Document:

Exhibit 10.1

EMPLOYMENT AGREEMENT

AGREEMENT, dated this   29th  day of June, 2012 (the “Agreement”), between Amtech Systems, Inc., an Arizona corporation (the “Company”) with registered offices at 131 South Clark Drive, Tempe, Arizona, and Fokko Pentinga, born on February 25, 1955, residing at Braamweg 6, Arnhem 6821 JT, The Netherlands (the “Executive”),

W I T N E S S E T H:

WHEREAS, on December 15,2011, the Board of Directors of the Company elected the Executive to the position of Chief Executive Officer, effective January 1, 2012;

NOW, THEREFORE, the Company and the Executive hereby enter into an employment and compensation arrangement on the following terms and conditions:

1.Employment.  Subject to the terms and conditions of this Agreement, the Company agrees to employ the Executive as its Chief Executive Officer during the Employment Period (as defined in Section 7) and Executive agrees to perform such acts and duties and furnish such services to the Company and its Affiliates consistent with such position as the Company's Board of Directors shall from time to time direct.  The Executive shall have general and active charge of the business and affairs of the Company and, in such capacity, shall have responsibility for the day-to-day operations of the Company, subject to the authority and control of the Board of Directors of the Company.  Executive has been a Director of the Company since December 15, 2011.  During the Employment Period, the Company shall continue to take such actions as necessary to cause the Executive's nomination as a member of the Board of Directors of the Company.  The Executive hereby accepts such employment and agrees to devote his full time and best efforts to the duties provided herein, provided, that the Executive may engage in other business activities which (i) involve no conflict of interest with the interests of the Company     (subject to approval by the Board of Directors, which approval shall not be unreasonably withheld) and (ii) do not materially interfere with the performance by the Executive of his duties under this Agreement.

2.Compensation.  For services rendered to the Company during the term of this Agreement, including services rendered as a Director of the Company or any of its affiliates, the Company shall compensate the Executive with an initial annual base salary of US$370,000, or € 284,310, which is the agreed upon equivalent as of the date of December 15, 2011.  Initially, 20% of the US dollar amount will be paid monthly and reported as compensation in the United States, which will be adjusted at least annually to reflect proportion of the Executives work performed to be performed in the United States.  The excess of the amount thus allocated to the Executives work in the United States will be paid Euros in thirteen equal installments, one each month and an additional one in May in accordance with Dutch practice.  Such base salary and allocation shall be reviewed on an annual basis by the Compensation Committee of the Company's Board of Directors (the “Compensation Committee”), with the base salary subject to being increased but not decreased in the discretion of the Compensation Committee. Salary payments shall be made to Executive at the end of each calendar month, net of all statutory and contractually agreed deductions.  Any compensation, including incentive compensation, paid to the Executive by any Affiliate of the Company shall be considered compensation paid by the Company pursuant to this Agreement.  For purposes of this Agreement, an “Affiliate” of the Company means any entity directly or indirectly controlling, controlled by or under common control with the Company.  As used in this definition, “controlling” (including, with its correlative meanings, “controlled by” and “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities, partnership or other ownership interests, by contract or otherwise).

3.Incentive Compensation.  The Executive shall also be entitled to annual cash bonuses for each fiscal year during the Employment Period (“Incentive Compensation”).  The Executive's Incentive Compensation for each such fiscal year shall be determined in accordance with an annual bonus plan adopted by the Compensation Committee, which shall be no less favorable to the Executive than the bonus plan metrics for fiscal 2012 adopted by the Compensation Committee on December15, 2011.  Any bonus due to Executive will be paid within 75 days after the end of the Company's fiscal year.

4.Stock Options and Restricted Stock.

(a)Outstanding Options and Restricted Stock.  All currently outstanding options to purchase Common Stock of the Company and all restricted stock grants held by Executive shall remain in full force and effect in accordance with the provisions of Company's stock option and restricted stock plans and the applicable Stock Option and Restricted Stock Agreements, as may be amended from time to time.

(b)New Options and Restricted Stock.  As further compensation, Executive shall be issued an annual grant of stock options and restricted stock by and at the sole discretion of the Compensation Committee within ninety (90) days after the end of each fiscal year during the Employment Period.  The amount of such grant and the terms of vesting shall be as determined by the Compensation Committee.  All of the stock options granted to Executive shall be non-qualified stock options within the meaning of the Internal Revenue Code of 1986, as amended (the “Code”)The stock options shall be issued at the fair market value of the Company's common stock as of the date of grant.

