LightPath Technologies, Inc 8-K [lpth-8k_041514.htm]

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of April 15,
2014, (the “Execution Date”) between LightPath Technologies, Inc., a Delaware
corporation (the “Company”), and Pudong Science & Technology (Cayman) Co., Ltd.
(“Purchaser”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and regulations promulgated under the Securities Act,
including Rule 506 and pursuant to Regulation S, the Company desires to issue
and sell to Purchaser, and Purchaser desires to purchase from the Company,
securities of the Company as more fully described in this Agreement.

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

ARTICLE I.
DEFINITIONS

1.1             Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:

“Adjusted Per Share Purchase Price” shall have the meaning ascribed to such term
in Section 2.6.

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.2.

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of Florida are authorized or required by law or other
governmental action to close.

“CFIUS” means the Committee on Foreign Investment in the United States or any
successor body.

“CFIUS Filing” shall have the meaning ascribed to such term in Section 4.11(a).

“CFIUS Notice” shall have the meaning ascribed to such term in Section
2.3(a)(iv).

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 “Closing” means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.

“Closing Date” shall have the meaning ascribed to such term in Section 2.1.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the Class A common stock of the Company, par value USD$0.01
per share, and any other class of securities into which such securities may
hereafter be reclassified or changed.

“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, 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 Counsel” means Baker & Hostetler LLP, with offices located at 200 South
Orange Avenue, SunTrust Center, Suite 2300, Orlando, FL 32801.

“Disclosure Schedules” shall have the meaning ascribed to such term in Section
3.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Final Per Share Purchase Price” shall have the meaning ascribed to such term in
Section 2.4.

“Force Majeure” shall mean the following acts or omissions provided that they
are beyond the direct control of the Company: an act of God, an act of war,
terrorism, natural disaster or prolonged and systematic failure of communication
or electrical services. Force Majeure shall not include any act or omission by
the Commission or the Trading Market.

“GAAP” shall have the meaning ascribed to such term in Section 3.1(g).

“Initial Per Share Purchase Price” shall have the meaning ascribed to such term
in Section 2.5.

“ITAR” means the International Traffic in Arms Regulations (22 C.F.R. Parts
120-130).

“Knowledge of the Company”, “the Company’s Knowledge” and terms and phrases of
similar import, whether or not capitalized, means (i) actual knowledge,
awareness or belief possessed by the executive officers and directors of the
Company, and (ii) the knowledge, awareness or belief that the executive officers
and directors would have possessed by using reasonable care and diligence under
the circumstances.

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 “Legend Removal Date” shall have the meaning ascribed to such term in Section
4.1(c).

“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.

“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(a).

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

“Registrable Shares” shall have the meaning ascribed to such term in Section
4.13(a).

“Required Approvals” shall have the meaning ascribed to such term in Section
3.1(d).

“Restricted Period” shall have the meaning assigned to such term in Section
4.10.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(g).

“Securities” means the Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Shares” means the shares of Common Stock issued to Purchaser pursuant to this
Agreement.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock). 

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“Subscription Amount” means the aggregate amount to be paid for Shares purchased
hereunder in United States dollars and in immediately available funds.

“Subsidiary” means any subsidiary of the Company as set forth on Schedule 1.1
and shall, where applicable, also include any direct or indirect subsidiary of
the Company formed or acquired after the date hereof.

“Trading Day” means a day on which the principal Trading Market is open for
trading.

“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any
successors to any of the foregoing).

“Transfer Agent” means Registrar and Transfer Agent Company, the current
transfer agent of the Company, with a mailing address of 10 Commerce Drive,
Cranford, NJ 07016 and a facsimile number of (908) 497-2310, and any successor
transfer agent of the Company.

“5 Day Average Price” shall have the meaning ascribed to such term in Section
2.6.

ARTICLE II.
PURCHASE AND SALE

2.1              Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, the Company agrees to sell, and Purchaser agrees to
purchase, up to an aggregate number of shares of Common Stock that will result
in Purchaser beneficially owning 19.9% of the Company’s outstanding shares of
Common Stock immediately after giving effect to the shares of Common Stock
issued pursuant to this Agreement, as calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
Purchaser shall deliver to the Company via wire transfer equal to Purchaser’s
Subscription Amount, and the Company shall deliver to Purchaser its Shares, as
determined pursuant to Section 2.2(a), and the Company and Purchaser shall
deliver the other items set forth in Section 2.2 deliverable at the Closing. The
Closing of the transactions contemplated hereby shall take place as promptly as
practicable, but in no event more than five (5) Business Days following the
satisfaction and/or waiver of all the conditions to Closing set forth in Section
2.2 and Section 2.3 hereof (other than those conditions that by their nature are
to be satisfied at the Closing, but subject to the satisfaction or waiver of
such conditions at or prior to Closing). The Closing shall take place remotely
via the exchange of documents and signatures, at such time and on such date as
the Company and Purchaser mutually agrees upon, orally or in writing. The date
on which the Closing actually occurs shall be referred to as the “Closing Date.”

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2.2              Deliveries.

(a)                On or prior to the Closing Date, the Company shall deliver or
cause to be delivered to Purchaser the following:

(i)                 this Agreement duly executed by the Company; and

(ii)               a copy of the irrevocable instructions to the Transfer Agent
instructing the Transfer Agent to deliver, on an expedited basis, a certificate
evidencing a number of Shares equal to Purchaser’s Subscription Amount divided
by the Final Per Share Purchase Price, registered in the name of Purchaser.

