Lightbridge Corp.: Exhibit 10.1 - Filed by newsfilecorp.com






Execution Version 

SECURITIES PURCHASE AGREEMENT 

This Securities Purchase
Agreement (this “Agreement”) is dated as of June 28, 2016 (the
“Effective Date”), between Lightbridge Corporation, a Nevada corporation
(the “Company”), and the purchaser identified on the signature pages
hereto (including its successors and assigns, the “Purchaser”). 

WHEREAS, subject to the terms and
conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the
Securities Act of 1933, as amended (the “Securities Act”), the Company
desires to issue and sell to the Purchaser, and the 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 the Purchaser agree as follows: 

ARTICLE I 
DEFINITIONS 

1.1      Definitions.
In addition to the terms defined elsewhere in this Agreement: (a) capitalized
terms that are not otherwise defined herein have the meanings given to such
terms in the Certificate of Designation (as defined herein), and (b) the
following terms have the meanings set forth in this Section 1.1: 

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

“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 New
York are authorized or required by law or other governmental action to close.


“Certificate of
Designation” means the Certificate of Designation of Preferences, Rights and
Limitations to be filed on or before the Closing Date by the Company with the
Secretary of State of Nevada, in the form of Exhibit A attached
hereto. 

“CFIUS” means the
Committee on Foreign Investment in the United States. 

“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
common stock of the Company, par value $0.001 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, right, option, warrant 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. 




“Conversion Price” shall
have the meaning ascribed to such term in the Certificate of Designation. 

“Disclosure Schedules”
means the Disclosure Schedules delivered by the Company to the Purchaser
concurrently with the execution and delivery of this Agreement. 

“Effective Date” has the
meaning set forth in the recitals hereto. 

“Environmental Laws” shall
have the meaning ascribed to such term in Section 3.1(w) . 

“Escrow Agent” shall mean
Bernard & Yam, LLP. 

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

“FCPA” means the Foreign
Corrupt Practices Act of 1977, as amended. 

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

“Intellectual Property
Rights” shall have the meaning ascribed to such term in Section 3.1(n) .


“Investors Rights
Agreement” means the Investors Rights Agreement, dated the date hereof, by
and among the Company and the Purchaser, in the form of Exhibit B
attached hereto. 

“Knowledge of the Company”
means the actual knowledge that was, or would reasonably be expected to be,
obtained after due inquiry of all executive officers of the Company. 

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

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

“Liquidation Preference”
shall have the meaning given to such term in the Certificate of Designation.


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

“Maximum Rate” shall have
the meaning ascribed to such term in Section 5.14. 

“Money Laundering Laws”
shall have the meaning ascribed to such term in Section 3.1(cc) . 

“Nasdaq Hearing” means the
hearing, scheduled for July 21, 2016, before a Nasdaq Hearings Panel concerning
the continued listing of the Common Stock on the Nasdaq Capital Market, as the
same may be rescheduled. 

“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.


“Preferred Stock” means
5,100,000 shares of the Company’s Non-Voting Series A Convertible Preferred
Stock, par value $0.001 per share issued hereunder having the rights,
preferences and privileges set forth in the Certificate of Designation, in the
form of Exhibit A hereto. 

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

“Purchaser Party” shall
have the meaning ascribed to such term in Section 4.8. 

2 




“Registration Statement”
means a registration statement meeting the requirements set forth in the
Investors Rights Agreement and covering the resale of the Underlying Shares by
the Purchaser as provided for in the Investors Rights Agreement. 

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

“Required Minimum” means,
as of any date, the maximum aggregate number of shares of Common Stock then
issued or potentially issuable in the future pursuant to the Transaction
Documents, including any Underlying Shares issuable upon conversion in full of
all shares of Preferred Stock, ignoring any conversion or exercise limits set
forth therein. 

“Rule 144” means Rule 144
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(h) . 

“Securities” means the
Preferred Stock and the Underlying Shares contemplated by this Agreement. 

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

“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). 

“Stockholder Approval”
means such approval as may be required by the applicable rules and regulations
of the Trading Market, as applicable, from the stockholders of the Company with
respect to the transactions contemplated by the Transaction Documents, including
any issuance of the Underlying Shares such that following such issuance the
Purchaser would own in excess of 19.99% of the issued and outstanding Common
Stock. 

“Subscription Amount”
means $2,800,000, in United States dollars and in immediately available funds.


“Subsidiary” means any
subsidiary of the Company as set forth on Schedule 21 to the Company’s most
recent Annual Report on Form 10-K, 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 MKT, the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York
Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing). 

“Transaction Documents”
means this Agreement, the Certificate of Designation, the Investors Rights
Agreement, all exhibits and schedules thereto and hereto and any other documents
or agreements executed in connection with the transactions contemplated
hereunder. 

“Transfer Agent” means
Computershare Trust Company is the current transfer agent of the Company, with a
mailing address of 350 Indiana Street, Golden, Colorado 80401, telephone number
(303) 262-0600 and any successor transfer agent of the Company.

“Underlying Shares” means
the shares of Common Stock issued and issuable upon conversion of the Preferred
Stock. 

3 




ARTICLE II 
PURCHASE AND SALE 

2.1      Closing.
Upon the terms and subject to the conditions set forth herein, the Company
agrees to sell, and the Purchaser agrees to purchase, an aggregate of 5,100,000
shares of Preferred Stock with an aggregate Liquidation Preference of two
million eight hundred thousand dollars ($2,800,000). The Closing shall take
place no later than three Business Days following the date on which the
conditions set forth in Section 2.4 have been satisfied or waived (other than
the conditions which by their nature are to be satisfied at the Closing, but
subject to the satisfaction or, if permissible, waiver of such conditions), as
determined by the Escrow Agent. The date and time at which the Closing actually
occurs is hereinafter referred to as the “Closing Date.” 

2.2      Deposit
and Escrow. Prior to or substantially concurrent with the execution of this
Agreement (or, in the event that the Escrow Agent is not prepared to accept the
Deposit on the date hereof, as soon as the Escrow Agent is so prepared), the
Purchaser has delivered or will deliver to the Escrow Agent, to be held in
escrow by the Escrow Agent, a deposit equal to the Subscription Amount (the
“Deposit”). The Deposit shall not be subject to any lien, attachment,
trustee process or any other judicial process of any creditor of the Purchaser.
The Escrow Agent shall deliver the Deposit to the Company at the Closing, by
bank wire transfer of immediately available funds, and the Deposit shall satisfy
in full the amount required to be paid by the Purchaser to the Company at the
Closing. If this Agreement is terminated prior to the Closing for any reason,
the Escrow Agent shall return the Deposit to the Purchaser following such
termination. 

2.3      Deliveries.


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

	 	(i) 	
      this Agreement duly executed by the Company;

	 	 	 
	 	(ii) 	
      evidence of the filing and acceptance of the Certificate
      of Designation from the Secretary of State of Nevada;

	 	 	 
	 	(iii) 	
      a stock certificate relating to 5,100,000 shares of
      Preferred Stock;

	 	 	 
	 	(iv) 	
      the Investors Rights Agreement duly executed by the
      Company;

	 	 	 
	 	(v) 	
      a certificate of the Company signed by its Chief
      Executive Officer and dated as of the Closing Date, stating that the
      conditions in Sections 2.4(b)(i) through (iv) have been
  satisfied;

	 	 	 
	 	(vi) 	
      a certificate of the Company’s Secretary, dated as of the
      Closing Date, certifying (A) the Company’s articles of incorporation and
      bylaws, as then in effect and attached thereto, (B) the resolutions
      adopted by the Company’s Board of Directors authorizing the transactions
      contemplated hereby and attached thereto, and (C) as to the signatures and
      authority of the Persons signing the Transaction Documents and related
      documents on behalf of the Company;

	 	 	 
	 	(vii) 	
      documents evidencing that any applicable regulatory or
      governmental consents or approvals for the transactions contemplated by
      the Transaction Documents have been obtained; and



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

	 	(i) 	
      this Agreement duly executed by the
  Purchaser;



4 





	 	(ii) 	
      the Deposit; and

	 	 	 
	 	(iii) 	
      the Investors Rights Agreement duly executed by the
      Purchaser.



2.4      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 the Purchaser contained herein
      (unless as of a specific date therein in which case they shall be accurate
      as of such date);

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

	 	 	 
	 	(iii) 	
      the delivery by the Purchaser of the items set forth in
      Section 2.3(b) of this Agreement.



(b)      The
obligations of the 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);

	 	 	 
	 	(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 Common Stock shall not be delisted from the Nasdaq
      Capital Market as a result of the Nasdaq Hearing;

	 	 	 
	 	(iv) 	
      the appointment of Xingping Hou, the nominee by the
      Purchaser, as a member and co-chairman of the Board of Directors;
    and

	 	 	 
	 	(v) 	
      the delivery by the Company of the items set forth in
      Section 2.3(a) of this Agreement.



ARTICLE III 
REPRESENTATIONS AND WARRANTIES


3.1      Representations
and Warranties of the Company. Except as disclosed in (i) the SEC Reports
prior to the date of this Agreement (excluding any risk factor disclosure and
disclosure of risks included in any “forward-looking statements”
disclaimer or other statements included in such SEC Reports to the extent that
they are predictive, forward-looking or primarily cautionary in nature, in each
case other than any specific factual information contained therein, and
excluding any supplement, modification or amendment thereto made after the date
hereof), or (ii) 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 therein, the Company hereby
makes the following representations and warranties to the Purchaser: 

(a)      Subsidiaries.
The Company owns, directly or indirectly, all of the capital stock or other
equity interests of each Subsidiary free and clear of any Liens, and all of the
issued and outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities. 

5 




(b)      Organization
and Qualification. The Company and each of the Subsidiaries 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. Neither the Company nor any
Subsidiary is in violation nor default of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries 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 any Transaction
Document, (ii) a material adverse effect on the results of operations, assets,
business, prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (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. 

(c)      Authorization;
Enforcement. The Company has the requisite corporate power and authority to
enter into and to consummate the transactions contemplated by this Agreement and
each of the other Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and each of the other Transaction Documents 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 herewith or therewith other than in
connection with the Required Approvals. This Agreement and each other
Transaction Document to which it is a party 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 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, fraudulent conveyance 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.


(d)      No
Conflicts. The execution, delivery and performance by the Company of this
Agreement and the other Transaction Documents to which it is a party, the
issuance and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’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 or
Subsidiary debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary 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 or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary 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. 

(e)      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 the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii)
the filing with the Commission pursuant to the Investors Rights Agreement, (iii)
the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the
Underlying Shares for trading thereon in the time and manner required thereby,
(iv) the Stockholder Approval, prior to the issuance of Underlying Shares such
that the Purchaser would own in excess of 19.99% of the issued and outstanding
Common Stock, and (v) such filings, if any, as are required to be made under
applicable state securities laws (collectively, the “Required
Approvals”). 

6 




(f)      Issuance
  of the Securities. The Securities are duly authorized and, when issued and
  paid for in accordance with the applicable Transaction Documents, 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 the
  Transaction Documents. The Underlying Shares, when issued in accordance with the
  terms of the Transaction Documents, will be validly issued, fully paid and
  nonassessable, free and clear of all Liens imposed by the Company other than
  restrictions on transfer provided for in the Transaction Documents. The Company
  has reserved from its duly authorized capital stock a number of shares of Common
  Stock for issuance of the Underlying Shares at least equal to the Required
Minimum on the date hereof. 