(c)Tax liability. Any and all tax liability and social security premiums due in connection with the grant and/or exercise of stock options and/or the selling and transferring of stock or stock options, shall be for the account of the Executive. The Executive authorizes the Company and its Affiliates to deduct any required taxes and/or social security premiums from the net payments made to the Executive.

5.    Benefits.  During the Employment Period, the Company shall provide or cause to be provided to the Executive such employee benefits as are provided to other employees of the Company in his country of domicile, but no less favorable than those provided at the time of this agreement.  In addition, the Executive is eligible to participate in the Mayo Executive Health Plan and Company's group life insurance on the same basis as other executives of the Company.  The Executive acknowledges that he/she is not a citizen of the United States of America and is not entitled to any mandatory or voluntarily social welfare or benefits provided under laws of the United States of America.  Notwithstanding the foregoing, the Company shall not have any obligation to provide benefits to the Executive to the extent such benefits would be duplicative of benefits provided to the Executive by any Affiliate of the Company, if any.  For example, the Company pays 50% of the private pension cost for Dutch employees, so the Executive will not be eligible for a 401(k) plan match.  During the Employment Period, the Company may provide or cause to be provided to the Executive such additional benefits as the Company may deem appropriate from time to time.  The Company shall also provide the Executive with a leased automobile at a cost of not more than €29,500 per annum. Company shall each month withhold from Executive's salary all payroll taxes relating to Executive's use of the car, unless Executive submits a “no private use declaration” as provided in Section 13bis(12) of the Dutch Payroll Tax Act, 1964. Executive shall be under an obligation to inform Company immediately if the tax authorities revoke the declaration in question.

6.Vacation.  The Executive shall be entitled to annual vacations in accordance with the Company's vacation policies in effect from time to time for employees in the Netherlands  Paid leave shall 

be reduced on a pro-rata basis for mid-year terminations and when Executive works part-time.

7.Term: Employment Period.  The “Employment Period” shall commence on January 1, 2012 (the “Effective Date”) and shall continue for an indefinite period of time. 

8.Termination.

(a)Either the Company or the Executive may terminate this Agreement and Executive's employment, (i) with prior written notice of termination given in accordance with Dutch statutory employment law, including observance of the Dutch statutory notice period, (ii) by mutual agreement between the Company and the Executive, or (iii) by court order.

(b)Without limiting the foregoing Section 8(a), (i) the Executive may terminate his employment with the company at any time for Good Reason, or (ii) the Company may terminate his employment at any time for Cause.  “Good Reason” shall mean (i) the Company's failure to elect or reelect, or to appoint or reappoint, Executive to the office of Chief Executive Officer of the Company; (ii) material changes by the Company in the Executive's function, duties or responsibilities (including reporting responsibilities) of a scope less than that associated with the position of Chief Executive Officer of the Company; (iii) Executive's base salary is reduced by the Company below the highest base salary of Executive in effect during the Employment Period; (iv) relocation of Executive's principal place of employment to a place that is not within a radius of twenty (20) miles of either the Executives primary residence or Vaassen, The Netherlands; (v) failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company; (vi) material breach of this Agreement by the Company, which breach is not cured within five (5) days after written notice thereof is delivered to the Company; or (vii) the occurrence of a Change of Control (as defined in Section 18).  “Cause” shall mean (i) the Executive's willful, repeated or negligent failure to perform his duties hereunder and to comply with any reasonable or proper direction given by or on behalf of the Company's Board of Directors and the continuation of such failure following twenty (20) days written notice to such effect, (ii) the Executive being guilty of serious misconduct on the Company's premises or elsewhere, whether during the performance of his duties or not, which is reasonably likely to cause material damage to the reputation of the Company or render it materially more difficult for the Executive to satisfactorily continue to perform his duties and the continuation or a second instance of such serious misconduct following twenty (20) days written notice to such effect; (iii) the Executive being found guilty in a criminal court of any offense of a nature which is reasonably likely to materially adversely affect the reputation of the Company or to materially prejudice its interests if the Executive were to continue to be employed by the Company; (iv) the Executive's commission of any act of fraud or theft involving the Company or its business, or any intentional tort against the Company; or (v) the Executive's violation of any of the material terms, covenants, representations or warranties contained in this Agreement and failure to correct such violation within twenty (20) days after written notice by the Company.  Notwithstanding the foregoing, “Cause” shall only be deemed to exist if it is so determined by a resolution duly adopted by the Board of Directors of the Company, at a duly noticed meeting at which the Executive and his counsel are first given the opportunity to address the Board with respect to such determination. 

