise contemplated
by this Section 6.1, the parties will remain bound by the Nondisclosure
Agreement, dated as of June 30, 2011 (the “Nondisclosure Agreement”), which will
survive the execution and delivery of this Agreement in accordance with its
terms.

 

6.2          Regulatory Filings and Other Actions.

 

(a)           Each of the Purchaser and the Company shall coordinate and
cooperate with one another and shall each use commercially reasonable efforts to
comply with, and shall each refrain from taking any action that would impede
compliance with, all applicable Laws, and as soon as practicable and, in any
event, within 10 Business Days after the date hereof, the Purchaser and the
Company shall make all filings, notices, petitions, statements, registrations,
submissions of information, application or submission of other documents
required by any Governmental Entity necessary or advisable in connection with
the transactions contemplated by this Agreement, including (i) notification and
report forms with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the HSR Act, and joint
notice to The Committee on Foreign Investment in the United States (“CFIUS”)
under FINSA, and (ii) any other filings necessary to satisfy the condition
precedent set forth in Section 8.1(b) in connection with the transactions
contemplated hereby.  Each of the Company and the Purchaser shall be responsible
for its own costs and expenses incurred in connection with such filings, and
shall share equally and each pay fifty percent of all filing fees payable in
connection with such filings (with the understanding that the parties will
cooperate such that only a single payment is made to each Governmental Entity
for each such filing fee).  Each of the Company and the Purchaser shall cause
all documents that it is responsible for filing with any Governmental Entity
under this Section 6.2(a) to comply in all material respects with all applicable
Law.

 

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(b)           The Purchaser and the Company each shall promptly supply the other
with any information which may be required in order to effectuate any filings or
applications pursuant to Section 6.2(a).  Subject to applicable Law relating to
the exchange of information and the preservation of any applicable
attorney-client privilege, work-product doctrine, self-audit privilege, or other
similar privilege, each of the Company and the Purchaser shall use commercially
reasonable efforts to collaborate in reviewing and commenting on, and consulting
with one another on, information relating to the Company or the Purchaser or any
of their respective Affiliates that appears in any filing made with, or written
materials submitted to, any third party and/or any Governmental Entity in
connection with any filing, investigation, or proceeding in connection with this
Agreement or the transactions contemplated hereby.  Notwithstanding anything in
this Section 6.2 to the contrary, with respect to the matters covered in this
Section 6.2, it is agreed that the Company, after consulting with the Purchaser
and considering the Purchaser’s views in good faith, shall make all decisions,
lead all discussions, negotiations and other proceedings with, and coordinate
all activities with respect to any requests that may be made by, or any actions,
consents, undertakings, approvals, or waivers that may be sought by, any
Governmental Entity, including determining the manner in which to contest or
otherwise respond, by litigation or otherwise, to objections to, or proceedings
challenging, the consummation of the transactions contemplated by this
Agreement.

 

(c)           Each of the Purchaser and the Company shall notify the other
promptly upon the receipt of (i) any comments from any officials of any
Governmental Entity in connection with any filings made pursuant to Section
6.2(a) and (ii) any request by any officials of any Governmental Entity for
amendments or supplements to any filings made pursuant to Section 6.2(a). 
Whenever any event occurs that is required to be set forth in an amendment or
supplement to any filing made pursuant to Section 6.2(a), the Purchaser or the
Company, as the case may be, shall promptly inform the other of such occurrence
and cooperate in filing with the applicable Governmental Entity such amendment
or supplement.

 

(d)           Upon the terms and subject to the conditions set forth in this
Agreement, each of the Purchaser and the Company agrees to use its commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement, including using commercially reasonable efforts to accomplish the
following: (i) the taking of all reasonable acts necessary to cause the
conditions to Closing set forth in Article VIII to be satisfied (provided that
no party shall be required to waive any of its own conditions to Closing set
forth in Article VIII); (ii) the obtaining of all necessary Consents from
Governmental Entities and other third parties and the making of all filings and
the taking of all steps as may be necessary to obtain Consent from, or to avoid
a Claim by, any Governmental Entity (it being understood that failure to obtain
any one or more such Consents, in and of itself, shall not constitute a failure
by either party to comply with any of its covenants herein or a failure of a
condition to Closing hereunder); (iii) the defending of any Claims, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed; and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement.

 

6.3          Pre-Closing Standstill Agreement.

 

The Purchaser agrees that during the Pre-Closing Standstill Period (except as
contemplated by this Agreement):

 

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(a)           The Purchaser will not, and will cause its Affiliates not to,
directly or indirectly, acquire Beneficial Ownership of any Securities.  In
addition, the Purchaser will not, and will cause its Affiliates not to, make any
public announcement with respect to, or submit any proposal for or with respect
to (i) the acquisition of Beneficial Ownership of any Securities, or (ii) any
extraordinary transaction or merger, consolidation, sale of substantial assets
or business combination involving the Company or any of its Affiliates, whether
or not any Persons other than stakeholders of the Purchaser are involved and
whether or not such proposal might require the making of a public announcement
by the Company.

 

(b)           Without the express prior written approval of the Company, the
Purchaser will not, and will cause its Affiliates not to, join a partnership,
limited partnership, syndicate or other group, or otherwise act in concert with
any Person, for the purpose of acquiring, holding, voting or disposing of
Securities.

 

(c)           Without the express prior written approval of the Company, no
director or executive officer of the Purchaser will, and the Purchaser will not
permit any of its Affiliates or any of its or their respective officers,
employees or agents (including investment bankers) to, induce or attempt to
induce or give encouragement to any Person, or enter into any substantive
discussions or negotiations with any Person, in furtherance of any tender offer
or business combination transaction in which Securities would be acquired.