(b)               On or prior to the Closing Date, Purchaser shall deliver or
cause to be delivered to the Company the following:

(i)                 this Agreement duly executed by Purchaser; and

(ii)               Purchaser’s Subscription Amount by wire transfer to the
account as specified in writing by the Company.

2.3              Closing Conditions.

(a)                The obligations of the Company hereunder in connection with
the Closing are subject to the following conditions being met:

(i)                 the accuracy in all material respects on the Closing Date of
the representations and warranties of Purchaser contained herein (unless as of a
specific date therein);

(ii)               all obligations, covenants and agreements of Purchaser
required to be performed at or prior to the Closing Date shall have been
performed;

(iii)             the delivery by Purchaser of the items set forth in Section
2.2(b) of this Agreement; and

(iv)             CFIUS or the President of the United States shall have issued a
written notice (the “CFIUS Notice”) to the parties that CFIUS has made a
determination that the transactions contemplated by this Agreement do not
present any unresolved national security concerns or do not constitute a
“covered transaction” as defined in 31 C.F.R. §800.207.

(b)               The obligations of Purchaser hereunder in connection with the
Closing are subject to the following conditions being met:

(i)                 the accuracy in all material respects when made and on the
Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein);

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(ii)               all obligations, covenants and agreements of the Company
required to be performed at or prior to the Closing Date shall have been
performed;

(iii)             the delivery by the Company of the items set forth in Section
2.2(a) of this Agreement;

(iv)             there shall have been no Material Adverse Effect with respect
to the Company since the date hereof;

(v)               from the date hereof to the Closing Date, trading in the
Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be terminated prior to
the Closing), and, at any time prior to the Closing Date, trading in securities
generally as reported by Bloomberg L.P. shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of Purchaser, makes it
impracticable or inadvisable to purchase the Securities at the Closing; and

(vi)             CFIUS or the President of the United States shall have issued
the CFIUS Notice.

2.4              Final Per Share Purchase Price. On the terms and subject to the
Closing conditions set forth in this Agreement, at the Closing, Purchaser shall
pay to the Company the Subscription Amount that is equal to the number of Shares
purchased times the Final Per Share Purchase Price. The “Final Per Share
Purchase Price” shall equal the Initial Per Share Purchase Price as calculated
in Section 2.5, unless otherwise adjusted pursuant to Section 2.6. The Final Per
Share Purchase Price shall also be subject to adjustments for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the Execution Date.

2.5              Initial Per Share Purchase Price. The “Initial Per Share
Purchase Price” equals the greater of (a) 105% of the greater of (i) the average
closing bid price of the Common Stock for the 5 Trading Days immediately
preceding the Execution Date and (ii) the closing bid price of the Common Stock
on the Trading Day immediately preceding the Execution Date, and (b) $1.40. As
the Execution Date is April 15, 2014, the Initial Per Share Purchase Price shall
be USD$1.62 per share.

2.6              Adjusted Per Share Purchase Price. The Initial Per Share
Purchase Price shall be adjusted on the Closing Date based upon the average
closing bid price of the Common Stock for the 5 Trading Days immediately
preceding the Closing Date (the “5 Day Average Price”) as follows (as adjusted,
the “Adjusted Per Share Purchase Price”):

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(a)                If the 5 Day Average Price is greater than the Initial Per
Share Purchase Price, the Adjusted Per Share Purchase Price shall equal the
lesser of (i) the Initial Per Share Purchase Price plus 50% of the difference
between (A) the 5 Day Average Price and (B) the Initial Per Share Purchase Price
or (ii) 125% of the Initial Per Share Purchase Price; and

(b)               If the 5 Day Average Price is less than the Initial Per Share
Purchase Price, the Adjusted Per Share Purchase Price shall equal the greater of
(i) the Initial Per Share Purchase Price less 95% of the difference between (A)
the Initial Per Share Purchase Price and (B) the 5 Day Average Price or (ii) 75%
of the Initial Per Share Purchase Price.

Notwithstanding the foregoing, in no event shall the Adjusted Per Share Purchase
Price equal less than $1.40.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

3.1              Representations and Warranties of the Company. Except as set
forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a
part hereof and shall qualify any representation or otherwise made herein to the
extent of the disclosure contained in the corresponding section of the
Disclosure Schedules, the Company hereby makes the following representations and
warranties to Purchaser:

(a)                Organization and Qualification. The Company is an entity duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted. The Company is not in violation
nor default of any of the provisions of its respective certificate or articles
of incorporation, bylaws or other organizational or charter documents. The
Company is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a
material adverse effect on the legality, validity or enforceability of this
Agreement, (ii) a material adverse effect on the results of operations, assets,
business, or condition (financial or otherwise) of the Company or (iii) a
material adverse effect on the Company’s ability to perform in any material
respect on a timely basis its obligations under this Agreement (any of (i), (ii)
or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail such power and authority or qualification.

(b)               Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the Board of Directors
or the Company’s stockholders in connection therewith other than in connection
with the Required Approvals. This Agreement has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will, subject to the satisfaction of and obtaining the
Required Approvals, constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

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(c)                No Conflicts. The execution, delivery and performance by the
Company of this Agreement, the issuance and sale of the Securities and the
consummation by it of the transactions contemplated hereby and thereby to which
it is a party do not and will not: (i) conflict with or violate any provision of
the Company’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets
of the Company or any Subsidiary, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company debt or otherwise) or other understanding to which the
Company is a party or by which any property or asset of the Company is bound or
affected, or (iii) subject to the Required Approvals, conflict with or result in
a violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not have or reasonably be
expected to result in a Material Adverse Effect.