For purposes of Section 409A of the Code, Company and Executive agree that Executive will be treated as incurring a separation from service as of the date that both parties reasonably expect that Executive's level of continuing service to the Company will be reduced to a level that is 49 percent or less of Executive's level of services for the twelve-month period preceding Executive's separation from service. As of the Effective Date, Executive and Company believe that a level of services of 20 hours per week for Executive will satisfy this standard.

(c)    “Disability” shall mean that the Executive, in the good faith determination of the Board of Directors of the Company, based on the advice of a qualified physician after a proper examination of the Executive, is unable, without reasonable accommodation, to render services of the character contemplated hereby and therefore becomes incapacitated as defined in Section 7:629 of the Dutch Civil Code.  Termination resulting from Disability may only be effected after meeting the requirements of Dutch statutory employment law including giving proper written notice by the Company of its intention to terminate the Executive's employment.  Executive shall promptly comply with all instructions and directions issued by or on behalf of Company with respect to illness or incapacity.

(d)    “Termination Date” shall mean any of the following and which termination is a “separation of service” within the meaning of Section 409A of the Code: (i) if this Agreement is terminated on account of death, the date of death; (ii) if this Agreement is terminated for Disability, the date established by the Company in its notice given in accordance with Dutch statutory employment law pursuant to Section 8(c) hereof; (iii) if this Agreement is terminated by the Company by giving notice of termination pursuant to Section 8(a) hereof to the Executive, the date on which the notice taking effect; or (iv) if the Agreement is terminated by the Executive, the date the Executive ceases work..  Notwithstanding the foregoing, if within thirty (30) days after any notice of termination is given, the party receiving such notice notifies the other party that a dispute exists concerning the termination, the Termination Date shall be the date finally determined to be the Termination Date, either by mutual written agreement of the parties or by binding arbitration in the manner provided in Section 23 hereof; provided that the Termination Date shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence.  Notwithstanding the pendency of any such dispute, the Company will continue to pay the Executive his full compensation in effect when the notice giving rise to the dispute was given and continue the Executive as a participant in all compensation, benefit and insurance plans in which he was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved.  Amounts paid under this Section 8(d) shall be in addition to all other amounts due under this Agreement and shall not be offset against or reduce any amounts due under this Agreement; provided, however, that if the arbitrator determines that any notice of dispute by the Executive was not given in good faith or that the Executive did not pursue the resolution of such dispute with reasonable diligence, the Executive shall repay the Company the amount of compensation paid to the Executive pursuant to Section 8(d) from the Termination Date which would have applied had such notice of dispute not been given, plus interest thereon at the applicable federal rate provided for in Section 1274(d) of the Code, or any successor provision thereof, for an obligation with a term equal to the period from the date of payment to the date of repayment pursuant to this Section 8(d).  However, to the extent that the Executive receives an award through arbitration that includes compensation for a period that the dispute was pending, amounts paid pursuant to this Section 8(d) shall offset the amounts awarded for such period.

9.Severance:

(a)In order to prevent discussions about the extent of the severance payment due to loss of income or loss of pension after termination of the employment agreement, parties agree to a severance payment as set out below, which agreement is considered to be a settlement agreement as defined in article 7:900 of the Dutch Civil Code.

(b)If (i) the Company terminates the employment of the Executive against his will and without Cause within the Employment Period or (ii) the Executive terminates his employment for Good Reason within the Employment Period, the Executive shall be entitled to receive salary, Incentive Compensation and vacation accrued through the Termination Date, plus the following:  

(i)a cash lump sum in an amount equal to two years of Executive's base salary in effect on the Termination Date, less the prorated amount of compensation (such a salary etc.), if any, paid for the period from the effective date in the notice of termination to the earliest termination date permitted under this Agreement in accordance with Dutch statutory employment law;

(ii)a cash lump sum equal to the maximum amount of the Incentive Compensation which Executive could earn for the fiscal year in which the Termination Date occurs (the “Maximum Incentive Compensation”); and

(iii)full vesting of all outstanding stock options and restricted stock held by Executive.

The Company shall make the termination payment required hereunder within thirty (30) days of the Termination Date; provided, however, if such thirty (30) day period begins in one calendar year and ends in another calendar year, the Executive will not have the right to designate the calendar year of payment.  