 

6.4          Reservation of Common Stock.

 

As of the date hereof through the Closing, the Company has reserved and the
Company shall continue to reserve and keep available at all times, free of
preemptive rights, a sufficient number of shares of Common Stock for the purpose
of enabling the Company to issue the Investment Shares pursuant to this
Agreement.

 

6.5          Integration.

 

The Company will not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Investment Shares in
a manner that would require the registration under the Securities Act of the
sale of the Investment Shares to the Purchaser or that would be integrated with
the offer or sale of the Investment Shares for purposes of the rules and
regulations of any Trading Market such that it would require stockholder
approval prior to the closing of such other transaction unless stockholder
approval is obtained before the closing of such subsequent transaction.

 

ARTICLE VII:  INVESTOR RIGHTS AND OTHER POST-CLOSING AGREEMENTS

 

7.1          Transfer Restrictions.

 

Following the Closing, and subject to Section 7.2, the Purchaser acknowledges
and agrees that the Investment Shares may be Transferred only as follows:  (a)
Transfers to the Company; (b) Transfers of Investment Shares pursuant to a
registration statement filed under the Securities Act; (c) Transfers made
pursuant Rule 144 under the Securities Act, subject to any volume limitations
imposed thereby; and (d) other Transfers that are made (i) in compliance with
the Securities Act and the rules and regulations promulgated thereunder and (ii)
if made on or before the two-year anniversary of the Closing Date, the number of
Investment Shares sold in connection therewith on any given Trading Day does not
exceed 10% of the aggregate number of Investment Shares acquired by the
Purchaser pursuant to this Agreement.  The Purchaser agrees that the foregoing
restrictions preclude the Purchaser from engaging in any hedging

 

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or other transaction that is designed or reasonably expected to lead to or
result in a Transfer of any of the Investment Shares that would not otherwise be
allowed above, even if the Investment Shares would be Transferred by a Person
other than the Purchaser.  The Purchaser agrees and consents to the entry of
stop-transfer instructions with the Company’s transfer agent against the
Transfer of any of the Investment Shares in violation of this Section 7.1.

 

7.2          Post-Closing Standstill Agreement.

 

The Purchaser agrees that during the Post-Closing Standstill Period:

 

(a)           The Purchaser will not, and will cause its Affiliates not to,
directly or indirectly, acquire Beneficial Ownership of any shares of Common
Stock or Common Stock Equivalents, in each case, now or hereafter outstanding
(collectively, “Securities”), if the effect of such acquisition would be to
increase the aggregate Beneficial Ownership of Securities of the Purchaser to
greater than 19.9% of the total number of shares of Common Stock then
outstanding (the “Percentage Limitation”), it being understood that, subject to
satisfaction of all applicable requirements of Law, the Purchaser may acquire
additional Securities to increase its Beneficial Ownership of Securities of the
Purchaser up to the Percentage Limitation.  In addition, the Purchaser will not,
and will cause its Affiliates not to, make any public announcement with respect
to, or submit any proposal for or with respect to (i) the acquisition of
Beneficial Ownership of any Securities if the effect of such acquisition would
be to cause the Beneficial Ownership of the Purchaser and its Affiliates to
exceed the Percentage Limitation, or (ii) any extraordinary transaction or
merger, consolidation, sale of substantial assets or business combination
involving the Company or any of its Affiliates, whether or not any Persons other
than stakeholders of the Purchaser are involved and whether or not such proposal
might require the making of a public announcement by the Company.

 

(b)           Without the express prior written approval of the Company, the
Purchaser will not, and will cause its Affiliates not to, directly or
indirectly, solicit proxies or initiate, propose or become a “participant” in a
“solicitation” (as such terms are defined in Regulation 14A under the Exchange
Act), in opposition to any matter that has been recommended by a majority of the
members of the Board or in favor of any matter that has not been approved by a
majority of the members of the Board or seek to advise, encourage or influence
any Person with respect to the voting of Securities in such manner, or initiate,
or induce or attempt to induce any Person to initiate, any shareholder proposal
relating to the Company.  In addition, the Purchaser will not, and will cause
its Affiliates not to, directly or indirectly, institute, prosecute or pursue
against the Company (or any of its officers, directors, representatives,
employees, attorneys, advisors, agents, Affiliates or associates) (i) any Claim
with respect to any action that is hereafter approved by a majority of the
members of the Board or (ii) any Claim on behalf of any class or classes of the
Company’s security holders.

 

(c)           Without the express prior written approval of the Company, the
Purchaser will not, and will cause its Affiliates not to, join a partnership,
limited partnership, syndicate or other group, or otherwise act in concert with
any Person, for the purpose of acquiring, holding, voting or disposing of
Securities.

 

(d)           Without the express prior written approval of the Company, no
director or executive officer of the Purchaser will, and the Purchaser will not
permit any of its Affiliates or any of its or their respective officers,
employees or agents (including investment bankers) to, induce or attempt to
induce or give encouragement to any Person, or enter into any substantive
discussions or negotiations with any Person, in furtherance of any tender offer
or business combination transaction in which Securities would be acquired;
provided, that nothing in this Section 7.2(d) will, or will be construed,
directly or indirectly,

 

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to limit any rights of the Purchaser to Transfer any Investment Shares pursuant
to any transaction effected in accordance with Section 7.1.

 

(e)                                  In addition to any other limitations with
respect to the Purchaser’s and its Affiliates’ ability to engage in transactions
involving any Securities (including pursuant to Section 7.1), the Purchaser
(i) acknowledges that the United States Federal securities Laws and other Laws
prohibit any Person in possession of material non-public information about a
company from purchasing or selling securities of that company or from
communication such information to any other Person under circumstances in which
it is reasonably foreseeable that such Person is likely to purchase or sell such
securities, and, accordingly, (ii) agrees not to (A) engage in any transactions
involving any Securities while it is in possession of any such material
non-public information, including any such material non-public information it
may have received pursuant to the Nondisclosure Agreement, or (B) communicate
any such material non-public information to any other Person, except as
expressly permitted by the Nondisclosure Agreement.