(d)               Filings, Consents and Approvals. The Company is not required
to obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of this Agreement, other
than: (i) the filings required by the rules and regulations of the Commission,
(ii) the notice and/or application(s) to each applicable Trading Market for the
issuance and sale of the Securities and the listing of the Securities for
trading thereon in the time and manner required thereby, (iii) the filing of
Form D with the Commission and such filings as are required to be made under
applicable state securities laws, and (iv) other consents, waivers,
authorizations or orders, or notice to, or filings or registrations with other
Persons which have already been obtained, delivered or made, or will be
obtained, delivered or made by the Closing Date and set forth on Schedule 3.1(d)
(collectively, the “Required Approvals”).

(e)                Issuance of the Securities. The Securities are duly
authorized and, when issued and paid for in accordance with this Agreement, will
be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer provided for in
this Agreement. The Company has reserved from its duly authorized capital stock
the maximum number of shares of Common Stock issuable pursuant to this
Agreement.

(f)                Capitalization of the Company. As of the Execution Date, (i)
the total number of shares of capital stock which the Company is authorized to
issue is 45,000,000, divided into 40,000,000 shares of common stock, of which
34,500,000 shares are Common Stock, par value USD$0.01 per share, and 5,500,000
shares were designated as Class E-1 common stock, Class E-2 common stock or
Class E-3 common stock, all previously outstanding shares and all of which have
been previously redeemed or converted into shares of Common Stock and 5,000,000
shares of preferred stock, par value USD$0.01 per share, (ii) the total number
of shares of Common Stock outstanding is 14,293,306 and no shares of preferred
stock are outstanding, and (iii) other than warrants to purchase a total of
2,127,230 shares of Common Stock, and options to purchase a total of 1,510,458
shares of Common Stock granted under the Company’s Amended and Restated
LightPath Technologies, Inc. Omnibus Incentive Plan (the “Plan”), there are no
other securities of the Company or its Subsidiaries which are outstanding and
would entitle the holder thereof to acquire at any time shares of capital stock
of the Company, including, without limitation, 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, shares of capital stock of the Company. As of the date
hereof, (x) other than the Plan and the Company’s 2004 Employee Stock Purchase
Plan (the “Employee Plan”), there are no other existing Company stock option
plans and stock purchase plans, (y) a total of 2,715,625 shares of Common Stock
have been authorized for issuance under the Plan, and 566,103 shares of Common
Stock are available for future issuance under the Plan and (z) a total of
200,000 shares of Common Stock have been authorized for issuance under the
Employee Plan, and 101,693 shares of Common Stock are available for future
issuance under the Employee Plan.

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(g)               SEC Reports; Financial Statements. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by the Company under the Securities Act and the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof
(or such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid extension
of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act, 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 light of the circumstances under which they were made, not
misleading. The Company has never been an issuer subject to Rule 144(i) under
the Securities Act. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by
GAAP, and fairly present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments.

(h)               Material Changes; Undisclosed Events, Liabilities or
Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC
Report filed prior to the date hereof: (i) there has been no event, occurrence
or development that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company’s financial
statements pursuant to GAAP or disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting, (iv) 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 (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to
existing Company stock option plans and stock purchase plans. The Company does
not have pending before the Commission any request for confidential treatment of
information. Except for the issuance of the Securities contemplated by this
Agreement or as set forth on Schedule 3.1(h), no event, liability, fact,
circumstance, occurrence or development has occurred or exists, or is reasonably
expected to occur or exist, with respect to the Company or its Subsidiaries or
their respective business, properties, operations, assets or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least 1 Trading Day prior to the
date that this representation is made.

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 (i)                 Registration and Qualification Exemptions. Assuming the
accuracy of Purchaser’s representations and warranties set forth in Section 3.2,
no registration under the Securities Act is required for the offer and sale of
the Securities by the Company to Purchaser as contemplated hereby. The Company
is relying upon the exemption from the registration requirements of Section 4(2)
of the Securities Act, and Rule 506 and Regulation S promulgated under the
Securities Act. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Trading Market.

(j)                 Investment Company. The Company is not, and is not an
Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended. The Company shall conduct its
business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.

(k)               Listing and Maintenance Requirements. The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the Commission
is contemplating terminating such registration. The Company has not, in the 12
months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements.

(l)                 No Integrated Offering. Assuming the accuracy of Purchaser’s
representations and warranties set forth in Section 3.2, neither the Company,
nor any of its Affiliates, nor, to the knowledge of the Company, any Person
acting on its or their behalf 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 Securities to be integrated
with prior offerings by the Company for purposes of (i) the Securities Act which
would require the registration of any such securities under the Securities Act,
or (ii) any applicable shareholder approval provisions of any Trading Market on
which any of the securities of the Company are listed or designated.

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3.2              Representations and Warranties of Purchaser. Purchaser
represents and warrants as of the date hereof and as of the Closing Date to the
Company as follows (unless as of a specific date therein):

(a)                Organization; Authority. Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full right, corporate or partnership power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and performance by
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate, partnership, limited liability company or
similar action, as applicable, on the part of Purchaser. This Agreement has been
duly executed by Purchaser, and when delivered by Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of
Purchaser, enforceable against it in accordance with its terms, except: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

(b)               Own Account. Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account, and not with a view to or for distributing or reselling
such Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law.
Purchaser is acquiring the Securities hereunder in the ordinary course of its
business.