Notwithstanding the foregoing, the Company shall not be required to pay any severance pay for any period following the Termination Date if the Executive violates the provisions of Section 15, Section 16 or Section 17 of this Agreement in any material respect, and fails to cure such violation within thirty (30) days after written notice from the Company to the Executive detailing such violation.  

For purposes of Section 409A of the Code, Company and Executive agree that Executive will be treated as incurring a separation from service as of the date that both parties reasonably expect that Executive's level of continuing service to the Company will be reduced to a level that is 49 percent or less of Executive's level of services for the twelve-month period preceding Executive's separation from service. As of the Effective Date, Executive and Company believe that a level of services of 20 hours per week for Executive will satisfy this standard.  

(a)    If (i) the Executive voluntarily terminates his employment other than for Good Reason, (ii) the Executive's employment is terminated due to death, or (iii) the Executive is terminated by the Company for Cause, then the Executive shall be entitled to receive his base salary and accrued vacation through the Termination Date only, less the prorated amount of compensation, if any, paid by the Company for the period from the effective date in the notice of termination to the earliest termination date permitted under this Agreement in accordance with Dutch statutory employment law.  In the event of death or Disability the Executive shall also be entitled to receive the Pro-Rated Incentive Compensation and full vesting of all outstanding stock options and restricted stock held by the Executive, subject to the same terms and conditions as provided in Section 9(b). 

(b)    If Executive, becomes incapacitated as defined in Section 8 of this Agreement or Section 7:629 of the Dutch Civil Code the Company shall pay Executive the base salary and accrued vacation through the date of such Disability and also continue to pay Executive 70% of the maximum daily social wage (“maximum dagloon”) for a maximum period of 52 weeks from the first day of incapacity.  Following said 52-week period, Company shall pay Executive 70% of the maximum daily social wage (“maximum dagloon”) for another maximum period of 52 weeks.  For example, if the maximum daily social wage is equal to €4,000 per month, the Company will pay Executive €2,800 per month for the period required under the Duct Civil Code.  This continued payment obligation, as imposed on Company under Section 7:629(1) of the Dutch Civil Code, shall apply only if and in so far as Company is not released from said obligation pursuant to the provisions laid down in Sections 7:629(3) to (7) and (9) of the Dutch Civil Code.  Executive shall promptly comply with all instructions and directions issued by or on behalf of Company with respect 

to illness or incapacity.  Executive shall not be entitled to any payment in excess of the statutory obligations under Section 7:629 of the Dutch Civil Code if the incapacity is the result of Executive's own fault or negligence.

(c)The Executive acknowledges that, upon termination of his employment, he is entitled to no other compensation, severance or other benefits other than those specifically set forth in this Agreement or any applicable Stock Option Agreement, or pursuant to any Applicable Benefit Plan.

(d)All payments to be made to the Executive to the extent such payments are subject to Section 409A, upon a termination of employment may only be made upon a “separation from service” (within the meaning of Section 409A) of the Executive.  For purposes of Section 409A, (i) each payment made under this Agreement shall be treated as a separate payment; (ii) the Executive may not, directly or indirectly, designate the calendar year of payment; and (iii) no acceleration of the time and form of payment of any nonqualified deferred compensation to the Executive or any portion thereof, shall be permitted.

(e)Notwithstanding anything contained in this Agreement to the contrary, if at the time of the Executive's “separation from service” (as defined in Section 409A of the Code) the Executive is a “specified employee” (within the meaning of Section 409A and the Company's specified employee identification policy) and if any payment, reimbursement and/or in-kind benefit that constitutes nonqualified deferred compensation (within the meaning of Section 409A) is deemed to be triggered by the Executive's separation from service, then, to the extent one or more exceptions to Section 409A are inapplicable (including, without limitation, the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) relating to separation pay due to an involuntary separation from service and its requirement that installments must be paid no later than the last day of the second taxable year following the taxable year in which such an employee incurs the involuntary separation from service), all payments, reimbursements, and in-kind benefits that constitute nonqualified deferred compensation (within the meaning of Section 409A) to the Executive shall not be paid or provided to the Executive during the six-month period following the Executive's separation from service, and (i) such postponed payment and/or reimbursement/in-kind amounts shall be paid to the Executive in a lump sum within thirty (30) days after the date that is six (6) months following the Executive's separation from service; (ii) any amounts payable to the Executive after the expiration of such six- (6-) month period shall continue to be paid to the Executive in accordance with the terms of this Agreement; and (iii) to the extent that any group hospitalization plan, health care plan, dental care plan, life or other insurance or death benefit plan, and any other present or future similar group executive benefit plan or program or any lump sum cash out thereof is nonqualified deferred compensation (within the meaning of Section 409A), the Executive shall pay for such benefits from his Termination Date until the first day of the seventh month following the month of the Executive's separation from service, at which time the Company shall reimburse the Executive for such payments.  If the Executive dies during such six (6) month period and prior to the payment of such postponed amounts of nonqualified deferred compensation, only the amount of nonqualified deferred compensation equal to the number of whole months that the Executive lived shall be paid in a lump sum to the Executive's estate or, if applicable, to the Executive's designated beneficiary within thirty (30) days after the date of the Executive's death.  