(g)      Capitalization.
The Company has not issued any capital stock since its most recently filed
periodic report under the Exchange Act, other than pursuant to (i) the exercise
or vesting of awards under the Company’s equity incentive plans, (ii) the
issuance of shares of Common Stock to employees, directors, advisors and
consultants as compensation and pursuant to the conversion and/or exercise of
Common Stock Equivalents outstanding as of the date of the most recently filed
periodic report under the Exchange Act, and (iii) the terms of that certain
Common Stock Purchase Agreement, dated September 4, 2015, between the Company
and Aspire Capital Fund, LLC. No Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in
the transactions contemplated by the Transaction Documents. Except as a result
of the purchase and sale of the Securities or as set forth on Schedule 3.1(g),
there are no outstanding options, warrants, scrip 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 Securities will not
obligate the Company to issue shares of Common Stock or other securities 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 duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance 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.
Other than any applicable stockholder approval provisions of any Trading Market
on which any of the securities of the Company are listed or designated, no
further approval or authorization of any stockholder, the Board of Directors or
others is required for the issuance and sale of the Securities. There are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the Knowledge of the Company, between or among any of the Company’s
stockholders. 

(h)      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, since January 1, 2015 (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 the light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with 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. 

7 




(i)      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 equity incentive
  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 disclosed in the SEC Reports, 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 businesses, 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 one Trading Day prior to the
date that this representation is made. 

(j)      Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the Knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”) which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the Securities
or (ii) could, if there were an unfavorable decision, have or reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any
Subsidiary, nor any director or officer thereof, is or has been the subject of
any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act. 

(k)      Labor
Relations. No labor dispute exists or, to the Knowledge of the Company, is
imminent with respect to any of the employees of the Company, which could
reasonably be expected to result in a Material Adverse Effect. None of the
Company’s or its Subsidiaries’ employees is a member of a union that relates to
such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that their relationships
with their employees are good. The Company and its Subsidiaries are in
compliance with all U.S. federal, state, local and foreign laws and regulations
relating to employment and employment practices, terms and conditions of
employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. 

(l)      Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any judgment,
decree or order of any court, arbitrator or other governmental
authority or (iii) is or has been in violation of any statute, rule, ordinance
or regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. 

8 




(m)      Regulatory
  Permits. The Company and the Subsidiaries possess all certificates,
  authorizations and permits issued by the appropriate federal, state, local or
  foreign regulatory authorities necessary for the current conduct of their
  respective businesses as described in the SEC Reports, except where the failure
  to possess such permits could not reasonably be expected to result in a Material
  Adverse Effect, and neither the Company nor any Subsidiary has received any
  notice of proceedings relating to the revocation or modification of any such
permit. 

(n)      Intellectual
Property. The Company and the Subsidiaries have, or have rights to use, all
patents, patent applications, trademarks, trademark applications, service marks,
trade names, trade secrets, inventions, copyrights, licenses and other
intellectual property rights and similar rights as necessary or required for use
in connection with their respective businesses and which the failure to so have
could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). Neither the Company nor any Subsidiary has received a
notice (written or otherwise) that any of, the Intellectual Property Rights has
expired, terminated or been abandoned, or is expected to expire or terminate or
be abandoned, within two (2) years from the date of this Agreement. Neither the
Company nor any Subsidiary has received, since the date of the latest audited
financial statements included within the SEC Reports, a written notice of a
claim or otherwise has any knowledge that the Intellectual Property Rights
violate or infringe upon the rights of any Person, except as could not have or
reasonably be expected to not have a Material Adverse Effect. To the Knowledge
of the Company, all such Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Intellectual
Property Rights. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties, except where failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.


(o)      Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged. Neither the Company nor any Subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business without a significant increase in cost. 

(p)      Sarbanes-Oxley.
The Company and the Subsidiaries are in compliance with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date
hereof, and any and all applicable rules and regulations promulgated by the
Commission thereunder that are effective as of the date hereof and as of the
Closing Date. 

(q)      Certain
Fees. No brokerage or finder’s fees or commissions are or will be payable by
the Company or any Subsidiary to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by the Transaction Documents. 

(r)      Private
Placement. Assuming the accuracy of the 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 the
Purchaser as contemplated hereby. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the Trading Market.


(s)      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. 

9 




(t)      Registration
  Rights. Except as set forth on Schedule 3.1(t), no Person has any
  right to cause the Company to effect the registration under the Securities Act
of any securities of the Company or any Subsidiary. 

(u)      Application
of Takeover Protections. The Company and the Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
articles of incorporation or the laws of its state of incorporation that is or
could become applicable to the Purchaser as a result of the Purchaser and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s
issuance of the Securities and the Purchaser’s ownership of the Securities. 

(v)      Disclosure.
All of the disclosure furnished by or on behalf of the Company to the Purchaser
regarding the Company and its Subsidiaries, their respective businesses and the
transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. 

(w)      Environmental
Matters. To the Knowledge of the Company, neither the Company nor any
Subsidiary is in violation of any statute, rule, regulation, decisions or order
of any governmental agency or body or any court, domestic or foreign, relating
to the use, disposal or release of hazardous or toxic substances relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), owns or operates
any real property contaminated with any substance that is subject to any
Environmental Laws, or is subject to any claim relating to any Environmental
Laws, which violation, contamination, liability or claim has had or could
reasonably be expected to have a Material Adverse Effect; and there is no
pending or to the Knowledge of the Company, threatened investigation that might
lead to such a claim. 

(x)      Tax
Status. Except for matters that would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, the
Company and its Subsidiaries each (i) has made or filed all United States
federal, state and local income and all foreign income and franchise tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has paid all taxes and other governmental assessments and charges
that are material in amount or shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision
reasonably adequate for the payment of all material taxes for periods subsequent
to the periods to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company or of any Subsidiary know
of no basis for any such claim. 

(y)      Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, nor to the
Knowledge of the Company or any Subsidiary, any agent or other person acting on
behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used
any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) 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,
(iii) failed to disclose fully any contribution made by the Company or any
Subsidiary (or made by any Person acting on its behalf of which the Company is
aware) which is in violation of law or (iv) violated in any material respect any
provision of FCPA. 

(z)      Accountants.
The Company’s accounting firm is set forth in its SEC Reports. To the Knowledge
and belief of the Company, such accounting firm: (i) is a registered public
accounting firm as required by the Exchange Act and (ii) shall express its
opinion with respect to the financial statements to be included in the Company’s
Annual Report for the fiscal year ending December 31, 2016. 

10 




(aa)      Acknowledgment
Regarding Purchaser’s Purchase of Securities. The Company acknowledges and
agrees that the Purchaser is acting solely in the capacity of an arm’s length
purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that the Purchaser is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated thereby and any advice given by the Purchaser or any of its
respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchaser’s purchase of the Securities. The Company further represents to the
Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives. 

(bb)      Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to
the Knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any Subsidiary is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”). 

(cc)
Money Laundering. The operations of the Company and its Subsidiaries are
and have been conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, applicable money laundering
statutes and applicable rules and regulations thereunder (collectively, the
“Money Laundering Laws”), and no action, suit or proceeding by or
before any court or governmental agency, authority or body or any arbitrator
involving the Company or any Subsidiary with respect to the Money Laundering
Laws is pending or, to the Knowledge of the Company or any Subsidiary,
threatened. 

The Purchaser acknowledges and
agrees that the representations contained in Section 3.1 shall not modify, amend
or affect the Company’s right to rely on the Purchaser’s representations and
warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument
executed and/or delivered in connection with this Agreement or the consummation
of the transaction contemplated hereby. 

3.2      Representations
and Warranties of the Purchaser. The Purchaser hereby 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 incorporated or formed, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation with full right, corporate, partnership, limited
liability company or similar power and authority to enter into and to consummate
the transactions contemplated by the Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder. The execution and delivery
of the Transaction Documents and performance by Purchaser of the transactions
contemplated by the Transaction Documents have been duly authorized by all
necessary corporate, partnership, limited liability company or similar action,
as applicable, on the part of Purchaser. Each Transaction Document to which it
is a party 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, fraudulent conveyance 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,” as defined in Section (a)(3) of Rule 144 of the Securities Act, 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 (this representation
and warranty not limiting Purchaser’s right to sell the Securities pursuant to a
registration statement or otherwise in compliance with applicable federal and
state securities laws). Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. 

11 




(c)      Purchaser
  Status. At the time Purchaser was offered the Securities, it was, and as of
  the date hereof it is, and on each date on which it converts any shares of
  Preferred Stock, it will be an “accredited investor” as defined in Rule 501
under the Securities Act. 

(d)      Access
to Information. Purchaser acknowledges that it has had the opportunity to
review the Transaction Documents (including all exhibits and schedules thereto)
and the SEC Reports and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and its financial
condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the opportunity to
obtain such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed
investment decision with respect to the investment. 

(e)      Experience
of 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. 

(f)      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. 

(g)      Certain
Transactions and Confidentiality. Other than consummating the transactions
contemplated hereunder, Purchaser has not directly or indirectly, nor has any
Person acting on behalf of or pursuant to any understanding with Purchaser,
executed any purchases or sales, including Short Sales, of the securities of the
Company during the period commencing as of the time that 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, if Purchaser is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of
Purchaser’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of
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. 

The Company acknowledges and agrees
that the representations contained in Section 3.2 shall not modify, amend or
affect Purchaser’s right to rely on the Company’s representations and warranties
contained in this Agreement or any representations and warranties contained in
any other Transaction Document or any other document or instrument executed
and/or delivered in connection with this Agreement or the consummation of the
transaction contemplated hereby. 

12 




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, the Certificate of Designation, and the Investors Rights
Agreement. 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 the Purchaser, 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 the Investors Rights
Agreement and shall have the rights and obligations of the Purchaser under this
Agreement and the Investors Rights Agreement. 

(b)      The
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: 

[NEITHER] THIS SECURITY [NOR THE
SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE] 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 [AND THE SECURITIES ISSUABLE
UPON CONVERSION OF 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. 

(c)      Subject
to the limitations set forth below, certificates evidencing the Underlying
Shares shall not contain any legend (including the legend set forth in Section
4.1(b) hereof): (i) following any sale of such Underlying Shares pursuant to
Rule 144, (ii) if such Underlying Shares are held by non-affiliates of the
Company and are eligible for sale under Rule 144 or (iii) 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 shall cause its counsel to issue a legal opinion to the Transfer Agent
promptly if required by the Transfer Agent to effect the removal of the legend
hereunder. The Company agrees that at such time as such legend is no longer
required under either clauses (i), (ii) or (iii) of the first sentence of this
Section 4.1(c), it will, no later than three Trading Days following the delivery
by the Purchaser to the Company or the Transfer Agent of a certificate
representing Underlying Shares, as applicable, issued with a restrictive legend
(such third Trading Day, the “Legend Removal Date”), 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 Article IV. Certificates for
Underlying 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.


(d)      In
connection with Section 4.1(c) above, the Purchaser understands and hereby
acknowledges that in order for Rule 144 to be applicable to the sale of the
Underlying Shares, the Company must be current with respect to its filing obligations under
the Exchange Act at the time of such sale. The Purchaser further understands and
hereby acknowledges that any legal opinion given by the Company’s counsel in
connection with Section 4.1(c) above may be limited as to scope and in
particular may expire or be withdrawn in the event that the Company is not in
compliance with the current public information or other requirements of Rule
144. Finally, the Purchaser understands and hereby acknowledges that the Company
and its legal counsel will rely on Purchaser’s understanding and agreement in
connection with the issuance of the legal opinion and removal of the legends
from the Underlying Shares in accordance with Section 4.1(c) above, and that it
is the Purchaser’s sole responsibility to confirm with the Company at the time
of any sale of Underlying Shares that the current public information requirement
set forth in Rule 144 has been met. 

13 




(e)      The
  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      Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Securities
may result in dilution of the outstanding shares of Common Stock, which dilution
may be substantial under certain market conditions. The Company further
acknowledges that its obligations under the Transaction Documents, including,
without limitation, its obligation to issue the Underlying Shares pursuant to
the Transaction Documents, are unconditional and absolute and not subject to any
right of set off, counterclaim, delay or reduction, regardless of the effect of
any such dilution or any claim the Company may have against the Purchaser and
regardless of the dilutive effect that such issuance may have on the ownership
of the other stockholders of the Company. 