(c)                Purchaser Status. At the time Purchaser was offered the
Securities, it was, and as of the date hereof, it is either: (i) an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act. Purchaser is not required to be registered as
a broker-dealer under Section 15 of the Exchange Act.

(d)               Offshore Transaction. At the time Purchaser was offered the
Securities, it was, and as of the date hereof, it is not in the United States
and is not a United States Person (as defined in Regulation S) and is not
acquiring the Securities for the account or benefit of a United States Person.
Purchaser will not be in the United States at the time of delivery of the
Securities.

11

 

 

(e)                Hedging Transactions. Purchaser acknowledges and agrees that
it cannot engage in hedging transactions with regard to the Securities prior to
the expiration of the six month distribution compliance period specified in Rule
903 promulgated under the Securities Act unless in compliance with the
Securities Act.

(f)                Resale. Purchaser agrees that all offers and sales of the
Securities, as applicable, by Purchaser shall be made only (i) in accordance
with the provisions of Regulation S, (ii) pursuant to registration under the
Securities Act, or (iii) pursuant to an available exemption from registration
under the Securities Act.

(g)               Compliance with Laws of Non-U.S. Jurisdictions. Purchaser has
satisfied itself as to the full observance of the laws of its jurisdiction in
connection with any invitation to subscribe for the Securities or any use of
this Agreement and the transactions contemplated thereby, including (i) the
legal requirements within its jurisdiction for the purchase of the Securities,
(ii) any foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained, and (iv) the income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale, or transfer of the Securities. Purchaser’s
subscription and payment for and continued beneficial ownership of the
Securities will not violate any applicable securities, money transfer or use, or
other laws of Purchaser’s jurisdiction.

(h)               Purchaser is not a “Distributor”. Purchaser is not a
“distributor” within the meaning of Regulation S promulgated under the
Securities Act. Notwithstanding the foregoing, Purchaser agrees: (i) that all
offers and sales of the Securities prior to the expiration of a period of six
months from the issuance of the Securities, shall be made only in accordance
with the provisions of Rule 903 or Rule 904 of Regulation S, pursuant to
registration of the Securities under the Securities Act, or pursuant to an
available exemption from the registration requirements of the Securities Act,
and (ii) not to engage in hedging transactions with regard to securities of the
Company prior to the expiration period of six months from the date of issuance
of the Securities unless in compliance with the Securities Act. Purchaser
understands and agrees that all offering materials and documents (other than
press releases) used in connection with offers and sales of the Securities prior
to the expiration of the period of six months from the date of issuance of the
Securities shall include statements to the effect that the Securities have not
been registered under the Securities Act and may not be offered or sold in the
United States or to United States persons (other than distributors) unless the
Securities are registered under the Securities Act, or an exemption from the
registration requirements of the Securities Act is available. Purchaser
understands and agrees that such offering materials and documents must state
that hedging transactions involving those securities may not be conducted unless
in compliance with the Securities Act. Purchaser understands and agrees that
such statements shall appear on the cover or inside cover page of any prospectus
or offering circular used in connection with the offer or sale of the
Securities; and in any advertisement made or issued by the issuer, any
distributor, or any of their respective Affiliates, or any person acting on
behalf of any of the foregoing.

12

 

(i)                 Refusal to Register. Purchaser understands that the Company
is required under Rule 903 of Regulation S to refuse to register the transfer of
any of the Securities to be received by Purchaser pursuant to this Agreement
that are not transferred pursuant to a registration statement under the
Securities Act, in compliance with Regulation S, or otherwise pursuant to an
available exemption from registration.

(j)                 Experience of Such Purchaser. Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Purchaser is able to bear the
economic risk of an investment in the Securities and, at the present time, is
able to afford a complete loss of such investment.

(k)               General Solicitation. Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.

(l)                 Certain Transactions and Confidentiality. Other than
consummating the transactions contemplated hereunder, such Purchaser has not
directly or indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Purchaser, executed any purchases or sales,
including Short Sales, of the securities of the Company during the period
commencing as of the time that such Purchaser first received a term sheet
(written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof. Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Purchaser’s
assets, the representation set forth above shall only apply with respect to the
portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement. Other than to
other Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).

(m)             Compliance with the FCPA and the Patriot Act. Purchaser is fully
aware of the provisions of the United States Foreign Corrupt Practices Act of
1977, as amended (the “FCPA”) and the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (the “Patriot Act”), Public Law 107-56 (Oct. 26, 2001), including, without
limitation, Title III: International Money Laundering Abatement and Financial
Anti-Terrorism Act of 2001. The Patriot Act prohibits certain activities and
requires certain procedures. Without limiting the foregoing, the Patriot Act
prohibits certain correspondent accounts, contains various money anti-laundering
provisions, requires each financial institution that establishes, maintains,
administers, or manages accounts in the United States for an individual or
representative of a non-United States Person to establish due diligence
policies, procedures and controls reasonably designed to detect and report
instances of money laundering through those accounts. Purchaser represents,
warrants, covenants and agrees with the Company that it is fully familiar with
the requirements of the FCPA and the Patriot Act and that it has complied and
will comply therewith in all financial arrangements pertaining to this
subscription and its investment in the Company.