 

7.3                               Purchaser Right to Nominate Director.

 

(a)                                  In accordance with the Bylaws, the Company
will take all actions as may be necessary or appropriate to expand the size of
its Board by one seat and to fill the vacancy created thereby by appointing the
Purchaser Director to serve as a Class II director on the Board, effective as of
the Closing Date.  Prior to the Closing Date, the Company shall also take all
actions as may be necessary or appropriate to present to the Board (or an
authorized committee thereof) such Purchaser Director (or, if such director is
not able to continue to serve on the Board for whatever reason, his successor as
nominated by Purchaser pursuant to Section 7.3(b)) for nomination as a candidate
for election as a Class II director at the Company’s next annual meeting of
stockholders in accordance with Section 7.3(b).

 

(b)                                 As long as the Purchaser and its Affiliates,
in the aggregate, Beneficially Own (i) during the period from the Closing until
the three-year anniversary thereof, at least 50% of the number of Investment
Shares acquired hereunder, and (ii) from and after the three-year anniversary of
the Closing, at least five percent of the aggregate shares of Common Stock then
outstanding (the “Nomination Requirements”), the Purchaser will have the right
to nominate one Class II director to the Board pursuant to this
Section 7.3(a) (the “Purchaser Director”).  The Purchaser may nominate its
Purchaser Director at every annual meeting of the stockholders of the Company in
which Class II directors are generally elected, including at every adjournment
or postponement thereof, and on any action or approval by written consent of the
stockholders of the Company relating to the election of such directors
generally; provided, that the Purchaser may not have any more than one Purchaser
Director on the Board at any particular time.  In addition to the provisions
contained in this Section 7.3, the Purchaser Director will be subject to the
provisions applicable to Class II directors contained in the Certificate of
Incorporation and Bylaws.

 

(c)                                  The following procedures will be followed
with respect to the nomination of the Purchaser Director pursuant to this
Section 7.3:

 

(i)                                     For purposes of whether the Purchaser
has a right to nominate the Purchaser Director pursuant to Section 7.3(a), the
Purchaser’s Beneficial Ownership of the outstanding shares of Common Stock will
be measured as of the record date for such annual meeting or written consent.

 

(ii)                                  No later than January 10 of each year in
which Class II directors are to be elected, the Purchaser must provide the Board
with the Purchaser’s nominee for the Purchaser Director, along with any other
information reasonably requested by the Board to evaluate the

 

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suitability of such candidate for directorship.  With respect to any Purchaser
nominee, the Purchaser will use its best efforts to ensure that any such nominee
satisfies all stated criteria and guidelines for director nominees of the
Company.

 

(iii)                               Within 20 days of receiving the Purchaser’s
nominee for the Purchaser Director in accordance with Section 7.3(c)(ii), the
Board or any authorized committee thereof will make a good faith and reasonable
determination as to the suitability of the Purchaser’s nominee for Purchaser
Director and will notify the Purchaser of its determination in writing.

 

(iv)                              If the Board or any authorized committee
thereof approves of the Purchaser’s nominee for Purchaser Director, then the
Board will recommend that the stockholders vote to elect such nominee at the
next annual meeting of stockholders at which Class II directors will be
generally elected.

 

(v)                                 If the Board or any authorized committee
thereof raises a reasonable objection to the Purchaser’s nominee for the
Purchaser Director, then the Purchaser and the Board will attempt to agree on
the nominee for such Purchaser Director, and if the Purchaser and the Board
cannot agree on the nominee on or before the tenth day prior to the proposed
filing of the Company’s annual proxy statement pursuant to which Class II
directors will be elected, then such nominee for Purchaser Director will not be
nominated by the Company at such annual meeting.

 

(vi)                              If the Purchaser nominee is not nominated (as
described in the foregoing clause (v)), then as soon as practicable after the
annual meeting, the Purchaser and the Board will attempt to agree on the nominee
for such Purchaser Director which nominee will be appointed as Class II director
by the Board promptly after such agreement is reached.

 

(d)                                 Notwithstanding anything to the contrary in
this Agreement and without any further action by the Company, the Purchaser’s
right to nominate the Purchaser Director will automatically terminate, and be of
no further force and effect, and the Purchaser will cause its Purchaser Director
to resign from the Board, effective as of the date that the Nomination
Requirements are no longer satisfied.  The Purchaser will promptly, but in any
case within five days after becoming aware thereof, provide notice to the
Company if the Nomination Requirements are no longer satisfied.

 

(e)                                  Each Purchaser Director, upon appointment
or election to the Board, will be governed by the same protections and
obligations as all other directors of the Company, including protections and
obligations regarding customary liability insurance for directors and officers,
confidentiality, conflicts of interests, fiduciary duties, trading and
disclosure policies, director evaluation process, director code of ethics,
director share ownership guidelines, stock trading and pre-approval policies,
and other governance matters.  In addition to the Indemnification Agreement, the
Company agrees that it will offer to enter into an indemnification agreement
with each Purchaser Director substantially similar to the indemnification
agreements then in effect with the Company’s other directors when each such
Purchaser Director becomes a member of the Board.

 

(f)                                    In addition to its agreements set forth
in Section 7.2, during the Post-Closing Standstill Period, the Purchaser will
(i) cause all shares of Common Stock Beneficially Owned by the Purchaser as to
which it is entitled to vote at any meeting of stockholders to be voted in favor
of the election of each member of any slate of directors recommended by the
Board in accordance with this Section 7.3, and (ii) not, except as provided for
in this Section 7.3, seek, alone or in concert with others, election or
appointment to, or representation on, or nominate or propose the nomination of
any candidate to, the Board.

 

19

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7.4                               Demand Registration Rights.