4.3      Conversion
and Exercise Procedures. The form of Notice of Conversion included in the
Certificate of Designation sets forth the totality of the procedures required of
the Purchaser in order to convert the Preferred Stock. Without limiting the
preceding sentences, no ink-original Notice of Conversion shall be required, nor
shall any medallion guarantee (or other type of guarantee or notarization) of
any Notice of Conversion form be required in order to convert the Preferred
Stock. No additional legal opinion, other information or instructions shall be
required of the Purchaser to convert its Preferred Stock. The Company shall
honor conversions of the Preferred Stock and shall deliver Underlying Shares in
accordance with the terms, conditions and time periods set forth in the
Transaction Documents. 

4.4      Securities
Laws Disclosure; Publicity. The Company shall file a Current Report on Form
8-K disclosing the material terms of the transactions contemplated hereby,
including the Transaction Documents as exhibits thereto, with the Commission
within the time required by the Exchange Act. The Company and the Purchaser
shall consult with each other in issuing any press releases with respect to the
transactions contemplated hereby, and neither the Company nor the Purchaser
shall issue any such press release nor otherwise make any such public statement
without consulting the other, except if such disclosure is required by law, in
which case the disclosing party shall promptly provide the other party with
prior notice of such public statement or communication. 

4.5      Use
of Proceeds. The Company shall use the net proceeds from the sale of the
Securities hereunder for working capital needs and general corporate purposes,
including but not limited to research and development activities. 

4.6      Reservation
and Listing of Securities. 

(a)      The
Company shall maintain a reserve from its duly authorized shares of Common Stock
for issuance pursuant to the Transaction Documents in such amount as may then be
required to fulfill its obligations in full under the Transaction Documents.


(b)      If,
on any date, the number of authorized but unissued (and otherwise unreserved)
shares of Common Stock is less than the Required Minimum on such date, minus the
number of shares of Common Stock previously issued pursuant to the Transaction
Documents, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s
articles of incorporation to increase the number of authorized but unissued
shares of Common Stock to at least the Required Minimum at such time (minus the
number of shares of Common Stock previously issued pursuant to the Transaction
Documents), as soon as possible and in any event not later than the 75th day
after such date; provided that the Company will not be required at any time to
authorize a number of shares of Common Stock greater than the maximum remaining
number of shares of Common Stock that could possibly be issued after such time
pursuant to the Transaction Documents. 

14 




(c)      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. The Company shall, if applicable: (i) in the time and manner
  required by the principal Trading Market, prepare and file with such Trading
  Market an additional shares listing application covering a number of shares of
  Common Stock at least equal to the Required Minimum on the date of such
  application, and (ii) take all steps necessary to cause such shares of Common
  Stock to be approved for listing or quotation on such Trading Market as soon as
  possible thereafter. The Company agrees to maintain the eligibility of the
  Common Stock for electronic transfer through the Depository Trust Company or
  another established clearing corporation, including, without limitation, by
  timely payment of fees to the Depository Trust Company or such other established
clearing corporation in connection with such electronic transfer. 

(d)      The
Company 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
Underlying Shares, and will take such other action as is necessary to cause all
of the Underlying Shares to be listed or quoted on such other Trading Market as
promptly as possible. The Company will then use commercially reasonable efforts
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.


4.7      Blue
Sky Filings. 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 the 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 the Purchaser.


4.8      Indemnification
of the Purchaser. Subject to the provisions of this Section 4.8, the Company
will indemnify and hold the Purchaser and its directors, officers, stockholders,
members, partners, employees and agents (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title), each Person who controls the Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, stockholders, agents, members,
partners or employees (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any
other title) of such controlling Persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation that any such Purchaser Party may suffer or incur as a result of
or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents or (b) any action instituted against the Purchaser Parties
in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Purchaser Party, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Purchaser Party’s
representations, warranties or covenants under the Transaction Documents or any
agreements or understandings such Purchaser Party may have with any such
stockholder or any violations by such Purchaser Party of state or federal
securities laws or any conduct by such Purchaser Party which constitutes fraud,
gross negligence, willful misconduct or malfeasance). If any action shall be
brought against any Purchaser Party in respect of which indemnity may be sought
pursuant to this Agreement, such Purchaser Party shall promptly notify the
Company in writing, and the Company shall have the right to assume the defense
thereof with counsel of its own choosing reasonably acceptable to the Purchaser
Party. Any Purchaser Party shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Purchaser Party except
to the extent that (i) the employment thereof has been specifically authorized
by the Company in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in such action there is,
in the reasonable opinion of counsel, a material conflict on any material issue
between the position of the Company and the position of such Purchaser Party, in
which case the Company shall be responsible for the reasonable fees and expenses
of no more than one such separate counsel. The Company will not be liable to any
Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party
effected without the Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (z) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party’s
breach of any of the representations, warranties, covenants or agreements made
by such Purchaser Party in this Agreement or in the other Transaction Documents.
The indemnification required by this Section 4.8 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or are incurred. The indemnity
agreements contained herein shall be in addition to any cause of action or
similar right of any Purchaser Party against the Company or others and any
liabilities the Company may be subject to pursuant to law. 

15 




4.9      CFIUS.
  The parties will consult and cooperate with one another to the extent permitted
  by law in connection with any CFIUS filing to be made in connection with the
  transactions contemplated by the Transaction Documents, including: (i) engaging
  in pre-filing discussions with CFIUS or its member agencies, as deemed advisable
  by the parties; (ii) promptly preparing any CFIUS notice and making any draft
  and final filings required or deemed advisable in connection with the CFIUS
  review process; and (iii) providing, within the time period imposed by CFIUS,
  any information reasonably requested by CFIUS in connection with any CFIUS
  review or investigation of the transactions contemplated by the Transaction
Documents. 

ARTICLE V 
MISCELLANEOUS 

5.1      Termination.
This Agreement may be terminated by any party, by written notice to the other
parties, if the Closing has not been consummated on or before August 15, 2016;
provided, however, that such termination will not affect the right of any party
to sue for any breach by any other party. 

5.2      Fees
and Expenses. Except as expressly set forth in the Transaction Documents to
the contrary, 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 stamp taxes and other
taxes and duties levied in connection with the delivery of any Securities to the
Purchaser. 

5.3      Entire
Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and thereof 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. 

5.4      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, if such notice or
communication is delivered via facsimile at the facsimile number or e-mail
attachment as set forth on the signature pages attached hereto at or prior to
5:30 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 at the facsimile number or e-mail attachment as set forth on the
signature pages attached hereto on a day that is not a Trading Day or later than
5:30 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 for such notices and communications
shall be as set forth on the signature pages attached hereto. 

5.5      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 the Company and the Purchaser 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. 

16 




5.6      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. 

5.7      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 the Purchaser (other than by merger). The Purchaser may not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Company, provided that the Purchaser may assign any or
all of its rights under this Agreement to any Affiliate of the Purchaser, and
that any such transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions of the Transaction Documents that
apply to the “Purchaser.” 

5.8      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, except as otherwise set forth in Section 4.8 and this Section 5.8. 

5.9      Governing
Law. All questions concerning the construction, validity, enforcement and
interpretation of the Transaction Documents shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
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 and any other
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, stockholders, partners, members, employees or
agents) shall be commenced exclusively in the state and federal courts sitting
in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan 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 any of the Transaction
Documents), 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, suit or proceeding to enforce any provisions of the
Transaction Documents, then, in addition to the obligations of the Company under
Section 4.8, the prevailing party in such action, suit 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. 

5.10     Survival.
The representations and warranties contained herein shall survive the Closing
and the delivery of the Securities. 

5.11     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 each
other party, it being understood that the 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. 

5.12     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. 

17 




5.13     Remedies.
  In addition to being entitled to exercise all rights provided herein or granted
  by law, including recovery of damages, each of the Purchaser and the Company
  will be entitled to specific performance under the Transaction Documents. The
  parties agree that monetary damages may not be adequate compensation for any
  loss incurred by reason of any breach of obligations contained in the
  Transaction Documents 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     Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist
upon or plead or in any manner whatsoever claim, and will resist any and all
efforts to be compelled to take the benefit or advantage of, usury laws wherever
enacted, now or at any time hereafter in force, in connection with any claim,
action or proceeding that may be brought by the Purchaser in order to enforce
any right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the “Maximum
Rate”), and, without limiting the foregoing, in no event shall any rate
of interest or default interest, or both of them, when aggregated with any other
sums in the nature of interest that the Company may be obligated to pay under
the Transaction Documents exceed such Maximum Rate. It is agreed that if the
maximum contract rate of interest allowed by law and applicable to the
Transaction Documents is increased or decreased by statute or any official
governmental action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to the
Transaction Documents from the effective date thereof forward, unless such
application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to the
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by Purchaser to the unpaid principal balance of any
such indebtedness or be refunded to the Company, the manner of handling such
excess to be at Purchaser’s election. 

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 have
reviewed and had an opportunity to revise the Transaction Documents 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 the Transaction Documents or any amendments thereto. In
addition, each and every reference to share prices and shares of Common Stock in
any Transaction Document 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     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) 

18 




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.


	LIGHTBRIDGE CORPORATION 	Address for Notice: 
	  	  
	  	11710 Plaza America Drive, Suite 2000 
	  	Reston, VA 20190 



	By: 	/s/ Seth Grae 	 	Fax: (303) 957-2234 
	 	Name: 	Seth Grae 	 	  
	 	Title: 	Chief Executive Officer 	 	  


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

	 	Hogan Lovells US LLP 
	 	One Tabor Center, Suite 1500 
	 	1200 Seventeenth Street 
	 	Denver, Colorado 80202 
	 	Attn: David Crandall 



	GENERAL INTERNATIONAL HOLDINGS, INC. 	Address for Notice: 
	  	  
	  	219-3 Northern Blvd, Suite 201 
	  	Bayside, NY 11361 



	By: 	/s/ Xingping Hou 	 	Fax: (212) 219-3604 
	 	Name: 	Xingping Hou 	 	  
	 	Title: 	President 	 	  


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

	 	Bernard & Yam, LLP 
	 	140-75 Ash Avenue, Suite 2D 
	 	Flushing, New York 11355 
	 	Attn: Mr. Mann Yam 


[Signature Page to Securities Purchase Agreement] 




DISCLOSURE SCHEDULES TO 
SECURITIES PURCHASE
AGREEMENT DATED JUNE 28, 2016 

Schedule 3.1(g) 

Capitalization as of June 20, 2016: 

	 	• 	22,142,386 shares of common stock outstanding;
    
	 	 	 
	 	• 	4,886,764 shares of common stock reserved for
      issuance upon exercise of outstanding warrants; 
	 	 	 
	 	• 	7,282,060 shares of common stock subject to
      outstanding options; and 
	 	 	 
	 	• 	1,868,921 shares of common stock available for
      issuance under the Company’s 2015 Equity Incentive Plan.



Schedule 3.1(t) 

Registration Rights Agreement, dated September 4, 2015, between
the Company and Aspire Capital Fund, LLC 




EXHIBIT A 

LIGHTBRIDGE CORPORATION 

CERTIFICATE OF DESIGNATION OF PREFERENCES, 
RIGHTS AND
LIMITATIONS 
OF
NON-VOTING SERIES A CONVERTIBLE PREFERRED
STOCK 

PURSUANT TO SECTION 78.1955 OF THE 
NEVADA REVISED STATUTE


The undersigned, Seth Grae, does
hereby certify that: 

1.      He
is the President and Chief Executive Officer of Lightbridge Corporation, a
Nevada corporation (the “Corporation”). 