13

 

 

(n)               Compliance with ITAR. Purchaser understands that the Company
is registered with the U.S. Department of State as a manufacturer and exporter
of defense articles under the ITAR. Purchaser agrees that, in order to preserve
the Company’s ability to obtain export licenses and other approvals from the
U.S. Department of State in connection with its ITAR-controlled products and
technology, it shall not seek the authority or ability to establish or direct
the general policies or day-to-day operations of the Company, nor will it seek
to own more than 19.9% of the outstanding shares of Common Stock of the Company.
Purchaser also understands that the Company is prohibited from releasing to
foreign nationals any technical data with respect to ITAR-controlled items
without a license or other written approval from the U.S. Department of State.

(o)               Accuracy of Representations and Warranties. Purchaser
understands and agrees that the Securities are being offered and sold to it in
reliance on specific exemptions from the registration requirements of the United
States federal and state securities laws and that the Company is relying on part
upon the truth and accuracy of, and Purchaser’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
Purchaser set forth herein in order to determine the availability of such
exemptions and the eligibility of Purchaser to acquire the Securities.

ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

4.1              Transfer Restrictions.

(a)                The Securities may only be disposed of in compliance with
state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement, or Rule 144, to the
Company or to an Affiliate of a Purchaser or in connection with a pledge as
contemplated in Section 4.1(b), the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act. As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights and
obligations of a Purchaser under this Agreement.

(b)               Purchaser agrees to the imprinting, so long as is required by
this Section 4.1, of a legend on any of the Securities in the following form:

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THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES. HEDGING
TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE SECURITIES ACT.

The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured parties. Such
a pledge or transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith. Further, no notice shall be required of such
pledge. At Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities,
including, if the Securities are subject to registration pursuant to this
Agreement, the preparation and filing of any required prospectus supplement
under Rule 424(b)(3) under the Securities Act or other applicable provision of
the Securities Act to appropriately amend the list of “Selling Stockholders”
thereunder.

(c)                Certificates evidencing the Shares shall not contain any
legend (including the legend set forth in Section 4.1(b) hereof), (i) while a
registration statement covering the resale of such security is effective under
the Securities Act, (ii) following any sale of such Shares pursuant to Rule 144,
(iii) if such Shares are eligible for sale under Rule 144, without the
requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such Shares and without volume or
manner-of-sale restrictions, or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission). The
Company agrees that following such time as such legend is no longer required
under this Section 4.1(c), it will, no later than three Trading Days following
the delivery by Purchaser to the Company or the Transfer Agent of a certificate
representing Shares issued with a restrictive legend (such third Trading Day,
the “Legend Removal Date”) (unless a delay is a result of a Force Majeure,
provided that the Company continues to use commercially reasonable efforts to
ultimately perform its obligations hereunder), deliver or cause to be delivered
to Purchaser a certificate representing such shares that is free from all
restrictive and other legends. The Company may not make any notation on its
records or give instructions to the Transfer Agent that enlarge the restrictions
on transfer set forth in this Section 4. Certificates for Shares subject to
legend removal hereunder shall be transmitted by the Transfer Agent to the
Purchaser by crediting the account of the Purchaser’s prime broker with the
Depository Trust Company System as directed by Purchaser.

15

 

 (d)               Purchaser agrees with the Company that Purchaser will sell
any Securities pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery requirements, or an
exemption therefrom, and that if Securities are sold pursuant to a registration
statement, they will be sold in compliance with the plan of distribution set
forth therein, and acknowledges that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section 4.1 is
predicated upon the Company’s reliance upon this understanding.

4.2              Shareholder Rights Plan. No claim will be made or enforced by
the Company or, with the consent of the Company, any other Person, that
Purchaser is an “Acquiring Person” under any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that Purchaser could be deemed to trigger the provisions of any
such plan or arrangement, by virtue of receiving Securities under this Agreement
or under any other agreement between the Company and Purchaser.

4.3              Non-Public Information. Except with respect to the material
terms and conditions of the transactions contemplated by this Agreement and the
information that may be contained in any future notices from the Company to
Purchaser as required pursuant to this Agreement, the Company covenants and
agrees that neither it, nor any other Person acting on its behalf, will provide
Purchaser or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior thereto
Purchaser shall have executed a written agreement with the Company regarding the
confidentiality and use of such information. The Company understands and
confirms that Purchaser shall be relying on the foregoing covenant in effecting
transactions in securities of the Company.

4.4              Reservation of Common Stock. As of the date hereof, the Company
has reserved a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue Shares pursuant to this Agreement.

4.5              Listing of Common Stock. The Company hereby agrees to use
commercially reasonable efforts to maintain the listing or quotation of the
Common Stock on the Trading Market on which it is currently listed, and
concurrently with the Closing, the Company shall apply to list or quote all of
the Shares on such Trading Market and promptly secure the listing of all of the
Shares on such Trading Market. The Company further agrees, if the Company
applies to have the Common Stock traded on any other Trading Market, it will
then include in such application all of the Shares, and will take such other
action as is necessary to cause all of the Shares to be listed or quoted on such
other Trading Market as promptly as possible. The Company will then take all
action reasonably necessary to continue the listing or quotation and trading of
its Common Stock on a Trading Market and will comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of
the Trading Market.