 

(a)                                  Demand Registration Rights.  From and after
the date that is 181 days after the Closing Date, the Purchaser shall have the
right to make three written requests that the Company file with the SEC a
Registration Statement on Form S-3 under the Securities Act covering the resale
of all or a portion of the Investment Shares by the Purchaser; provided, that
the Company will not be required to file any Registration Statement if it is not
then eligible to file registration statements under the Securities Act on a
Form S-3.  The Company shall prepare and file with the SEC a shelf Registration
Statement covering the resale of all or a portion of the Investment Shares for
an offering to be made on a continuous basis pursuant to Rule 415 as soon as
reasonably practicable after the Company receives any such written demand for
registration.  The Company will use its commercially reasonable efforts to cause
any such Registration Statement to become effective as soon as reasonably
practicable after it is filed.  The Registration Statement will provide for the
resale of all or a portion of the Investment Shares by the Purchaser from time
to time, and pursuant to any method or combination of methods legally available,
by the Purchaser and permitted transferees hereunder; provided, that the Company
will not be required to provide for the distribution of the Investment Shares by
means of an underwritten public offering pursuant to this Section 7.4(a).  The
Company shall not be required to effect a registration pursuant to this
Section 7.4 while any other Registration Statement filed pursuant to an exercise
of the Purchaser’s registration rights provided for in this Section 7.4 is then
effective or within six months of any registration initiated by the Company to
make a bona fide, primary and underwritten offering of equity securities.  All
fees and expenses incurred in connection with a registration pursuant to this
Section 7.4(a), including all registration, qualification, printers’, accounting
and Company counsel fees, will be borne by the Company.  All fees and expenses
of counsel to the Purchaser and any other expenses exclusive to the Purchaser,
including brokerage commissions or fees, will be borne by the Purchaser. 
Notwithstanding anything contained herein to the contrary, the Company shall not
be required to file a Registration Statement under this Section 7.4 unless at
least 25% of the Investment Shares issued by the Company on the Closing Date are
covered by such Registration Statement.

 

(b)                                 The Company’s Obligations.  When the Company
is required by this Section 7.4 to file a Registration Statement to register the
resale of all or a portion of the Investment Shares, the Company agrees to:

 

(i)                                     subject to Section 7.4(d) and (e), use
its commercially reasonable efforts to cause any such Registration Statement to
become and remain continuously effective under the Securities Act for a period
of at least twelve months;

 

(ii)                                  subject to Section 7.4(d) and (e), prepare
and file with the SEC such amendments and supplements to any such Registration
Statement and the Prospectus used in connection therewith as may be necessary to
keep such Registration Statement effective for a period of at least twelve
months;

 

(iii)                               as far in advance as practicable but at
least five Business Days prior to filing a Registration Statement or Prospectus
(or any amendment or supplement thereto, other than documents filed under the
Exchange Act that amend or supplement such Registration Statement through
incorporation by reference), furnish to the Purchaser, for its review, copies of
such Registration Statement or Prospectus (or amendment or supplement) as
proposed to be filed; and provided that the Purchaser may request reasonable
changes to such Registration Statement or Prospectus (or amendment or
supplement) and shall be required to comply therewith (A) if the Purchaser
reasonably believes that the provisions in question would have an impact or
effect on it, or (B) solely to the extent necessary, if at all, to lawfully
complete the filing or maintain the effectiveness thereof;

 

20

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(iv)                              furnish to the Purchaser such number of
conformed copies of any such Registration Statement and of each such amendment
and supplement thereto (in each case including all exhibits, other than exhibits
filed under the Exchange Act that amend or supplement such Registration
Statement through incorporation by reference), such number of copies of the
Prospectus included in any such Registration Statement (including each
preliminary Prospectus and any summary Prospectus), in conformity with the
requirements of the Securities Act, such documents incorporated by reference in
such Registration Statement or Prospectus, each free writing prospectus incident
thereto, and such other documents as the Purchaser may reasonably request, and a
copy of any and all transmittal letters or other correspondence to or received
from the SEC or any other Governmental Entity or self-regulatory body or other
body having jurisdiction (including any domestic or foreign securities exchange)
relating to such offering;

 

(v)                                 ensure that at the time of pricing the
offering of any Investment Shares, any such Registration Statement, Prospectus
or Prospectus supplement included in such Registration Statement, as then in
effect, and any free writing prospectus related thereto, includes all
information necessary such that a seller of such Investment Shares would not be
liable under Section 12(a)(2) of the Securities Act, and such offering and the
sale of such Investment Shares in connection therewith would not constitute a
violation of Section 12(a)(2) of the Securities Act;

 

(vi)                              notify the Purchaser (which notice shall,
pursuant to subclauses (C) through (F) hereof, be accompanied by an instruction
to suspend the use of the Prospectus until the requisite changes have been made)
as promptly as reasonably practicable (and, in the case of subclause
(A)(x) hereof, not less than one Trading Day prior to such filing):

 

(A)                              (x) when a Prospectus or any Prospectus
supplement or post-effective amendment to a Registration Statement is proposed
to be filed (other than documents filed under the Exchange Act that amend or
supplement such Registration Statement through incorporation by reference);
(y) when the SEC notifies the Company whether there will be a “review” of such
Registration Statement and whenever the SEC comments in writing on such
Registration Statement; and (z) with respect to a Registration Statement or any
post-effective amendment (other than documents filed under the Exchange Act that
amend or supplement such Registration Statement through incorporation by
reference), when the same has become effective;

 

(B)                                of any request by the SEC or any other
federal or state Governmental Entity for amendments or supplements to a
Registration Statement or Prospectus or for additional information;

 

(C)                                of the issuance by the SEC or any other
federal or state Governmental Entity of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Investment
Shares or, to the knowledge of the Company, the initiation of any Claim for that
purpose;