2.      The
Corporation is authorized to issue 50,000,000 shares of preferred stock. 

3.      The
following resolutions were duly adopted by the board of directors of the
Corporation (the “Board of Directors”): 

WHEREAS, the articles of
incorporation of the Corporation (the “Articles”) provides for a class of
its authorized stock known as preferred stock, consisting of 50,000,000 shares,
$0.001 par value per share, issuable from time to time in one or more series;


WHEREAS, the Articles authorizes
the Board of Directors to fix and determine the designations, qualifications,
preferences, limitations and terms of the shares of any series of preferred
stock; and 

WHEREAS, it is the desire of the
Board of Directors, pursuant to its authority as aforesaid, to fix and determine
designations, qualifications, preferences, limitations and terms relating to a
series of the preferred stock, which shall consist of 5,100,000 shares of the
preferred stock which the Corporation has the authority to issue, as follows:


NOW, THEREFORE, BE IT RESOLVED,
that the Board of Directors does hereby provide for the issuance of a series of
preferred stock for cash or exchange of other securities, rights or property and
does hereby fix and determine the rights, preferences, restrictions and other
matters relating to such series of preferred stock as follows: 

TERMS OF PREFERRED STOCK 

Section
1.      Definitions. For the
purposes hereof, the following terms shall have the following meanings: 

“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 of the Securities Act. 

“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 New
York are authorized or required by law or other governmental action to close.


“Call Option” shall have
the meaning set forth in Section 7(a). 

“Call Option Notice” shall
have the meaning set forth in Section 7(b). 

A-1 




“Change of Control
Transaction” means the occurrence after the date hereof of any of (a) an
acquisition after the date hereof by an individual or legal entity or
“group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange
Act) of effective control (whether through legal or beneficial ownership of
capital stock of the Corporation, by contract or otherwise) of in excess of 50%
of the voting securities of the Corporation (other than by means of conversion
or exercise of Preferred Stock), (b) the Corporation merges into or consolidates
with any other Person, or any Person merges into or consolidates with the
Corporation and, after giving effect to such transaction, the stockholders of
the Corporation immediately prior to such transaction own less than 50% of the
aggregate voting power of the Corporation or the successor entity of such
transaction, (c) the Corporation sells or transfers all or substantially all of
its assets to another Person and the stockholders of the Corporation immediately
prior to such transaction own less than 50% of the aggregate voting power of the
acquiring entity immediately after the transaction, or (d) a replacement at one
time or within a one year period of more than one-half of the members of the
Board of Directors which is not approved by a majority of those individuals who
are members of the Board of Directors on the Original Issue Date (or by those
individuals who are serving as members of the Board of Directors on any date
whose nomination to the Board of Directors was approved by a majority of the
members of the Board of Directors who are members on the Original Issue Date).


“Common Stock” means the
Corporation’s common stock, par value $0.001 per share, and stock of any other
class of securities into which such securities may hereafter be reclassified or
changed. 

“Common Stock Event” shall
have the meaning set forth in Section 6(e). 

“Conversion Date” shall
have the meaning set forth in Section 6(b)(ii). 

“Conversion Price” shall
have the meaning set forth in Section 6(a). 

“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion of the shares
of Preferred Stock in accordance with the terms hereof. 

“Dividend Payment Date”
shall have the meaning set forth in Section 3(a). 

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

“Holder” shall have the
meaning given such term in Section 2. 

“Investors Rights
Agreement” means the Investors Rights Agreement, dated ______, 2016, between
the Corporation and the original Holder. 

“Liquidation” shall have
the meaning set forth in Section 5. 

“Liquidation Preference”
shall have the meaning set forth in Section 2, as the same may be increased
pursuant to Section 3. 

“Mandatory Conversion
Notice” shall have the meaning set forth in Section 6(c). 

“Mandatory Conversion Notice
Date” shall have the meaning set forth in Section 6(c). 

“Nasdaq” means the Nasdaq
Stock Market LLC. 

“Notice of Conversion”
shall have the meaning set forth in Section 6(b)(ii). 

“Original Issue Date”
shall mean, with respect to any shares of Preferred Stock, the date on which
such share of Preferred Stock was issued by the Corporation. 

“Permitted Transfer” shall
have the meaning set forth in Section 8. 

A-2 




“Permitted Transferee”
shall have the meaning set forth in Section 8. 

“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.


“Preferred Stock” shall
have the meaning set forth in Section 2. 

“Purchase Agreement” means
the Securities Purchase Agreement, dated June 28, 2016, between the Corporation
and the original Holder, as amended, modified or supplemented from time to time
in accordance with its terms. 

“Redemption Date” shall
mean the date upon which a redemption effected pursuant to the exercise of a
Call Option shall be consummated. 

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

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

“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 MKT, the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York
Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing). 

“Transaction Documents”
means this Certificate of Designation, the Purchase Agreement, the Investors
Rights Agreement, all exhibits and schedules thereto and hereto and any other
documents or agreements executed in connection with the transactions
contemplated pursuant to the Purchase Agreement. 

“Transfer” shall have the
meaning set forth in Section 8. 

Section
2.      Designation, Amount
and Par Value. The series of preferred stock shall be designated as
Non-Voting Series A Convertible Preferred Stock (the “Preferred Stock”)
and the number of shares so designated shall be 5,100,000 (which shall not be
subject to increase, subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization with
respect to the Preferred Stock, without the written consent of all of the
holders of the Preferred Stock (each, a “Holder” and collectively, the
“Holders”)). Each share of Preferred Stock shall have a par value of
$0.001 per share and an original issue price of $0.54902 per share (the
“Liquidation Preference”), subject to increase set forth in Section 3
below. 

Section
3.      Dividends.


(a)      Dividends
in Kind. From and after the Original Issue Date of any share of Preferred
Stock, cumulative dividends on such Preferred Stock shall accrue, whether or not
declared by the Board of Directors and whether or not there are funds legally
available for the payment of dividends, on a daily basis in arrears at the rate
of 7% per annum on the sum of the Liquidation Preference thereof, payable
annually on the last day of March, June, September and December of each calendar
year beginning on the first such date after the Original Issue Date and on each
Conversion Date (with respect only to Preferred Stock then being converted)
(each such date, a “Dividend Payment Date”). All accrued dividends shall
be paid in kind by increasing the Liquidation Preference of the Preferred Stock,
in an amount equal to the accrued but unpaid interest due to a Holder on the
Dividend Payment Date. All accrued and accumulated dividends on the Preferred
Stock shall be prior and in preference to any dividend on the Common Stock or
other equity securities of the Company and shall be fully declared and paid
before any dividends are declared and paid, or any other distributions or
redemptions are made, on the Common Stock or other equity securities of the
Company, other than to (a) declare or pay any dividend or distribution payable
on the Common Stock in shares of Common Stock or (b) repurchase Common Stock
held by employees or consultants of the Corporation upon termination of their employment or services
pursuant to agreements providing for such repurchase. 

A-3 




(b)      Dividend
  Calculations. Dividends on the Preferred Stock shall be calculated on the
  basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall
accrue daily commencing on the Original Issue Date. 

(c)      Participating
Dividends. In addition to the dividends accruing on the Preferred Stock
pursuant to Section 3(a) hereof, if the Corporation declares or pays a dividend
or distribution on the Common Stock, whether such dividend or distribution is
payable in cash, securities or other property, including the purchase or
redemption by the Corporation or any of its subsidiaries of shares of Common
Stock for cash, securities or property, but excluding (i) any dividend or
distribution payable on the Common Stock in shares of Common Stock and (ii) any
repurchases of Common Stock held by employees or consultants of the Corporation
upon termination of their employment or services pursuant to agreements
providing for such repurchase, the Corporation shall simultaneously declare and
pay a dividend on the Preferred Stock on a pro rata basis with the Common Stock
determined on an as-converted basis assuming all shares of Preferred Stock had
been converted pursuant to Section 6 as of immediately prior to the record date
of the applicable dividend (or if no record date is fixed, the date as of which
the record holders of Common Stock entitled to such dividends are to be
determined). 

Section
4.      Voting Rights;
Protective Provisions.

(a)      General.
Except as otherwise required by law, the Preferred Stock shall have no voting
rights.

(b)      Protective
Provisions. As long as 1,275,000 shares of Preferred Stock, subject to
appropriate adjustment in the event of any stock dividend, stock split,
combination or other similar recapitalization with respect to the Preferred
Stock, are outstanding, except for clause (10) below, which shall require that
at least 2,550,000 shares of Preferred Stock, subject to appropriate adjustment
in the event of any stock dividend, stock split, combination or other similar
recapitalization with respect to the Preferred Stock, are outstanding, the
Corporation shall not either directly or indirectly by amendment, merger,
consolidation or otherwise, do any of the following without (in addition to any
other vote required by law or the Articles) the written consent or affirmative
vote of the Holders of at least a majority of the outstanding shares of
Preferred Stock:

(1)      alter
or change the rights, preferences or privileges of the Preferred Stock; 

(2)      increase
or decrease (other than by redemption or conversion) the authorized number of
shares of Preferred Stock;

(3)      amend
or waive any provision of the Articles or bylaws of the Corporation, provided,
that the Corporation may adopt an amendment to the Articles to effect a reverse
stock split of the Common Stock on or before July 29, 2016 without the consent
of the Holders;

(4)      authorize,
create, issue, or reclassify any existing security into any class of equity
security that is senior or pari passu to the Preferred Stock;

(5)      repurchase
or redeem Common Stock except from employees, officers, directors, or
consultants upon termination of their employment or other relationship or in
accordance with any existing repurchase or redemption program that has been
approved by the board of directors;

(6)      declare
or pay any dividend other than a dividend payable solely in stock or other
securities of the Corporation;

A-4 




(7)      acquire
any entity (regardless of the structure of any such acquisition, including if
such acquisition is structured as a license, lease, merger, reorganization,
acquisition of assets or equity or other business combination or similar
corporate transaction) for a consideration of $3 million or more;

(8)      materially
alter the general nature of the business of the Corporation; 

(9)      enter
into any sale, license, lease or other disposition of assets of the Corporation
having a book value of at least $10 million that is effected outside of the
ordinary course of the business of the Corporation; or 

(10)     effect
any event for which the Liquidation Preference would become payable. 

Section
5.      Liquidation. Upon any
liquidation, dissolution, Change of Control Transaction, or winding down of the
Corporation (a “Liquidation”), the Holders shall be entitled to receive
out of the assets, whether capital or surplus, of the Corporation an amount
equal to the Liquidation Preference, plus any accrued and unpaid dividends
thereon, for each share of Preferred Stock before any distribution or payment
shall be made to the holders of Common Stock, and if the assets of the
Corporation shall be insufficient to pay in full such amounts, then the entire
assets to be distributed to the Holders shall be ratably distributed among the
Holders in accordance with the respective amounts that would be payable on such
shares if all amounts payable thereon were paid in full. The Corporation shall
mail written notice of any such Liquidation, not less than 10 days prior to the
payment date stated therein, to each Holder. 

Section 6.      Conversion. The outstanding shares of Preferred Stock shall
be convertible into Common Stock as follows: 

(a)      Conversions
Price. The conversion price for the Preferred Stock shall equal $0.54902,
subject to adjustment herein (the “Conversion Price”). 

(b)      Optional
Conversion.

(1)      Each
share of Preferred Stock shall be convertible, at any time and from time to time
from and after the Original Issue Date at the option of the Holder thereof and
without the payment of additional consideration, subject to applicable Trading
Market rules and the limitations set forth in the Investor Rights Agreement,
into that number of shares of Common Stock determined by dividing the
Liquidation Preference of such share of Preferred Stock by the Conversion
Price.

(2)      Each
holder of Preferred Stock who elects to convert the same into shares of Common
Stock shall give written notice to the Corporation by providing the Corporation
with the written notice (a “Notice of Conversion”). Each Notice of
Conversion shall specify the number of shares of Preferred Stock to be
converted, the number of shares of Preferred Stock owned prior to the conversion
at issue, the number of shares of Preferred Stock owned subsequent to the
conversion at issue and the date on which such conversion is to be effected,
which date may not be prior to the date the applicable Holder delivers by
facsimile such Notice of Conversion to the Corporation (such date, the
“Conversion Date”). Thereupon, the Corporation shall promptly deliver the
Conversion Shares required to be delivered by the Corporation to such Holder.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such delivery of shares of Common Stock, and the
person entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such shares
of Common Stock on such date.