16

 

4.6              Certain Transactions and Confidentiality. Purchaser covenants
that neither it, nor any Affiliate acting on its behalf or pursuant to any
understanding with it will execute any purchases or sales of any of the
Company’s securities during the period commencing with the execution of this
Agreement and ending at such time that the transactions contemplated by this
Agreement are first publicly announced pursuant to the initial press release or
the filing of a Form 8-K with the Commission. Purchaser covenants that until
such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company pursuant to the initial press release or the filing of
a Form 8-K, Purchaser will maintain the confidentiality of the existence and
terms of this transaction and the information included in this Agreement and the
Disclosure Schedules. Purchaser covenants that at no time following the Closing
Date, will Purchaser engage in any Short Sales of the Common Stock.

4.7              Form D; Blue Sky Filings. The Company agrees to timely file a
Form D with respect to the Securities as required under Regulation D and to
provide Purchaser a copy thereof, promptly upon request of Purchaser. The
Company shall take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for, or to qualify the Securities for,
sale to Purchaser at the Closing under applicable securities or “Blue Sky” laws
of the states of the United States, and shall provide evidence of such actions
promptly upon request of Purchaser.

4.8              Delivery of Securities After Closing. The Company shall
deliver, or cause to be delivered, the respective Securities purchased by
Purchaser to Purchaser within 5 Trading Days of the Closing Date.

4.9              Beneficial Ownership Limitation. Purchaser hereby covenants
that at no time following the Closing Date will Purchaser beneficially own
shares of Common Stock exceeding 19.9% of the Company’s outstanding Common Stock
as calculated in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder except and to the extent that the
Purchaser’s beneficial ownership exceeds 19.9% solely because of the decrease of
the number of the outstanding shares of Common Stock.

4.10          Stockholder Matters. Purchaser agrees that during the three-year
period following the Closing Date (the “Restricted Period”), unless as otherwise
agreed to in writing by the Company, Purchaser will not:

(a)                Submit any stockholder proposals for the vote or consent of
the stockholders (whether pursuant to Rule 14a-8 under the Exchange Act, or
otherwise) or any proposal for consideration by the Company’s Board of
Directors;

 

(b)               Nominate any candidate for election as a director or otherwise
seek appointment to or representation of the Board of Directors;

17

 

 

(c)                Solicit proxies or make, participate in or encourage any
“solicitation” (as such term is used in the proxy rules of the Commission) for
proxies for any stockholder proposals or nominations of candidates for election
as directors;

 

(d)               Form or join in a partnership, syndicate or other group,
including, without limitation, a “group” as defined under Section 13(d) of the
Exchange Act, with respect to the Company’s Common Stock, or deposit any shares
of Common Stock in a voting trust, arrangement or agreement, or subject the
Common Stock to a voting trust, arrangement or agreement;

 

(e)                Encourage, recommend, advise, finance or urge others to put
forward stockholder proposals or nominations with respect to directors of the
Company or otherwise have discussions or enter into any arrangements with any
other person in connection with any of the foregoing as they relate to the
Company;

 

(f)                Indicate support or approval for any stockholder proposals or
nominations relating to the Company (unless in accordance with the Board of
Director’s written recommendation);

 

(g)               Cause or permit any entity that Purchaser directly or
indirectly has the power to vote or direct the vote of, to vote on any matter in
any way other than in accordance with the written recommendations of the Board
of Directors, or to withhold from or otherwise abstain from voting on any such
matter;

 

(h)               Solicit or encourage others to vote against any matter
recommended by the Board of Directors;

 

(i)                Act, alone or in concert with others, to seek to control the
management, Board of Directors or policies of the Company;

 

(j)                Pursue any tender offer or other acquisition of the Company;

 

(k)               Directly or indirectly, offer for sale, sell, assign,
transfer, engage in any hedging transaction with respect to, or otherwise
dispose of any of the Shares issued pursuant to the terms of this Agreement
(except in connection with a pledge of Shares in accordance with Section 4.1(b)
above); or

 

(l)                Take or seek to take, or cause or seek to cause or solicit
others to take, any actions inconsistent with the matters set forth in Section
4.10(a)-(k) as they relate to the Company.

 

All covenants, agreements, representations and warranties made in this Section
4.10 shall survive the Closing of the transactions contemplated herein.

18

 

 

4.11          CFIUS Clearance.

(a)                The Company and Purchaser shall as soon as practicable, but
in no event later than fifteen (15) Business Days following the Execution Date
(or by such other time mutually acceptable to the parties), submit to CFIUS a
complete draft of a joint voluntary notice pursuant to Section 721 of the
Defense Production Act of 1950, 50 U.S.C. app. § 2170, as amended
(“Exon-Florio”), with the formal joint voluntary notice made as soon as
practicable thereafter within the minimum amount of time reasonably necessary to
address any questions or comments of CFIUS (such notifications and other filings
submitted to CFIUS, including as subsequently updated or modified, collectively,
the “CFIUS Filing”). The Company and Purchaser promptly shall furnish any
supplemental information requested by CFIUS in connection the CFIUS Filing in
accordance with the applicable regulations.