 

(D)                               of the receipt by the Company of any written
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Investment Shares for sale in any jurisdiction,
or, to the knowledge of the Company, the initiation or threatening of any Claim
for such purpose; and

 

(E)         of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement ineligible for
inclusion therein or that requires any revisions to a Registration Statement,
Prospectus or other documents

 

21

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so that, in the case of a Registration Statement or the Prospectus, as the case
may be, it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;

 

(vii)                           take all commercially reasonable actions
required to prevent the entry of any stop order or to promptly remove it if
entered and promptly notify the Purchaser of such lifting or withdrawal of such
order;

 

(viii)                        take all commercially reasonable action to ensure
that any free writing prospectus utilized in connection with any registration
covered by this Section 7.4 complies in all material respects with the
Securities Act, is filed in accordance with the Securities Act to the extent
required thereby, is retained in accordance with the Securities Act to the
extent required thereby and, when taken together with the related Prospectus and
any free writing prospectus, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;

 

(ix)                                use commercially reasonable efforts to
register for resale or qualify all Investment Shares covered by any such
Registration Statement under the securities or blue sky laws of such
jurisdictions as the Purchaser or any underwriter of such Investment Shares
shall request, and promptly notify the Purchaser of the receipt of any
notification with respect to the suspension of the qualification of Investment
Shares for sale or offer in any such jurisdiction;

 

(x)                                   use commercially reasonable efforts to
obtain all appropriate registrations, permits and consents in connection
therewith, and do any and all other acts and things (including commercially
reasonable efforts to promptly remove any such suspension) which may be
necessary or advisable to enable the Purchaser or any such underwriter to
consummate the disposition in such jurisdictions of the Investment Shares
covered by any such Registration Statement; provided, that the Company shall not
for any such purpose be required to qualify generally to do business as a
foreign corporation in any such jurisdiction wherein it is not so qualified, to
consent to general service of process in any such jurisdiction or to amend its
Certificate of Incorporation or Bylaws;

 

(xi)                                use its commercially reasonable efforts to
list all such Investment Shares covered by any such registration on the Trading
Market or such other securities exchange and automated inter-dealer quotation
system on which shares of Common Stock of the Company are then listed;

 

(xii)                             furnish for delivery in connection with the
sale of Investment Shares pursuant to a registration effected pursuant to
Section 7.4(a) unlegended certificates representing ownership of the Investment
Shares being sold in such denominations as shall be requested by the Purchaser,
subject to receipt of undertakings by the Purchaser regarding compliance with
the terms hereof, but only in connection with the actual sale of such Investment
Shares; and

 

(xiii)                          otherwise comply in all material respects with
all applicable securities laws, including the rules and regulations of the SEC.

 

(c)                                  Rule 144.  The Company will not be
obligated to register the resale of Investment Shares under this Section 7.4, or
otherwise keep a Registration Statement effective, if all such shares are
otherwise eligible for immediate sale (without any volume restrictions imposed
by Rule 144) by the

 

22

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Purchaser under Rule 144 under the Securities Act and this Agreement.  As long
as the Purchaser and its Affiliates, in the aggregate, Beneficially Own at least
25% of the Investment Shares, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchaser and
make publicly available in accordance with Rule 144 such information as is
required for the Purchaser to sell the Investment Shares under Rule 144.

 

(d)                                 The Company’s Right to Postpone or Suspend
Registration.

 

(i)                                     If, in connection with any registration
pursuant to this Section 7.4, the Company provides a certificate, signed by the
President or Chief Executive Officer of the Company, to the Purchaser stating
that, in the good faith judgment of the Board and its counsel, it would be
materially detrimental to the Company or its stockholders for any Registration
Statement either to become effective or to remain effective for as long as such
Registration Statement otherwise would be required to remain effective, then the
Company shall have the right to defer taking action with respect to such filing
and any time periods with respect to filing or effectiveness thereof shall be
tolled correspondingly, for a period of not more than 60 consecutive days;
provided, that the Company may not invoke this right more than once in any
365-day period; and provided, further, that the Company shall not register any
shares of its capital stock on a registration statement under the Securities Act
during such period, other than pursuant to a registration statement on Form S-8.

 

(ii)                                  If the Company has delivered a Prospectus,
Prospectus supplement or free writing prospectus to the Purchaser and after
having done so the Prospectus, Prospectus supplement or free writing prospectus
is amended to comply with the requirements of the Securities Act, the Company
shall promptly notify the Purchaser and, if requested, the Purchaser shall
immediately cease making offers of Investment Shares and return to the Company
all Prospectuses, Prospectus supplements and free writing prospectuses in its
possession.  The Company shall promptly provide the Purchaser with revised
Prospectuses, Prospectus supplements and free writing prospectuses, as
applicable, and, following receipt of the revised Prospectuses, Prospectus
supplements and free writing prospectuses, as applicable, the Purchaser shall be
free to resume making offers of the Investment Shares.

 

(iii)                               In the event that, in the judgment of the
Company, it is advisable to suspend use of a Prospectus included in a
Registration Statement due to pending material developments or other events that
have not yet been publicly disclosed and as to which the Company believes public
disclosure would be detrimental to the Company, the Company shall direct the
Purchaser to discontinue sales of Investment Shares pursuant to such
Registration Statement, and the Purchaser shall immediately so discontinue,
until the Purchaser has received copies of a supplemented or amended Prospectus
or until the Purchaser is advised in writing by the Company that the then
current Prospectus may be used and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such Prospectus.  The Company shall provide the Purchaser with any such
supplemented or amended Prospectuses or additional or supplemental filings, as
the case may be.  Notwithstanding anything to the contrary in this Agreement,
the Company shall not exercise its rights under this Section 7.4(d)(iii) to
suspend sales of Investment Shares for a period in excess of 60 consecutive days
or more than an aggregate of 90 days during any 365-day period.