(c)      Mandatory
Conversion. Notwithstanding anything herein to the contrary, if at any time
the trading price of the Corporation’s Common Stock (i) is greater than two
times the Conversion Price before the third anniversary of the Original Issue
Date or (ii) is greater than three times the Conversion Price, the Corporation may deliver a written notice to all
Holders (a “Mandatory Conversion Notice” and the date such notice is
delivered to all Holders, the “Mandatory Conversion Notice Date”) to
cause each Holder to convert all or part of such Holder’s Preferred Stock (as
specified in such Mandatory Conversion Notice) plus all accrued but unpaid
dividends thereon. The Corporation shall promptly deliver the Conversion Shares
required to be delivered by the Corporation under this Section 6(c) to each
Holder. Such conversion shall be deemed to have been made immediately prior to
the close of business on the date of such delivery of shares of Common Stock,
and the person entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such shares
of Common Stock on such date 

A-5 




(d)      Fractional
  Shares. No fractional shares or scrip representing fractional shares shall
  be issued upon the conversion of the Preferred Stock. As to any fraction of a
  share which the Holder would otherwise be entitled to purchase upon such
  conversion, the Corporation shall at its election, either pay a cash adjustment
  in respect of such final fraction in an amount equal to such fraction multiplied
by the Conversion Price or round up to the next whole share.

(e)      Adjustment
Upon Common Stock Event. Upon the happening of a Common Stock Event (as
hereinafter defined), the Conversion Price of the Preferred Stock shall,
simultaneously with the happening of such Common Stock Event, be adjusted by
multiplying the Conversion Price of the Preferred Stock in effect immediately
prior to such Common Stock Event by a fraction, (i) the numerator of which shall
be the number of shares of Common Stock issued and outstanding immediately prior
to such Common Stock Event, and (ii) the denominator of which shall be the
number of shares of Common Stock issued and outstanding immediately after such
Common Stock Event, and the product so obtained shall thereafter be the
Conversion Price for the Preferred Stock. The Conversion Price for the Preferred
Stock shall be readjusted in the same manner upon the happening of each
subsequent Common Stock Event. As used herein, the term “Common Stock
Event” shall mean (i) the issue by the Corporation of additional shares of
Common Stock as a dividend or other distribution on outstanding Common Stock,
(ii) a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock, or (iii) a combination of the outstanding
shares of Common Stock into a smaller number of shares of Common Stock. 

Section
7.      Call
Option.

(a)      The
Corporation shall have the option (the “Call Option”) at any time after
the third anniversary of the Original Issue Date to redeem some or all of the
outstanding Preferred Stock for cash, for an amount equal to the Liquidation
Preference, plus the amount of any accrued but unpaid dividends, of the
Preferred Stock being redeemed.

(b)      The
exercise of the Call Option by the Corporation shall be subject to the
transmission of a written notice of the exercise of the Call Option to the
Holders (the “Call Option Notice”) 30 days prior to the applicable
Redemption Date which shall specify the number of shares Preferred Stock being
redeemed.

(c)      With
respect to exercises of the Call Option, the Corporation shall remit the
applicable cash consideration in one installment to the Holder between the 31st
and 60th day after delivery of the Call Option Notice.

(d)      The
Holder shall maintain the right to convert the Preferred Stock into shares of
Common Stock pursuant to Section 6(a) prior to the Redemption Date. 

Section
8.      Transfer
Restrictions. No Holder of Preferred Stock may sell, assign,
transfer, pledge, encumber or in any manner dispose of the shares of Preferred
Stock or any right or interest therein (including without limitation a voting
proxy), whether voluntarily or by operation of law, or by gift or otherwise (a
“Transfer”), other than by means of a Permitted Transfer. Any Transfer,
or purported Transfer, of Preferred Stock of the Corporation other than a
Permitted Transfer shall be null and void, and of no force or effect; provided
that the Board of Directors may at its sole discretion waive any or all of the
foregoing conditions through prior written consent. The only transaction that is
a “Permitted Transfer” is a Transfer that meets the following conditions:
(i) the Transfer by a Holder must be to an Affiliate of such Holder (a
“Permitted Transferee”) or to the Corporation, (ii) if the Transfer is to
a Permitted Transferee, such Permitted Transferee must become a party to that
certain Investors Rights Agreement, and (iii) the Transfer must comply with all
applicable securities laws including, without limitation, the federal securities
laws of the United States. 

A-6 




Section
  9.      Miscellaneous.


(a)      Notices.
Any and all notices or other communications or deliveries to be provided by the
Holders hereunder including, without limitation, any Notice of Conversion, shall
be in writing and delivered personally, by facsimile, or sent by a nationally
recognized overnight courier service, addressed to the Corporation, Attention:
Seth Grae, 11710 Plaza America Drive, Suite 2000, Reston, VA 20190, facsimile
number (571) 730-1260, or such other facsimile number or address as the
Corporation may specify for such purposes by notice to the Holders delivered in
accordance with this Section. Any and all notices or other communications or
deliveries to be provided by the Corporation hereunder shall be in writing and
delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile number or address of
such Holder appearing on the books of the Corporation, or if no such facsimile
number or address appears on the books of the Corporation, at the principal
place of business of such Holder, as set forth in the Purchase Agreement. Any
notice or other communication or deliveries hereunder shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth in
this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next
Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number set forth in this Section on a
day that is not a Trading Day or later than 5:30 p.m. (New York City time) on
any Trading Day, (iii) the second Trading Day following the date of mailing, if
sent by U.S. nationally recognized overnight courier service, or (iv) upon
actual receipt by the party to whom such notice is required to be given. 

(b)      Governing
Law. All questions concerning the construction, validity, enforcement and
interpretation of this Certificate of Designation shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Nevada, without regard to the principles of conflict of laws thereof. Each
party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Certificate of Designation or the
transactions contemplated hereby. If any party shall commence an action or
proceeding to enforce any provisions of this Certificate of Designation, then
the prevailing party in such action or proceeding shall be reimbursed by the
other party for its attorneys’ fees and other costs and expenses incurred in the
investigation, preparation and prosecution of such action or proceeding. 

(c)      Waiver.
Any waiver by the Corporation or a Holder of a breach of any provision of this
Certificate of Designation shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Certificate of Designation or a waiver by any other Holders. The failure of
the Corporation or a Holder to insist upon strict adherence to any term of this
Certificate of Designation on one or more occasions shall not be considered a
waiver or deprive that party (or any other Holder) of the right thereafter to
insist upon strict adherence to that term or any other term of this Certificate
of Designation on any other occasion. Any waiver by the Corporation or a Holder
must be in writing. 

(d)      Severability.
If any provision of this Certificate of Designation is invalid, illegal or
unenforceable, the balance of this Certificate of Designation shall remain in
effect, and if any provision is inapplicable to any Person or circumstance, it
shall nevertheless remain applicable to all other Persons and circumstances. If
it shall be found that any interest or other amount deemed interest due
hereunder violates the applicable law governing usury, the applicable rate of
interest due hereunder shall automatically be lowered to equal the maximum rate
of interest permitted under applicable law. 

(e)      Next
Business Day. Whenever any payment or other obligation hereunder shall be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day. 

A-7 




(f)      Headings.
The headings contained herein are for convenience only, do not constitute a part
of this Certificate of Designation and shall not be deemed to limit or affect
any of the provisions hereof. 

(g)      Status
of Converted or Redeemed Preferred Stock. Shares of Preferred Stock may only
be issued pursuant to the Purchase Agreement. If any shares of Preferred Stock
shall be converted, redeemed or reacquired by the Corporation, such shares shall
resume the status of authorized but unissued shares of preferred stock and shall
no longer be designated as Non-Voting Series A Convertible Preferred Stock. 

RESOLVED, FURTHER, that the
president or any vice-president, and the secretary or any assistant secretary,
of the Corporation be and they hereby are authorized and directed to prepare and
file this Certificate of Designation of Preferences, Rights and Limitations in
accordance with the foregoing resolution and the provisions of Nevada law. 

***** 

(Signature page follows)

A-8 




IN WITNESS WHEREOF, the
undersigned has executed this Certificate of Designation, _______, 2016. 


	Name:
    	Seth Grae
    
	Title: 	President and Chief Executive Officer
  



A-9 




EXHIBIT B 

FORM OF INVESTORS RIGHTS AGREEMENT 

THIS INVESTORS RIGHTS AGREEMENT
(this “Agreement”), is made as of ________, 2016, by and among Lightbridge
Corporation, a Nevada corporation (the “Company”), and the investor listed on
the signature page hereto (the “Investor”) and any other Permitted Transferee
(as defined in the Certificate of Designation) that becomes a party to this
Agreement, each of which is referred to in this Agreement as a “Holder” and
collectively as the “Holders”. 

WHEREAS, in order to induce the
Company to enter into the Securities Purchase Agreement dated June 28, 2016 (the
“SPA”), and to induce the Investor to invest funds in the Company pursuant to
the SPA, the Company and the Investor hereby agree that this Agreement shall
govern the rights of the Holders to cause the Company to register shares of
Common Stock issuable to the Holders, to receive certain information from the
Company, and to participate in future equity offerings by the Company, and shall
govern certain other matters as set forth in this Agreement. 

NOW, THEREFORE, the Company and
the Holders agree as follows: 

1.      Definitions.
For purposes of this Agreement: 

“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. 

“Certificate of Designation”
means the Certificate of Designation of Preferences, Rights and Limitations
filed _____, 2016 by the Company with the Secretary of State of Nevada. 

“Common Stock” means shares of
the Company’s common stock, par value $0.001 per share. 

“Conversion Date” shall have the
meaning ascribed to it in the Certificate of Designation.

“Conversion Rights” shall mean
the rights of the Holder to convert Series A Preferred Stock into Common Stock
pursuant to the Certificate of Designation. 

“Damages” means any loss, damage,
claim or liability (joint or several) to which a party hereto may become subject
under the Securities Act, the Exchange Act, or other federal or state law,
insofar as such loss, damage, claim or liability (or any action in respect
thereof) arises out of or is based upon: (i) any untrue statement or alleged
untrue statement of a material fact contained in any registration statement of
the Company, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto; (ii) an omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading; or (iii) any violation
or alleged violation by the indemnifying party (or any of its agents or
Affiliates) of the Securities Act, the Exchange Act, any state securities law,
or any rule or regulation promulgated under the Securities Act, the Exchange
Act, or any state securities law. 

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

“Excluded Registration” means (i)
a registration relating to the sale of securities to employees of the Company or
a subsidiary pursuant to an equity incentive plan, stock purchase plan, or
similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii)
a registration on any form that does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities; or (iv) a registration in which
the only Common Stock being registered is Common Stock issuable upon conversion
of debt securities that are also being registered. 

B-1 




“Form S 1” means such form under
the Securities Act as in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC. 

“Form S 3” means such form under
the Securities Act as in effect on the date hereof or any registration form
under the Securities Act subsequently adopted by the SEC that permits
incorporation of substantial information by reference to other documents filed
by the Company with the SEC. 

“Immediate Family Member” means a
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including, adoptive relationships, of a natural person referred
to herein. 

“Initiating Holders” means,
collectively, Holders who properly initiate a registration request under this
Agreement. 

“Nasdaq Rules” means the rules
promulgated by the Nasdaq Stock Market LLC. 

“New Securities” means,
collectively, newly issued equity securities of the Company, whether or not
currently authorized, as well as rights, options, or warrants to purchase such
equity securities, or securities of any type whatsoever that are, or may become,
convertible or exchangeable into or exercisable for such equity securities. 

“Person” means any individual,
corporation, partnership, trust, limited liability company, association or other
entity. 

“Registrable Securities” means
(i) the Common Stock issuable or issued upon conversion of the Series A
Preferred Stock; and (ii) any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right, or other security that is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, the shares referenced in clause (i) above; excluding in all
cases, however, any Registrable Securities sold by a Person in a transaction in
which the applicable rights under this Agreement are not assigned pursuant to
Section 7.1, and excluding for purposes of Section 2 any shares for which
registration rights have terminated pursuant to Section 2.12 of this Agreement.