 

(b)               Prior to the Closing, the Company and Purchaser shall use
commercially reasonable efforts to obtain all requisite clearances and approvals
from CFIUS and any such other governmental entity as promptly as practicable.
Prior to the Closing, the Company and Purchaser shall cooperate in good faith:
(i) to keep each other apprised of the status of matters relating to the
completion of the transactions contemplated by this Agreement, including
promptly furnishing the other with copies of notices or other communications
received from CFIUS or its member agencies; (ii) to permit counsel for the other
party reasonable opportunity to review in advance, and consider the views of the
other party in connection with, any proposed written communication to CFIUS or
its member agencies; (iii) to furnish to the other such information and
assistance as the other may reasonably request in connection with its
preparation of the CFIUS Filing and subsequent submissions to CFIUS; and (iv) to
participate in any meeting with CFIUS or its member agencies in connection with
the CFIUS Filing only after consulting with the other party in advance and, to
the extent permitted by CFIUS or any such other governmental entity, providing
the other party the opportunity to participate in such meeting. Nothing in this
Agreement shall require either the Company or Purchaser to disclose to the other
party non-public information that is personally or commercially sensitive,
classified for national security reasons, or otherwise requested by CFIUS to be
treated in confidence.

 

(c)                Purchaser shall use commercially reasonable efforts to
resolve any requests by CFIUS that Purchaser implement mitigation measures to
address national security concerns; provided that, Purchaser shall be free to
determine in its sole discretion whether to agree to any mitigation measures
proposed by CFIUS as a condition of obtaining CFIUS clearance.

 

(d)               Each party shall bear its own fees, costs and expenses
(including attorneys’ fees) incurred in connection with the filing of any
notifications and related materials that are required in connection with the
CFIUS Filing.

 

(e)                In the event that either (i) CFIUS or the President takes
action to block the transaction, or (ii) the parties jointly withdraw the CFIUS
Filing, then either party in its sole discretion may terminate this Agreement by
giving written notice to the other party. This right of termination shall not
apply if the parties agree with CFIUS jointly to withdraw and to refile the
CFIUS Filing for further consideration by CFIUS, and CFIUS accepts such
refiling. In that case, the provisions of this Section 4.11 shall apply to the
new CFIUS Filing. Neither party shall withdraw the CFIUS Filing without the
express written consent of the other party.

19

 

 

4.12          No Common Stock Purchases and Sales. Purchaser hereby agrees that
from the Execution Date to the Closing Date, neither it, nor any Affiliate
acting on its behalf or pursuant to any understandings with it, will purchase or
sell any shares of Common Stock.

4.13          Registration Rights.

(a)                If at any time after the one-year anniversary of the Closing
Date, the Company determines to prepare and file with the Commission a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities
(other than on Form S-4 or S-8 (each as promulgated under the Securities Act) or
their then equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity securities
issuable in connection with the Company’s stock option or other employee benefit
plans) and the form of registration statement to be used may be used for
registration of the Shares (a “Piggyback Registration”), then the Company shall
give prompt written notice (in any event no later than fifteen (15) Business
Days prior to the filing of such registration statement) to Purchaser of its
intention to effect such a registration and, subject to Sections 4.13(b) and
4.13(c), shall include in such registration all Shares with respect to which the
Company has received written requests for inclusion from Purchaser (the
“Registrable Shares”) within five (5) Business Days after the Company’s notice
has been delivered to Purchaser.

(b)               If a Piggyback Registration is initiated as a primary
underwritten offering on behalf of the Company and the managing underwriter
advises the Company in writing that in its opinion the number of securities
proposed to be included in such registration exceeds the number which can
reasonably be sold in such offering and/or that the number of securities
proposed to be included in any such registration would adversely affect the
offering price, the Company shall include in such registration (i) first, the
number of securities that the Company proposes to sell; and (ii) second, the
number of Registrable Shares requested to be included therein by Purchaser and
other securities requested to be included by other holders of the Company’s
securities (pro rata in accordance with the number of Registrable Shares
requested by Purchaser and the number of securities requested by holders of such
other securities to be included in such registration). If the managing
underwriter of such offering subsequently advises the Company in writing that
the number of securities which can be sold exceeds the number of securities
included in the offering, the Company shall include in such registration: (i)
first, the securities that the Company proposes to sell; (ii) second, such
Registrable Shares that Purchaser and such securities that other holders of
securities had originally requested be included in the registration (pro rata in
accordance with the number of Registrable Shares requested by Purchaser and the
number of securities requested by holders of such other securities to be
included in such registration); and (iii) third, any other securities proposed
for inclusion in such registration.

(c)                If a Piggyback Registration is initiated as an underwritten
offering on behalf of holders of the Company’s securities other than Purchaser,
and the managing underwriter advises the Company in writing that in its opinion
the number of securities proposed to be included in such registration exceeds
the number which can be sold in such offering and/or that the number of
securities proposed to be included in any such registration would adversely
affect the offering price, the Company shall include in such registration (i)
first, if such registration is being made on behalf of other stockholders of the
Company exercising demand registration rights, then the securities so requested
to be included therein in accordance with such demand registration rights; and
(ii) second, the Registrable Shares requested by Purchaser to be included in
such registration and other securities requested to be included in such
registration (pro rata in accordance with the number of Registrable Shares
requested by Purchaser and the number of securities requested by holders of such
other securities to be included in such registration). If the managing
underwriter of such offering subsequently advises the Company in writing that
the number of securities which can be sold exceeds the number of securities
included in the offering, the Company shall include in the registration such
additional securities that Purchaser of the Registrable Shares and other holders
of securities had originally requested to be included in the registration (pro
rata in accordance with the number of Registrable Shares requested by Purchaser
and the number of securities requested by holders of such other securities to be
included in such registration).