 

(e)                                  Indemnification.

 

(i)                                     The Company shall, notwithstanding any
termination of this Agreement, indemnify, defend and hold harmless the Purchaser
to the fullest extent permitted by applicable

 

23

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Law, from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, to the extent resulting from any untrue
statement of a material fact contained in a Registration Statement, any
Prospectus or any form of Prospectus or in any amendment or supplement thereto
or in any preliminary Prospectus filed pursuant to this Section 7.4, or any
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made; provided, that the Company will not be liable in any such
case to the extent that any Losses arise out of or are based upon (A) an untrue
statement or omission in the Registration Statement, the Prospectus or any
amendment or supplement thereto or in any preliminary Prospectus made in
reliance upon and in conformity with information that was furnished to the
Company by or on behalf of the Purchaser expressly for use therein, or (B) in
the case of an occurrence of an event of the type specified in
Section 7.4(b)(vi)(C)-(E), the use by the Purchaser of an outdated or defective
Prospectus after the Company has notified the Purchaser in writing that the
Prospectus is outdated or defective and prior to the Purchaser being advised by
the Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed.

 

(ii)                                  The Purchaser shall, notwithstanding any
termination of this Agreement, indemnify, defend and hold harmless the Company
to the fullest extent permitted by applicable Law, from and against any and all
Losses, as incurred, to the extent resulting from any untrue statement of a
material fact contained in any Registration Statement, any Prospectus, or any
form of Prospectus or in any amendment or supplement thereto or in any
preliminary Prospectus filed pursuant to this Section 7.4, or any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made (A) to the extent that such untrue statement or omission is contained in
any information so furnished in writing by the Purchaser to the Company for
inclusion in such Registration Statement, Prospectus or any amendment or
supplement thereto or in any preliminary Prospectus, or (B) in the case of an
occurrence of an event of the type specified in Section 7.4(b)(vi)(C)-(E), the
use by the Purchaser of an outdated or defective Prospectus after the Company
has notified the Purchaser in writing that the Prospectus is outdated or
defective and prior to the Purchaser being advised by the Company that the use
of the applicable Prospectus (as it may have been supplemented or amended) may
be resumed.

 

ARTICLE VIII:  CONDITIONS TO OBLIGATIONS OF PARTIES

 

8.1                               Conditions to Obligations of Each Party.

 

The respective obligations of each party hereto to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing Date of the following conditions:

 

(a)                                  no Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction or other Order
which (i) is in effect and (ii) has the effect of otherwise prohibiting or
preventing the consummation of the transactions contemplated hereby; and

 

(b)                                 (i) all waiting periods under the HSR Act
and FINSA relating to the transactions contemplated hereby will have expired or
been terminated; (ii) in the event the parties determine to file the voluntary
notice with CFIUS pursuant to Section 6.2(a), (x) CFIUS, through its Staff
Chairperson, shall have advised a party (or the parties) in writing that none of
the transactions contemplated hereby is a covered transaction, (y) the parties
to the transactions contemplated hereby shall have been advised in

 

24

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writing pursuant to 31 C.F.R. § 800.504 or § 800.506(d) that CFIUS has concluded
all action under Section 721 with respect to such transactions, or (z) the
President of the United States shall have announced, pursuant to Section 721(d),
his decision not to exercise his authority under Section 721 with respect to the
transactions contemplated hereby, in each case with no conditions imposed; and
(iii) all other Consents of any Governmental Entity required to be obtained or
made in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby shall have been obtained or
made.

 

8.2                               Conditions to the Company’s Obligations.

 

The obligations of the Company to consummate the transactions contemplated by
this Agreement are subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions, any of which may be waived by the Company:

 

(a)                                  each of the representations and warranties
of the Purchaser in Article V that are qualified by materiality shall be true
and correct in all respects and each of the representations and warranties made
by the Purchaser in Article V that are not so qualified will be true and correct
in all material respects, in each case, as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date (except that
those representations and warranties which address matters only as of a
particular date need only be true and correct as of such date);

 

(b)                                 the Purchaser shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date; and

 

(c)                                  the Purchaser shall have made all
deliveries set forth in Section 3.1(b).

 

8.3                               Conditions to the Purchaser’s Obligations.

 

The obligations of the Purchaser to consummate the transactions contemplated by
this Agreement are subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions, any of which may be waived by the
Purchaser:

 

(a)                                  each of the representations and warranties
of the Company in Article IV that are qualified by materiality or Material
Adverse Effect shall be true and correct in all respects and each of the
representations and warranties made by the Company in Article IV that are not so
qualified will be true and correct in all material respects, in each case, as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date (except that those representations and warranties which
address matters only as of a particular date need only be true and correct as of
such date);

 

(b)                                 the Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date; and

 

(c)                                  the Company shall have made all deliveries
set forth in Section 3.1(a).

 

ARTICLE IX:  TERMINATION

 

9.1                               Termination.

 

This Agreement may be terminated prior to the Closing:

 

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(a)                                  by written agreement executed by the
Purchaser and the Company;

 

(b)                                 by the Purchaser or the Company at any time
after July 31, 2012 (the “End Date”) if the Closing shall not have taken place
on or before such date; provided, that the right to terminate this Agreement
under this Section 9.1(b) shall not be available to any party whose failure to
fulfill any obligation hereunder has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date;

 

(c)                                  by the Purchaser, if the Company shall have
breached or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements contained in this
Agreement and such breach or failure to perform (i) is not cured on or prior to
the 30th day after written notice thereof from the Purchaser (reasonably
describing the nature of the breach or failure) or (ii) is incapable of being
cured, as the case may be; or

 

(d)                                 by the Company, if the Purchaser shall have
breached or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements contained in this
Agreement and such breach or failure to perform (i) is not cured on or prior to
the 30th day after written notice thereof from the Company (reasonably
describing the nature of the breach or failure) or (ii) is incapable of being
cured, as the case may be.