“Registrable Securities then
outstanding” means the number of shares determined by adding the number of
shares of outstanding Common Stock that are Registrable Securities and the
number of shares of Common Stock issuable (directly or indirectly) pursuant to
then exercisable and/or convertible securities that are Registrable Securities.


“Restricted Securities” means the
securities of the Company required to be notated with the legend set forth in
Section 2.11(b) hereof. 

“SEC” means the Securities and
Exchange Commission. 

“SEC Rule 144” means Rule 144
promulgated by the SEC under the Securities Act. 

“SEC Rule 145” means Rule 145
promulgated by the SEC under the Securities Act.

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

“Selling Expenses” means all
underwriting discounts, selling commissions, and stock transfer taxes applicable
to the sale of Registrable Securities, and fees and disbursements of counsel for
any Holder. 

“Series A Preferred Stock” means
shares of the Company’s Non-Voting Series A Preferred Stock, par value $0.001
per share. 

B-2 




2.      Registration
Rights. The Company covenants and agrees as follows: 

2.1     Registration
Rights. 

(a)      Registration
Demand. If at any time after the first anniversary of this Agreement, the
Company receives a request from Holders of at least 25% of the Registrable
Securities then outstanding that the Company file a registration statement with
respect to outstanding Registrable Securities of such Holders, then the Company
shall (x) within ten (10) days after the date such request is given, give notice
thereof (the “Demand Notice”) to all Holders other than the Initiating Holders;
and (y) as soon as practicable, and in any event within sixty (60) days after
the date such request is given by the Initiating Holders, file a registration
statement under the Securities Act covering all Registrable Securities that the
Initiating Holders requested to be registered and any additional Registrable
Securities requested to be included in such registration by any other Holders,
as specified by notice given by each such Holder to the Company within twenty
(20) days of the date the Demand Notice is given, and in each case, subject to
the limitations of Sections 2.1(b) and 2.3. The Company shall determine in its
sole discretion whether to implement the registration using Form S-1 or Form
S-3. 

(b)      Notwithstanding
the foregoing obligations, if the Company furnishes to Holders requesting a
registration pursuant to this Section 2.1 a certificate signed by the Company’s
chief executive officer stating that in the good faith judgment of the Company’s
Board of Directors it would be materially detrimental to the Company and its
stockholders for such registration statement to either become effective or
remain effective for as long as such registration statement otherwise would be
required to remain effective, because such action would (i) materially interfere
with a significant acquisition, corporate reorganization, or other similar
transaction involving the Company; (ii) require premature disclosure of material
information that the Company has a bona fide business purpose for preserving as
confidential; or (iii) render the Company unable to comply with requirements
under the Securities Act or Exchange Act, 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 one hundred twenty (120) days after the request of the
Initiating Holders is given; provided, however, that the Company may not invoke
this right more than twice in any twelve (12) month period. 

(c)      The
Company shall not be obligated to effect, or to take any action to effect, any
registration pursuant to Section 2.1(a) during the period that is sixty (60)
days before the Company’s good faith estimate of the date of filing of, and
ending on a date that is one hundred eighty (180) days after the effective date
of, a Company-initiated registration, provided that the Company is actively
employing in good faith commercially reasonable efforts to cause such
registration statement to become effective. 

2.2      Company
Registration. If at any time after the first anniversary of this Agreement, the
Company proposes to register (including, for this purpose, a registration
effected by the Company for stockholders other than the Holders) any of its
Common Stock under the Securities Act in connection with the public offering of
such securities solely for cash (other than in an Excluded Registration), the
Company shall, at such time, promptly give each Holder notice of such
registration. Upon the request of each Holder given within twenty (20) days
after such notice is given by the Company, the Company shall, subject to the
provisions of Section 2.3, cause to be registered all of the Registrable
Securities that each such Holder has requested to be included in such
registration. The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 2.2 before the effective date of
such registration, whether or not any Holder has elected to include Registrable
Securities in such registration. The expenses (other than Selling Expenses) of
such withdrawn registration shall be borne by the Company in accordance with
Section 2.6. 

2.3      Underwriting
Requirements. 

(a)      If,
pursuant to Section 2.1, the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 2.1, and the Company shall include such information in the Demand
Notice. The underwriter(s), if any, will be selected by the Company and shall be
reasonably acceptable to a majority in interest of the Initiating Holders. In
such event, the right of any Holder to include such Holder’s Registrable
Securities in such registration shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company as provided in Section 2.4(e)) enter into an
underwriting agreement in customary form with the underwriter(s) selected for
such underwriting. Notwithstanding any other provision of this Section 2.3, if
the underwriter(s) advise(s) the Initiating Holders in writing that marketing
factors require a limitation on the number of shares to be underwritten, then
the Initiating Holders shall so advise all Holders of Registrable Securities
that otherwise would be underwritten pursuant hereto, and the number of
Registrable Securities that may be included in the underwriting shall be
allocated among such Holders of Registrable Securities, including the Initiating
Holders, in proportion (as nearly as practicable) to the number of Registrable
Securities owned by each Holder or in such other proportion as shall mutually be
agreed to by all such selling Holders; provided, however, that the number of
Registrable Securities held by the Holders to be included in such underwriting
shall not be reduced unless all other securities are first entirely excluded
from the underwriting. To facilitate the allocation of shares in accordance with
the above provisions, the Company or the underwriters may round the number of
shares allocated to any Holder to the nearest one hundred (100) shares. 

B-3 




(b)      In
  connection with any offering involving an underwriting of shares of the
  Company’s capital stock pursuant to Section 2.2, the Company shall not be
  required to include any of the Holders’ Registrable Securities in such
  underwriting unless the Holders accept the terms of the underwriting as agreed
  upon between the Company and its underwriters, and then only in such quantity as
  the underwriters in their sole discretion determine will not jeopardize the
  success of the offering by the Company. If the total number of securities,
  including Registrable Securities, requested by stockholders to be included in
  such offering exceeds the number of securities to be sold (other than by the
  Company) that the underwriters in their reasonable discretion determine is
  compatible with the success of the offering, then the Company shall be required
  to include in the offering only that number of such securities, including
  Registrable Securities, which the underwriters and the Company in their sole
  discretion determine will not jeopardize the success of the offering. If the
  underwriters determine that less than all of the Registrable Securities
  requested to be registered can be included in such offering, then the
  Registrable Securities that are included in such offering shall be allocated
  among the selling Holders in proportion (as nearly as practicable) to the number
  of Registrable Securities owned by each selling Holder or in such other
  proportions as shall mutually be agreed to by all such selling Holders. To
  facilitate the allocation of shares in accordance with the above provisions, the
  Company or the underwriters may round the number of shares allocated to any
  Holder to the nearest one hundred (100) shares. Notwithstanding the foregoing,
  in no event shall (i) the number of Registrable Securities included in the
  offering be reduced unless all other securities (other than securities to be
  sold by the Company) are first entirely excluded from the offering, or (ii) the
  number of Registrable Securities included in the offering be reduced below
  twenty percent (20%) of the total number of securities included in such
  offering, For purposes of the provision in this Section 2.3(b) concerning
  apportionment, for any selling Holder that is a partnership, limited liability
  company, or corporation, the partners, members, retired partners, retired
  members, stockholders, and Affiliates of such Holder, or the estates and
  Immediate Family Members of any such partners, retired partners, members, and
  retired members and any trusts for the benefit of any of the foregoing Persons,
  shall be deemed to be a single “selling Holder,” and any pro rata reduction with
  respect to such “selling Holder” shall be based upon the aggregate number of
  Registrable Securities owned by all Persons included in such “selling Holder,”
as defined in this sentence. 

2.4      Obligations
of the Company. Whenever required under this Section 2 to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible: 

(a)      prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its commercially reasonable efforts to cause such
registration statement to become effective and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to one year or, if earlier,
until the distribution contemplated in the registration statement has been
completed; provided, however, that (i) such one year period shall be extended
for a period of time equal to the period the Holder refrains, at the request of
an underwriter of Common Stock (or other securities) of the Company, from
selling any securities included in such registration, and (ii) in the case of
any registration of Registrable Securities on Form S-3 that are intended to be
offered on a continuous or delayed basis, subject to compliance with applicable
SEC rules, such one year period shall be extended for up to one hundred eighty
(180) days, if necessary, to keep the registration statement effective until all
such Registrable Securities are sold; 

(b)      prepare
and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration
statement, as may be necessary to comply with the Securities Act in order to
enable the disposition of all securities covered by such registration statement;


B-4 




(c)      furnish
to the selling Holders such numbers of copies of a prospectus, including a
preliminary prospectus, as required by the Securities Act, and such other
documents as the Holders may reasonably request in order to facilitate their
disposition of their Registrable Securities; 

(d)      use
its commercially reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or blue-sky
laws of such jurisdictions as shall be reasonably requested by the selling
Holders; provided that the Company shall not be required to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act; 

(e)      in
the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the underwriter(s) of such offering; 

(f)      use
its commercially reasonable efforts to cause all such Registrable Securities
covered by such registration statement to be listed on a national securities
exchange or trading system and each securities exchange and trading system (if
any) on which similar securities issued by the Company are then listed; 

(g)      promptly
make available for inspection by the selling Holders, any underwriter(s)
participating in any disposition pursuant to such registration statement, and
any attorney or accountant or other agent retained by any such underwriter or
selected by the selling Holders, all financial and other records, pertinent
corporate documents, and properties of the Company, and cause the Company’s
officers, directors, employees, and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant, or agent, in each case, as necessary or advisable to verify the
accuracy of the information in such registration statement and to conduct
appropriate due diligence in connection therewith; 

(h)      notify
each selling Holder, promptly after the Company receives notice thereof, of the
time when such registration statement has been declared effective or a
supplement to any prospectus forming a part of such registration statement has
been filed; and 

(i)      after
such registration statement becomes effective, notify each selling Holder of any
request by the SEC that the Company amend or supplement such registration
statement or prospectus.

In addition, the Company shall
ensure that, at all times after any registration statement covering a public
offering of securities of the Company under the Securities Act shall have become
effective, its insider trading policy shall provide that the Company’s directors
may implement a trading program under Rule 10b5-1 of the Exchange Act. 

2.5      Furnish
Information. It shall be a condition precedent to the obligations of the Company
to take any action pursuant to this Section 2 with respect to the Registrable
Securities of any selling Holder that such Holder shall furnish to the Company
such information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of such securities as is reasonably required
to effect the registration of such Holder’s Registrable Securities. 

2.6      Expenses
of Registration. All expenses (other than Selling Expenses) incurred in
connection with registrations, filings, or qualifications pursuant to Section 2,
including all registration, filing, and qualification fees, printers’ and
accounting fees, and fees and disbursements of counsel for the Company, shall be
borne and paid by the Company. All Selling Expenses relating to Registrable
Securities registered pursuant to this Section 2 shall be borne and paid by the
Holders pro rata on the basis of the number of Registrable Securities registered
on their behalf.

2.7      Delay
of Registration. No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any registration pursuant to this Agreement as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 2. 

B-5 




2.8      Indemnification.
If any Registrable Securities are included in a registration statement under
this Section 2: 

(a)      To
the extent permitted by law, the Company will indemnify and hold harmless each
selling Holder, and the partners, members, officers, directors, and stockholders
of each such Holder; legal counsel and accountants for each such Holder; any
underwriter (as defined in the Securities Act) for each such Holder; and each
Person, if any, who controls such Holder or underwriter within the meaning of
the Securities Act or the Exchange Act, against any Damages, and the Company
will pay to each such Holder, underwriter, controlling Person, or other
aforementioned Person any legal or other expenses reasonably incurred thereby in
connection with investigating or defending any claim or proceeding from which
Damages may result, as such expenses are incurred; provided, however, that the
indemnity agreement contained in this Section 2.8(a) shall not apply to amounts
paid in settlement of any such claim or proceeding if such settlement is
effected without the consent of the Company, which consent shall not be
unreasonably withheld, nor shall the Company be liable for any Damages to the
extent that they arise out of or are based upon actions or omissions made in
reliance upon and in conformity with written information furnished by or on
behalf of any such Holder, underwriter, controlling Person, or other
aforementioned Person expressly for use in connection with such registration.