10.Expenses; Reimbursements and In-Kind Benefits.  The Company shall pay or reimburse the Executive for all expenses normally reimbursed by Company, reasonably incurred by him in furtherance of his duties hereunder and authorized and approved by the Company in compliance with such rules relating thereto as the Company may, from time to time, adopt and as may be required in order to permit such payments as proper deductions to Company under the Code, and the rules and regulations adopted pursuant thereto now or hereafter in effect.
Notwithstanding any other provision of the applicable plans and programs, all reimbursements and in-kind 

benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A, including, where applicable, the requirement that (i) the amount of expenses eligible for reimbursement and the provision of benefits in kind during a calendar year shall not affect the expenses eligible for reimbursement or the provision of in-kind benefits in any other calendar year; (ii) the reimbursement for an eligible expense will be made on or before the last day of the calendar year following the calendar year in which the expense is incurred; (iii) the right to reimbursement or right to in-kind benefit is not subject to liquidation or exchange for another benefit; and (iv) each reimbursement payment or provision of in-kind benefit shall be one of a series of separate payments (and each shall be construed as a separate identified payment) for purposes of Section 409A of the Code. 

11.Unless the tax authorities or any of the applicable tax rules require otherwise, the amounts referred to in Section 10 shall be paid without payroll tax deductions. Executive shall, on request, fully cooperate with all investigations carried out, whether or not ordered by the tax authorities, into the acceptability of the reimbursements and allowances concerned.

All payments referred to in Section 10 shall be disbursed with due observance of the applicable tax legislation and net of all amounts which Company is required to withhold. Should the tax inspector decide at any time that Company must withhold, or ought to have withheld, payroll taxes from any of the payments concerned, the amounts to be withheld will be deducted at Executive's expense. As of the time of any such decision, the payments concerned will be reduced to the level at which no taxes need be withheld. Company shall not be liable to compensate Executive in any way for any financial loss incurred in this connection.
12.Facilities and Services.  The Executive will be furnished with office space, secretarial and support staff and such other facilities and services as shall be reasonably necessary for the performance of his duties under this Agreement.

13.Mitigation Not Required.  In the event this Agreement is terminated, the Executive shall not be required to mitigate amounts payable pursuant hereto by seeking other employment or otherwise.  The Executive's acceptance of any such other employment shall not diminish or impair the amounts payable to the Executive pursuant hereto.

14.Place of Performance.  The Executive shall perform his duties primarily in Vaassen and Arnhem in The Netherlands, or locations within a reasonable proximity thereof, except for reasonable travel as the performance of the Executive's duties may require, including periodic travel to the corporate offices in Tempe, Arizona.

15.Insurance and Indemnity.  During the Employment Period, if available at reasonable costs, the Company shall maintain, at its expense, officers and directors fiduciary liability insurance covering the Executive and all other executive officers and directors in an amount of no less than $1,000,000.  The Company shall also indemnify the Executive, to the fullest extent permitted by law, from any liability asserted against or incurred by the Executive by reason of the fact that the Executive is or was an officer or director of the Company or any affiliate or related party or is or was serving in any capacity at the request of the Company for any other corporation, partnership, joint venture, trust, employment benefit plan or other enterprise.  This indemnity shall survive termination of this Agreement.

16.Noncompetition.