 

9.2                               Notice of Termination; Effect of Termination.

 

Any termination of this Agreement under Section 9.1 shall be effective
immediately upon the delivery of a valid written notice of the terminating party
to the other party hereto.  In the event that this Agreement is terminated
pursuant to Section 9.1, all obligations of the parties under this Agreement
shall terminate and neither party shall have any liability or obligation to the
other party except (a) for a willful breach of any of the representations,
warranties, covenants or agreements herein or (b) pursuant to this Section 9.2,
Section 6.1, Article X or the Nondisclosure Agreement.  A termination of this
Agreement will not affect the rights of the non-breaching party to pursue any
remedies available to it arising from the breach of the other party.

 

9.3                               Extension; Waiver.

 

At any time prior to the Closing, a party may (a) extend the time for the
performance of any of the obligations or other acts of the other party,
(b) waive any inaccuracies in the representations and warranties of the other
party contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to Sections 8.2, 8.3 and 10.11, waive compliance by the
other party with any of the agreements or conditions contained in this
Agreement.  Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party.  The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of such
rights.

 

ARTICLE X:  MISCELLANEOUS

 

10.1                        Survival.

 

(a)                                  Claims for breach of the representations
and warranties contained in this Agreement or in any document delivered at
Closing will not survive the Closing Date.  From and after the Closing Date, no
Claim may be asserted by either party against the other based on a breach of a
representation or warranty contained in this Agreement or in any document
delivered at Closing; provided, that nothing in

 

26

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this Agreement will preclude or otherwise affect the rights of the Purchaser to
assert Claims against the Company for any violations of the securities Laws or
for fraud.

 

(b)                                 The right to bring a Claim based on a breach
of any agreement or covenant contained herein will survive for one year after
the date that such agreement or covenant, by its term, has been or was required
to have been fully performed.

 

10.2                        Expenses.

 

Except as otherwise specifically provided in this Agreement, the Company and the
Purchaser will each be responsible for its own costs and expenses incurred in
connection with the transactions contemplated by this Agreement (including
accountants’ fees, attorneys’ fees and other expenses).

 

10.3                        No Third-Party Beneficiaries.

 

This Agreement does not confer any rights or remedies upon any Person other than
the parties hereto and their respective successors and permitted assigns.

 

10.4                        Entire Agreement.

 

This Agreement (together with the Nondisclosure Agreement) constitutes the
entire agreement between the Company and the Purchaser with respect to the
subject matter hereof, and supersedes any prior understandings, agreements or
representations by or between such parties, written or oral, that may have
related in any way to the subject matter of this Agreement, including the MOU.

 

10.5                        Successors and Assigns.

 

This Agreement will be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.  Neither party may
assign either this Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of the other party.

 

10.6                        Notices.

 

All notices, requests, demands, claims and other communications hereunder must
be in writing and will be deemed to have been duly given if delivered
personally, by facsimile, sent by nationally recognized overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as will be specified by like notice):

 

If to the Company, to:

 

Molycorp, Inc.
5619 Denver Tech Center Parkway, Suite 1000
Greenwood Village, Colorado  80111
Facsimile:  (303) 843-8082
Attention:  Executive Vice President and General Counsel

 

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with a copy (which will not constitute notice) to:

 

Jones Day

325 John H. McConnell Boulevard, Suite 600

Columbus, Ohio  43215

Facsimile:  (614) 461-4198
Attention:  Jeffrey D. Litle, Esq.

 

If to the Purchaser, to:

 

Molibdenos y Metales S.A.

Camino Nos a Los Morros 66

San Bernardo

Santiago

Chile

Facsimile:  (562) 937-6653

Attention:  Vice-president of International Business and Planning

 

with a copy (which will not constitute notice) to:

 

Morrison & Foerster LLP

555 West Fifth Street, Suite 3500

Los Angeles, California  90013

Facsimile:  (213) 892-5454

Attention:  Michael C. Cohen, Esq.

 

All such notices and other communications will be deemed to have been given and
received (a) in the case of personal delivery, on the date of such delivery,
(b) in the case of delivery by facsimile, on the date of such delivery, (c) in
the case of delivery by nationally recognized overnight courier, on the third
Business Day following dispatch and (d) in the case of mailing, on the seventh
Business Day following such mailing.

 

10.7                        Governing Law.

 

THIS AGREEMENT WILL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, USA, APPLICABLE TO AGREEMENTS
MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE CONFLICTS OF LAW
PRINCIPLES OF SUCH STATE.

 

10.8                        Consent to Arbitration.

 

Unless otherwise required by applicable Law or otherwise necessary to prevent
irreparable harm (including obtaining injunctive relief), any controversy, Claim
or dispute arising out of or relating to this Agreement shall be finally and
conclusively settled by arbitration conducted by a panel of three arbitrators,
each of whom shall have been engaged in the practice of business law for at
least 15 years, to be held in New York, New York, U.S.A., in English, in
accordance with the then current Rules of Arbitration of the International
Chamber of Commerce (the “ICC”); provided, that no party to this Agreement shall
initiate any arbitration until the Chief Executive Officers (or equivalent) of
each party to this Agreement have met and discussed resolution of such dispute. 
Subject to the foregoing, a party seeking to arbitrate a controversy, Claim or
dispute shall send a written notice to the other party hereto and the
International Court of Arbitration of the ICC.  The Company, on the one hand,
and the Purchaser,

 