(b)      To
the extent permitted by law, each selling Holder, severally and not jointly,
will indemnify and hold harmless the Company, and each of its directors, each of
its officers who has signed the registration statement, each Person (if any),
who controls the Company within the meaning of the Securities Act, legal counsel
and accountants for the Company, any underwriter (as defined in the Securities
Act), any other Holder selling securities in such registration statement, and
any controlling Person of any such underwriter or other Holder, against any
Damages, in each case only to the extent that such Damages arise out of or are
based upon actions or omissions made in reliance upon and in conformity with
written information furnished by or on behalf of such selling Holder expressly
for use in connection with such registration; and each such selling Holder will
pay to the Company and each other aforementioned Person any legal or other
expenses reasonably incurred thereby in connection with investigating or
defending any claim or proceeding from which Damages may result, as such
expenses are incurred; provided, however, that the indemnity agreement contained
in this Section 2.8(b) shall not apply to amounts paid in settlement of any such
claim or proceeding if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; and provided further
that in no event shall the aggregate amounts payable by any Holder by way of
indemnity or contribution under Sections 2.8(b) and 2.8(d) exceed the proceeds
from the offering received by such Holder (net of any Selling Expenses paid by
such Holder), except in the case of fraud or willful misconduct by such Holder.


(c)      Promptly
after receipt by an indemnified party under this Section 2.8 of notice of the
commencement of any action (including any governmental action) for which a party
may be entitled to indemnification hereunder, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 2.8, give the indemnifying party notice of the commencement thereof. The
indemnifying party shall have the right to participate in such action and, to
the extent the indemnifying party so desires, participate jointly with any other
indemnifying party to which notice has been given, and to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party (together with all other indemnified parties that may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such action. 

(d)      To
provide for just and equitable contribution to joint liability under the
Securities Act in any case in which either: (i) any party otherwise entitled to
indemnification hereunder makes a claim for indemnification pursuant to this
Section 2.8 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case, notwithstanding the fact that this Section 2.8 provides
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any party hereto for which indemnification is
provided under this Section 2.8, then, and in each such case, such parties will
contribute to the aggregate losses, claims, damages, liabilities, or expenses to
which they may be subject (after contribution from others) in such proportion as
is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the
statements, omissions, or other actions that resulted in such loss, claim,
damage, liability, or expense, as well as to reflect any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or allegedly untrue statement of a material fact, or the
omission or alleged omission of a material fact, relates to information supplied
by the indemnifying party or by the indemnified party and the parties’ relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission; provided, however, that, in any such case (x) no
Holder will be required to contribute any amount in excess of the public
offering price of all such Registrable Securities offered and sold by such
Holder pursuant to such registration statement, and (y) no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation; and provided further that in no
event shall a Holder’s liability pursuant to this Section 2.8(d), when combined
with the amounts paid or payable by such Holder pursuant to Section 2.8(b),
exceed the proceeds from the offering received by such Holder (net of any
Selling Expenses paid by such Holder), except in the case of willful misconduct
or fraud by such Holder. 

B-6 




(e)      Notwithstanding
  the foregoing, to the extent that the provisions on indemnification and
  contribution contained in the underwriting agreement entered into in connection
  with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall control. 

(f)      Unless
otherwise superseded by an underwriting agreement entered into in connection
with the underwritten public offering, the obligations of the Company and
Holders under this Section 2.8 shall survive the completion of any offering of
Registrable Securities in a registration under this Section 2, and otherwise
shall survive the termination of this Agreement.

2.9      Reports
Under Exchange Act. With a view to making available to the Holders the benefits
of SEC Rule 144 and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S 3, the Company shall: 

(a)      use
commercially reasonable efforts to make and keep available adequate current
public information, as those terms are understood and defined in SEC Rule 144,
at all times; 

(b)      use
commercially reasonable efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act (at any time after the Company has become subject to such
reporting requirements); and 

(c)      furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request (i) to the extent accurate, a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144, the Securities
Act, and the Exchange Act (at any time after the Company has become subject to
such reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S 3 (at any time at which the Company
so qualifies); (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company; and (iii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the SEC that permits the selling of any such
securities without registration (at any time after the Company has become
subject to the reporting requirements under the Exchange Act) or pursuant to
Form S 3 (at any time after the Company so qualifies to use such form). 

2.10      “Market
Stand off” Agreement. Each Holder hereby agrees that it will not, without the
prior written consent of the managing underwriter, during the period commencing
on the date of the final prospectus relating to the registration by the Company
for its own behalf of shares of its Common Stock or any other equity securities
under the Securities Act on a registration statement on Form S-1 or Form S-3 and
ending on the date specified by the Company and the managing underwriter (such
period not to exceed 120 days, or such other period as may be requested by the
Company or an underwriter to accommodate regulatory restrictions on (1) the
publication or other distribution of research reports, and (2) analyst
recommendations and opinions, including, but not limited to, the restrictions
contained in FINRA Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor
provisions or amendments thereto), (i) lend; offer; pledge; sell; contract to
sell; sell any option or contract to purchase; purchase any option or contract
to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
(directly or indirectly) for Common Stock (whether such shares or any such
securities are then owned by the Holder or are thereafter acquired) or (ii)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of such securities,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or other securities, in cash, or otherwise.
The foregoing provisions of this Section 2.10 shall not apply to the sale of any
shares to an underwriter pursuant to an underwriting agreement, or the transfer
of any shares to any trust for the direct or indirect benefit of the Holder or
the immediate family of the Holder, provided that the trustee of the trust
agrees to be bound in writing by the restrictions set forth herein, and provided
further that any such transfer shall not involve a disposition for value, and
shall be applicable to the Holders only if all officers and directors are
subject to the same restrictions. The underwriters in connection with such
registration are intended third party beneficiaries of this Section 2.10 and
shall have the right, power and authority to enforce the provisions hereof as
though they were a party hereto. Each Holder further agrees to execute such
agreements as may be reasonably requested by the underwriters in connection with
such registration that are consistent with this Section 2.10 or that are
necessary to give further effect thereto. 

B-7 




2.11      Restrictions
on Transfer. 

(a)      The
Series A Preferred Stock and the Registrable Securities shall not be sold,
pledged, or otherwise transferred, and the Company shall not recognize and shall
issue stop-transfer instructions to its transfer agent with respect to any such
sale, pledge, or transfer, except upon the conditions specified in this
Agreement, which conditions are intended to ensure compliance with the
provisions of the Securities Act. A transferring Holder will cause any proposed
purchaser, pledgee, or transferee of the Series A Preferred Stock and, if
required by applicable law, the Registrable Securities held by such Holder to
agree to take and hold such securities subject to the provisions and upon the
conditions specified in this Agreement. 

(b)      Each
certificate, instrument, or book entry representing (i) the Series A Preferred
Stock, (ii) the Registrable Securities, and (iii) any other securities issued in
respect of the securities referenced in clauses (i) and (ii), upon any stock
split, stock dividend, recapitalization, merger, consolidation, or similar
event, shall (unless otherwise permitted by the provisions of Section 2.11(c))
be notated with a legend substantially in the following form: 

[NEITHER] THIS SECURITY [NOR THE
SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE] 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 [AND THE SECURITIES ISSUABLE
UPON CONVERSION OF 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. 

[THE SECURITIES REPRESENTED HEREBY MAY
BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE
COMPANY AND THE STOCKHOLDER, AND THE CERTIFICATE OF DESIGNATION, COPIES OF WHICH
ARE ON FILE WITH THE SECRETARY OF THE COMPANY.] 

B-8 




The Holders consent to the
Company making a notation in its records and giving instructions to any transfer
agent of the Restricted Securities in order to implement the restrictions on
transfer set forth in this Section 2.11. 

(c)      The
holder of such Restricted Securities, by acceptance of ownership thereof, agrees
to comply in all respects with the provisions of this Section 2. Before any
proposed sale, pledge, or transfer of any Restricted Securities, unless there is
in effect a registration statement under the Securities Act covering the
proposed transaction, the Holder thereof shall give notice to the Company of
such Holder’s intention to effect such sale, pledge, or transfer. Each such
notice shall describe the manner and circumstances of the proposed sale, pledge,
or transfer in sufficient detail and, if reasonably requested by the Company,
shall be accompanied at such Holder’s expense by either (i) a written opinion of
legal counsel who shall, and whose legal opinion shall, be reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
proposed transaction may be effected without registration under the Securities
Act; (ii) a “no action” letter from the SEC to the effect that the proposed
sale, pledge, or transfer of such Restricted Securities without registration
will not result in a recommendation by the staff of the SEC that action be taken
with respect thereto; or (iii) any other evidence reasonably satisfactory to
counsel to the Company to the effect that the proposed sale, pledge, or transfer
of the Restricted Securities may be effected without registration under the
Securities Act, whereupon the Holder of such Restricted Securities shall be
entitled to sell, pledge, or transfer such Restricted Securities in accordance
with the terms of the notice given by the Holder to the Company. The Company
will not require such a legal opinion or “no action” letter (x) in any
transaction in compliance with SEC Rule 144; or (y) in any transaction in which
such Holder distributes Restricted Securities to an Affiliate of such Holder for
no consideration, provided that each such Affiliate agrees in writing to be
subject to the terms of this Section 2.11. Each certificate, instrument, or book
entry representing the Restricted Securities transferred as above provided shall
be notated with, except if such transfer is made pursuant to SEC Rule 144, the
appropriate restrictive legend set forth in Section 2.11(b), except that such
certificate instrument, or book entry shall not be notated with such restrictive
legend if, in the opinion of counsel for such Holder and the Company, such
legend is not required in order to establish compliance with any provisions of
the Securities Act. 

2.12      Termination
of Registration Rights. The right of any Holder to request registration or
inclusion of Registrable Securities in any registration pursuant to Sections 2.1
or 2.2 shall terminate upon such time as SEC Rule 144 or another similar
exemption under the Securities Act is available for the sale of all of such
Holder’s shares without limitation during a three-month period without
registration. 

3.      Confidentiality.
Each Holder agrees that such Holder will keep confidential and will not
disclose, divulge, or use for any purpose (other than to monitor its investment
in the Company) any confidential information obtained from the Company
(including notice of the Company’s intention to file a registration statement),
unless such confidential information (a) is known or becomes known to the public
in general (other than as a result of a breach of this Section 3 by such
Holder), (b) is or has been independently developed or conceived by the Holder
without use of the Company’s confidential information, or (c) is or has been
made known or disclosed to the Holder by a third party without a breach of any
obligation of confidentiality such third party may have to the Company;
provided, however, that a Holder may disclose confidential information (i) to
its attorneys, accountants, consultants, and other professionals to the extent
necessary to obtain their services in connection with monitoring its investment
in the Company; (ii) to any prospective purchaser of any Registrable Securities
from such Holder, if such prospective purchaser agrees to be bound by the
provisions of this Section 3; (iii) to any existing or prospective Affiliate,
partner, member, stockholder, or wholly owned subsidiary of such Holder in the
ordinary course of business, provided that such Holder informs such Person that
such information is confidential and directs such Person to maintain the
confidentiality of such information; or (iv) as may otherwise be required by
law, provided that the Holder promptly notifies the Company of such disclosure
and takes reasonable steps to minimize the extent of any such required
disclosure.

4.      Investor
Participation in Future Equity Financings. Subject to the terms and conditions
of this Section 4 and applicable securities laws, if the Company proposes to
offer or sell any New Securities, the Company shall first offer such New
Securities to the Investor. 

(a)      The
Company shall give notice (the “Offer Notice”) to the Investor, stating (i) its
bona fide intention to offer such New Securities, (ii) the number of such New
Securities to be offered, and (iii) the price and terms, if any, upon which it
proposes to offer such New Securities. 