20

 

(d)               If any Piggyback Registration is initiated as a primary
underwritten offering on behalf of the Company, the Company shall select the
investment banking firm or firms to act as the managing underwriter or
underwriters in connection with such offering.

(e)                Nothing in this Section 4.13 shall create any liability on
the part of the Company to Purchaser if the Company in its sole discretion
should decide not to file a registration statement proposed to be filed pursuant
to Section 4.13(a) or to withdraw such registration statement subsequent to its
filing, regardless of any action whatsoever that Purchaser may have taken,
whether as a result of the issuance by the Company of any notice hereunder or
otherwise.

(f)                Purchaser hereby agrees that any Shares registered pursuant
to a Piggyback Registration may not be sold until after the expiration of the
three-year Restricted Period.

(g)               If any of the Shares are not registered pursuant to this
Section 4.13 upon the expiry of the three-year Restricted Period, the parties
hereto agree to discuss in good faith the possible registration of such Shares.

 

ARTICLE V.
MISCELLANEOUS

5.1              Fees and Expenses. Each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all
Transfer Agent fees levied in connection with the delivery of any Securities to
Purchaser.

5.2              Entire Agreement. This Agreement, together with the exhibits
and schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

5.3              Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of: (a) the date of
transmission (with electronic “answerback” or other confirmation of successful
transmission or receipt), if such notice or communication is delivered via
facsimile or email at the facsimile number or email address set forth on the
signature pages attached hereto prior to 5:00 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile or email at the facsimile
number or email address set forth on the signature pages attached hereto on a
day that is not a Trading Day or later than 5:00 p.m. (New York City time) on
any Trading Day, (c) the second (2nd) Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given. The
address, facsimile number and email address for such notices and communications
shall be as set forth on the signature pages attached hereto, except as the same
may be changed by a party hereto by delivering notice to Purchaser, in the case
of a change of address by the Company, and to the Company, in the case of a
change of address by Purchaser, in each case in accordance with the terms
hereof, such change of address to be effective on the later of the date set
forth in such notice, or ten (10) days after such notice is deemed given
hereunder.

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5.4              Amendments; Waivers. No provision of this Agreement may be
waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by both parties or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought. No waiver
of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right.

5.5              Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

5.6              Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of Purchaser (other than by merger).
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom Purchaser assigns or transfers any Securities, provided that such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of this Agreement that apply to “Purchaser.”

5.7              No Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.

5.8              Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Florida, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement
(whether brought against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in Orange County, Florida. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in Orange County, Florida for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of this
Agreement), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
the prevailing party in such action or proceeding shall be reimbursed by the
other party for its reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such action or
proceeding.

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5.9  Survival. The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities for the applicable statute of
limitations.

5.10          Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.

5.11          Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

5.12          Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction
(including customary indemnity reasonably satisfactory to the Company). The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.

5.13          Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, Purchaser and
the Company will be entitled to specific performance under this Agreement. The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations contained in this Agreement
and hereby agree to waive and not to assert in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.

5.14          Payment Set Aside. To the extent that the Company makes a payment
or payments to Purchaser pursuant to this Agreement or Purchaser enforces or
exercises its rights thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

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5.15          Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right
may be exercised on the next succeeding Business Day.

5.16          Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise this Agreement
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments hereto. In addition,
each and every reference to share prices and shares of Common Stock in this
Agreement shall be subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of this Agreement.

5.17          Assurances. The offer and issuance of the Securities to Purchaser
is being made pursuant to the exemption from the registration provisions of the
Securities Act afforded by either or both of (i) Section 4(2) of the Securities
Act and Rule 506 of Regulation D promulgated thereunder and (ii) Regulation S
promulgated under the Securities Act. Purchaser will provide such information as
is requested by the Company and take such other actions as are necessary or
appropriate in the judgment of the Company to perfect such exemption(s).

5.18          Translation. If a translation of this Agreement is made by or
provided to Purchaser, to the extent of any conflict between the translated
version and this English version, then the English version shall control.

5.19          WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

 

(Signature Pages Follow)

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

lightpath technologies, inc.

 

Address for Notice:

2603 Challenger Tech Court

Suite 100

Orlando, Florida 32826

 

By:___/s/ J. James Gaynor_____________________

Name: J. James Gaynor

Title: President & CEO

 

With a copy to (which shall not constitute notice):

Fax: (407) 382-4007

Email Address:

jgaynor@lightpath.com

   

Baker & Hostetler LLP

SunTrust Center

200 S. Orange Avenue, Suite 2300

Orlando, Florida 32801

Facsimile: (407) 841-0168

Email Address: jdecker@bakerlaw.com

Attention: Jeffrey E. Decker, Esq.

 

 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

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[PURCHASER SIGNATURE PAGE TO LPTH SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 

 

 

Name of Purchaser: Pudong Science & Technology (Cayman) Co., Ltd.     Signature
of Authorized Signatory of Purchaser: /s/ Zhu Xudong    

Name of Authorized Signatory: Zhu Xudong (朱旭东)

    Title of Authorized Signatory: Director       Email Address of Contact
Person: huay@pdsti.com       Facsimile Number of Contact Person: 86-
021-50276385       Address for Notice of Purchaser:       13 Building, No. 439,
Chunxiao Rd.   Zhangjiang High-tech Park   Pudong, Shanghai   201203, PRC  

 

 

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

 

 

 

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