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on the other hand, shall each select one arbitrator within 20 days of the date
of such written notice, and the two arbitrators so chosen shall jointly select a
third arbitrator within 15 days of the date the last of such arbitrators is
appointed, which third arbitrator shall chair the arbitration panel.  The
International Court of Arbitration of the ICC shall administer the arbitration
and act as an appointing authority if any of the arbitrators fails to be
selected in accordance with the foregoing.  In the event of any conflict between
the Rules of Arbitration of the ICC and this Section 10.8, this Section 10.8
shall govern.  The arbitration will be conducted in accordance with the
substantive Laws of the State of New York, U.S.A., and the arbitrators will be
so instructed.  Not less than 30 days prior to the arbitration, each party shall
submit to the other the documents and a list of witnesses it intends to use in
the arbitration.  Each party shall have the right to cross-examine any witnesses
presented by the other party during the arbitration.  The arbitrators shall
issue a written opinion stating the findings of fact and the conclusions of law
upon which the decision is based.  The arbitration award shall not include
direct, indirect, special, consequential or punitive damages unless caused by
the gross negligence or willful misconduct of the breaching party, and the
arbitrators shall be so instructed.  The United Nations Convention on the
Recognition and Enforcement of Arbitral Awards (New York Convention) shall
govern the enforcement of the award, and the principles set forth in this
Agreement shall be applied by the arbitrators for both evidence and substantive
legal questions during the arbitration, including the rendering of the award. 
The arbitration award will be final and binding and may be entered in any court
having jurisdiction thereof.  Each party hereto will bear its own costs and
attorneys’ fees and shall share the fees and expenses of the arbitrators in the
manner determined by the arbitrators.  Any party may seek injunctive relief in
an appropriate court of law or equity pending an award in arbitration to prevent
irreparable harm in the interim.

 

10.9                        Waiver of Jury Trial.

 

Each party hereby waives to the fullest extent permitted by applicable Law any
right it may have to a trial by jury in respect of any litigation directly or
indirectly arising out of, under or in connection with this Agreement or the
transactions contemplated hereby.  Each party (a) certifies that no
representative, agent or attorney of such party has represented, expressly or
otherwise, that such party would not, in the event of litigation, seek to
enforce the foregoing waiver, and (b) acknowledges that it and the other party
have been induced to enter into this Agreement by, among other things, the
mutual waivers and certifications in this Section 10.9.

 

10.10                 Press Release and Announcements.

 

Concurrently with the Closing, the parties will collaboratively prepare and
release a joint press release announcing the Closing, and promptly following the
Closing, the Company will file a Current Report on Form 8-K with the SEC
regarding the same.  Except for such joint press release and Form 8-K, neither
party will issue (or cause to be issued) any press release or other public
announcement relating to the existence or subject matter of this Agreement or
the transactions contemplated hereby, except as required by applicable Law or
with the prior written consent of the other party, which consent will not be
unreasonably withheld, conditioned or delayed.  Except as otherwise contemplated
by this Section 10.10, the parties will remain bound by the Nondisclosure
Agreement, which will survive the execution and delivery of this Agreement in
accordance with its terms.

 

10.11                 Amendments and Waivers.

 

This Agreement may be amended or modified, and the terms and conditions may be
waived, only by a written instrument signed by the Company and the Purchaser.

 

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10.12                 Severability.

 

It is the desire and intent of the parties that the provisions of this Agreement
be enforced to the fullest extent permissible under the Laws and public policies
applied in each jurisdiction in which enforcement is sought.  Accordingly, if
any particular provision of this Agreement is adjudicated by a court of
competent jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, will be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.  Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it will, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.

 

10.13                 Construction.

 

The descriptive headings of the Articles, Sections and subsections of this
Agreement are for convenience of reference only, do not constitute a part of
this Agreement, and do not affect this Agreement’s construction or
interpretation.  The parties have participated jointly in the negotiation and
drafting of this Agreement.  In the event an ambiguity or question of intent or
interpretation arises, this Agreement must be construed as if drafted jointly by
the parties and no presumption or burden of proof will arise favoring or
disfavoring any party by virtue of the authorship of any particular provision of
this Agreement.  Where the context requires, the use of a pronoun of one gender
or the neuter is to be deemed to include a pronoun of the appropriate gender. 
Any reference to the singular in this Agreement shall also include the plural
and vice versa.  As used in this Agreement, the words “include” and “including,”
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words “without limitation.”  Unless
the context otherwise requires, all references to “$” or dollar amounts will be
to lawful currency of the United States.  References herein to any Law shall be
deemed to refer to such Law, as amended from time to time, and all rules and
regulations promulgated thereunder.  Except as otherwise indicated, all
references in this Agreement to “Articles” or “Sections” are intended to refer
to Articles and Sections of this Agreement.  The term “knowledge of the Company”
or words of similar import means the (a) actual conscious awareness of the
Company’s President and Chief Executive Officer, Chief Financial Officer, Chief
Technology Officer or Executive Vice President and General Counsel, or (b) the
actual conscious awareness that any of the foregoing would reasonably be
expected to acquire in the course of having served in such position with the
care of an ordinarily prudent executive.

 

10.14                 Counterparts.

 

This Agreement may be executed in one or more counterparts, each of which will
be deemed an original but all of which together will constitute one and the same
instrument.  Signatures delivered by facsimile or other electronic means will
have the same force and effect as manual signatures delivered in person.

 

10.15                 Translation.

 

This Agreement has been drafted, negotiated and executed in the English
language.  If this Agreement is translated into another language, the English
language text will govern and control for all purposes.

 

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IN WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement
as of the date first written above.

 

 

 

MOLYCORP, INC.

 

 

 

 

 

By:

/s/ Mark A. Smith

 

 

Mark A. Smith

 

 

President and Chief Executive Officer

 

 

 

 

 

 

 

MOLIBDENOS Y METALES S.A.

 

 

 

 

 

 

 

By:

/s/ John Graell

 

 

John Graell

 

 

Chief Executive Officer

 

[Signature Page to Securities Purchase Agreement]

 

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