B-9 




(b)      By
notification to the Company within twenty (20) days after the Offer Notice is
given, the Investor may elect to purchase or otherwise acquire, at the price and
on the terms specified in the Offer Notice, up to that portion of such New
Securities which equals the proportion that the Common Stock then held by the
Investor and its Affiliates (including all shares of Common Stock then issuable
(directly or indirectly) upon conversion and/or exercise, as applicable, of the
Series A Preferred Stock then held by the Investor and its Affiliates) bears to
the total Common Stock of the Company then outstanding (assuming full conversion
and/or exercise, as applicable, of all Series A Preferred Stock). The closing of
any sale pursuant to this Section 4(b) shall occur within the later of thirty
(30) days of the date that the Offer Notice is given and the date of initial
sale of New Securities pursuant to Section 4(c). 

(c)      If
all New Securities referred to in the Offer Notice are not elected to be
purchased or acquired as provided in Section 4(b), the Company may, during the
ninety (90) day period following the expiration of the periods provided in
Section 4(b), offer and sell the remaining unsubscribed portion of such New
Securities to any Person or Persons at a price not less than, and upon terms no
more favorable to the offeree than, those specified in the Offer Notice. If the
Company does not enter into an agreement for the sale of the New Securities
within such period, or if such agreement is not consummated within thirty (30)
days of the execution thereof, the right provided hereunder shall be deemed to
be revived and such New Securities shall not be offered unless first reoffered
to the Investor in accordance with this Section 4. 

(d)      The
right of first offer in this Section 4 shall not be applicable to (i) any equity
securities issued in connection with the conversion of any convertible security
outstanding as of the Original Issue Date, as defined in the Certificate of
Designation, (ii) any exercise of a warrant or option outstanding as of the
Original Issue Date, as defined in the Certificate of Designation, (iii) any
options or shares of Common Stock issued pursuant to any plan adopted by the
Company for the benefit of its employees, executive officers, directors or
consultants, (iv) any shares of Common Stock issued in connection with an
acquisition, asset purchase agreement or joint venture agreement, (v) any
issuance of Common Stock to Aspire Capital Fund, LLC, and (vi) any issuance of
Common Stock in connection with a stock split or in connection with a dividend
payable in Common Stock. 

(e)      Notwithstanding
any provision hereof to the contrary, in lieu of complying with the provisions
of this Section 4, the Company may elect to give notice to the Investor within
thirty (30) days after the issuance of New Securities. Such notice shall
describe the type, price, and terms of the New Securities. The Investor shall
have twenty (20) days from the date notice is given to elect to purchase up to
the number of New Securities that would, if purchased by the Investor, maintain
the Investor’s percentage-ownership position, calculated as set forth in Section
4(b) before giving effect to the issuance of such New Securities. The closing of
such sale shall occur within sixty (60) days of the date notice is given to the
Investor. 

(f)      The
covenants set forth in Section 4 shall terminate and be of no further force or
effect immediately upon the third (3rd) anniversary of the date hereof. 

5.      Voting
Rights. The Investor hereby grants an irrevocable proxy (which proxy is coupled
with an interest) to the Company’s Board of Directors authorizing and directing
the Board of Directors to vote all Excess Shares (as defined below) at any
stockholders’ meeting or in an action by written consent in the same proportion
as the shares of Common Stock that are voted at such meeting or by such written
consent which are not beneficially owned by the Investor on the record date for
such meeting or such written consent. “Excess Shares” shall mean the number of
shares of Common Stock held or voted by the Investor and its Affiliates or any
member of a “group” (as defined under Section 13(d) of the Exchange Act)
including the Investor or its Affiliates or other parties acting in concert with
the Investor or its Affiliates, in the aggregate, that is in excess of 9.99% of
the issued and outstanding Common Stock of the Company. 

6.      Additional
Covenants. 

6.1     Volume
Limitations. Each Holder (together with its Affiliates) shall be prohibited from
lending, offering, pledging, selling, contracting to sell, or otherwise
transferring or disposing of, directly or indirectly, any shares of Common Stock
issued upon conversion of the Series A Preferred Stock as follows:

B-10 




(a)      on
and prior to the first anniversary of the applicable Conversion Date, each
Holder (together with its Affiliates) may only sell up to 255,000 shares of
Common Stock issued upon conversion of the Series A Preferred Stock in any
ninety (90) consecutive day period; and 

(b)      after
the first anniversary of the Conversion Date, each Holder may freely transfer
shares of Common Stock. 

6.2      Compliance
with Nasdaq Rules.

(a)      No
Holder shall exercise its Conversion Rights at any time, if the exercise of the
Conversion Rights would cause such Holder (together with its Affiliates) to own
greater than 19.99% of the issued and outstanding shares of Common Stock prior
to the time that the Company shall have received stockholder approval in
accordance with Nasdaq Rules. 

(b)      The
Company shall seek stockholder approval for the issuance of Common Stock to the
Holders in excess of 19.99% of the issued and outstanding shares of Common Stock
at the earlier of (i) the Company’s next annual meeting of stockholders, or (ii)
any earlier special meeting of stockholders unless the Company’s Board of
Directors determines that soliciting approval at such special meeting in
connection with this Section 6.2 would be materially detrimental to the approval
of the other proposals to be considered thereat. 

7.      Miscellaneous.


7.1     Successors
and Assigns. The rights under this Agreement may be assigned (but only with all
related obligations) by a Holder to a transferee of Registrable Securities that
is an Affiliate of a Holder; provided, however, that (x) the Company is, within
a reasonable time after such transfer, furnished with written notice of the name
and address of such transferee and the Registrable Securities with respect to
which such rights are being transferred; and (y) such transferee agrees in a
written instrument delivered to the Company to be bound by and subject to the
terms and conditions of this Agreement, including the provisions of Section
2.10. The terms and conditions of this Agreement inure to the benefit of and are
binding upon the respective successors and permitted assignees of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and permitted
assignees any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein. 

7.2     Governing
Law. This Agreement shall be governed by the internal law of the State of New
York. 

7.3     Counterparts.
This Agreement may be executed in two (2) or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Counterparts may be delivered via facsimile, electronic
mail (including pdf or any electronic signature complying with the U.S. federal
ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any
counterpart so delivered shall be deemed to have been duly and validly delivered
and be valid and effective for all purposes.

7.4     Titles
and Subtitles. The titles and subtitles used in this Agreement are for
convenience only and are not to be considered in construing or interpreting this
Agreement. 

7.5     Notices.
All notices and other communications given or made pursuant to this Agreement
shall be in writing and shall be deemed effectively given upon the earlier of
actual receipt or (i) personal delivery to the party to be notified; (ii) when
sent, if sent by electronic mail or facsimile during the recipient’s normal
business hours, and if not sent during normal business hours, then on the
recipient’s next business day; (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid; or (iv)
one (1) business day after the business day of deposit with a nationally
recognized overnight courier, freight prepaid, specifying next-day delivery,
with written verification of receipt. All communications shall be sent to the
respective parties at their addresses as set forth on Schedule A hereto (as may
be updated from time to time), or to the principal office of the Company and to
the attention of the Chief Executive Officer, in the case of the Company, or to
such email address, facsimile number, or address as subsequently modified by
written notice given in accordance with this Section 7.5. If notice is given to
the Company, a copy shall also be sent to Hogan Lovells US LLP, Attn: David
Crandall, One Tabor Center, Suite 1500, 1200 Seventeenth Street, Denver,
Colorado 80202 and if notice is given to Investors, a copy shall also be given
to Bernard & Yam, LLP, Attn: Mr. Mann Yam, 140-75 Ash Avenue, Suite 2D,
Flushing, New York 11355. 

B-11 




7.6      Amendments
  and Waivers. Any term of this Agreement may be amended and the observance of any
  term of this Agreement may be waived (either generally or in a particular
  instance, and either retroactively or prospectively) only with the written
  consent of the Company and Holders holding a majority of the Registrable
  Securities then outstanding; provided that the Company may in its sole
  discretion waive compliance with Section 2.11(c); and provided further that any
  provision hereof may be waived by any waiving party on such party’s own behalf,
  without the consent of any other party. Notwithstanding the foregoing, this
  Agreement may not be amended or terminated and the observance of any term hereof
  may not be waived with respect to any Holder without the written consent of such
  Holder, unless such amendment, termination, or waiver applies to all Holders in
  the same fashion. The Company shall give prompt notice of any amendment or
  termination hereof or waiver hereunder to any party hereto that did not consent
  in writing to such amendment, termination, or waiver. Any amendment,
  termination, or waiver effected in accordance with this Section 7.6 shall be
  binding on all parties hereto, regardless of whether any such party has
  consented thereto. No waivers of or exceptions to any term, condition, or
  provision of this Agreement, in any one or more instances, shall be deemed to be
  or construed as a further or continuing waiver of any such term, condition, or
provision. 

7.7      Severability.
In case any one or more of the provisions contained in this Agreement is for any
reason held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
of this Agreement, and such invalid, illegal, or unenforceable provision shall
be reformed and construed so that it will be valid, legal, and enforceable to
the maximum extent permitted by law. 

7.8      Aggregation
of Stock. All shares of Registrable Securities held or acquired by Affiliates
shall be aggregated together for the purpose of determining the availability of
any rights under this Agreement and such Affiliated persons may apportion such
rights as among themselves in any manner they deem appropriate. 

7.9      Additional
Investors. Notwithstanding anything to the contrary contained herein, a
Permitted Transferee, as defined in the Certificate of Designation, may become a
party to this Agreement by executing and delivering an additional counterpart
signature page to this Agreement, and thereafter shall be deemed a “Holder” for
all purposes hereunder. No action or consent by the Holders shall be required
for such joinder to this Agreement by such additional Holder, so long as such
additional Holder has agreed in writing to be bound by all of the obligations as
a “Holder” hereunder. 

7.10     Entire
Agreement. This Agreement (including any Schedules and Exhibits hereto)
constitutes the full and entire understanding and agreement among the parties
with respect to the subject matter hereof, and any other written or oral
agreement relating to the subject matter hereof existing between the parties is
expressly canceled. 

7.11     Dispute
Resolution. The parties (a) hereby irrevocably and unconditionally submit to the
jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement, (b) agree not to commence any suit,
action or other proceeding arising out of or based upon this Agreement except in
the state and federal courts sitting in the City of New York, Borough of
Manhattan, and (c) hereby waive, and agree not to assert, by way of motion, as a
defense, or otherwise, in any such suit, action or proceeding, any claim that it
is not subject personally to the jurisdiction of the above-named courts, that
its property is exempt or immune from attachment or execution, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this Agreement or the subject
matter hereof may not be enforced in or by such court.

B-12 




WAIVER OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER
HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING
OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT
CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH
OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY
EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH
PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. 

7.12     Delays
or Omissions. No delay or omission to exercise any right, power, or remedy
accruing to any party under this Agreement, upon any breach or default of any
other party under this Agreement, shall impair any such right, power, or remedy
of such nonbreaching or nondefaulting party, nor shall it be construed to be a
waiver of or acquiescence to any such breach or default, or to any similar
breach or default thereafter occurring, nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. All remedies, whether under this Agreement or by law or
otherwise afforded to any party, shall be cumulative and not alternative. 

[Remainder of Page Intentionally Left Blank]

B-13 




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


	COMPANY: 
	 
	 
	LIGHTBRIDGE CORPORATION 
	 
	 
	By: 	 
    
	Name: 	Seth Grae 
	Title: 	Chief Executive Officer 
	 	 
	 	 
	INVESTOR: 
	 
	 
	GENERAL INTERNATIONAL HOLDINGS, INC.

	 
	 
	By: 	 
    
	Name: 	Xingping Hou 
	Title: 	President 



B-14 




SCHEDULE A 
Holders 

	General International Holdings, Inc. 
	Address: 	219-3 Northern Blvd, Suite 201 
	 	Bayside, NY 11361 
	Fax: 	212-219-3604 


B-15