(a)The Executive agrees that, except in accordance with his duties under this Agreement on behalf of the Company, he will not during the term of this Agreement:

Participate in, be employed in any capacity by, serve as director, consultant, agent or representative for, or have any interest, directly or indirectly, in any enterprise which is engaged in the business of distributing, selling or otherwise trading in products or services which are competitive to any products or services distributed, sold or otherwise traded in by the Company or any of its subsidiaries during the term of the Executive's employment with the Company, or which are competitive to any products or services being actively developed, with the bona fide intent to market same, by the Company or any of its subsidiaries during the term of the Executive's employment with the Company;
In addition, the Executive agrees that for a period of two years after the end of the term of this Agreement (unless the Company breaches this Agreement by failing to pay to the Executive all sums due him under the terms hereof, in which event the following provisions of this Section 15.A shall be inapplicable), the Executive shall observe the covenants set forth in this Section 15 and shall not own, either directly or indirectly or through or in conjunction with one or more members of his or his spouse's family or through any trust or other contractual arrangement, a greater than five percent (5%) interest in, or otherwise control either directly or indirectly, any partnership, corporation, or other entity which distributes, sells, or otherwise trades in products which are competitive to any products or services being developed, distributed, sold, or otherwise traded in by the Company or any of its subsidiaries, during the term of this Agreement, or being actively developed by the Company or any of its subsidiaries during the term of this Agreement with the Company with a bona fide intent to market same.  Executive further agrees, for such two-year period following termination, to refrain from directly or indirectly soliciting Company's vendors, customers or employees, except that the Executive may solicit the Company's vendors or customers in connection with a business that does not compete with the Company or any of its subsidiaries.
(b)The Executive hereby agrees that damages and any other remedy available at law would be inadequate to redress or remedy any loss or damage suffered by the Company upon any breach of the terms of this Section 15 by the Executive, and the Executive therefore agrees that the Company, in addition to recovering on any claim for damages or obtaining any other remedy available at law, also may enforce the terms of this section 15 by injunction or specific performance, and may obtain any other appropriate remedy available in equity.

17.    Assignment of Patents.  Executive shall disclose fully to the Company any and all discoveries and any and all ideas, concepts or inventions relating to the Company's business as described in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission) which he shall conceive or make during his period of employment, or during the period of six months after his employment shall terminate, which are in whole or in part the result of his work with the Company.  Such disclosure is to be made promptly after each such discovery or conception, and each such discovery, idea, concept or invention will become and remain the property of the Company, whether or not patent applications are filed thereon.  Upon request and at the expense of the Company, the Executive shall make application through the patent solicitors of the Company for letters patent of the United States and any and all other countries at the discretion of the Company on such discoveries, ideas and inventions, and to assign all such applications to the Company, or at its order, forthwith, without additional payment by the Company during his period of employment and for reasonable compensation for time actually spent by the Executive at such work at the request of the Company after the termination of the employment.  Executive shall give the Company, its attorneys and solicitors, all reasonable assistance in preparing and prosecuting such applications and, on request of the Company, execute all papers and do all things that may be reasonably necessary to protect the right of the Company and vest in it or its assigns the discoveries, ideas or inventions, applications and letters patent herein contemplated.  Said cooperation shall also include all actions reasonably necessary to aid the Company in the defense of its rights in the event of litigation.

18.Trade Secrets.

(a)In the course of the term of this Agreement, it is anticipated that the Executive shall have access to secret or confidential technical and commercial information, records, data, specifications, systems, methods, plans, policies, inventions, material and other knowledge (“Confidential Material”) owned by the Company and its subsidiaries.  The Executive recognizes and acknowledges that included within the Confidential Material are the Company's confidential commercial information, technology, methods of manufacture, designs, and any computer programs, source codes, object codes, executable codes and related materials, all as they may exist from time to time, and that they are valuable special and unique aspects of the Company's business.  All such Confidential material shall be and remain the property of the Company.  Except as required by his duties to the Company, the Executive shall not, directly or indirectly, either during the term of his employment or at any time thereafter, disclose or disseminate to anyone or make use of, for any purpose whatsoever, any Confidential Material.  Upon termination of his employment, the Executive shall promptly deliver to the Company all Confidential Material (including all copies thereof, whether prepared by the Executive or others) which are in the possession or under the control of the Executive.  The Executive shall not be deemed to have breached this Section 17 if the Executive shall be specifically compelled by lawful order of any judicial, legislative, or administrative authority or body to disclose any Confidential Material or else face civil or criminal penalty or sanction.

(b)The Executive hereby agrees that damages and any other remedy available at law would be inadequate to redress or remedy any loss or damage suffered by the Company upon any breach of the terms of this Section 17 by the Executive, and the Executive therefore agrees that the Company, in addition to recovering on any claim for damages or obtaining any other remedy available at law, also may enforce the terms of this Section 17 by injunction or specific performance, and may obtain any other appropriate remedy available in equity.

19.Provisions After Change of Control.

(a)In order to prevent discussions about the extent of the severance payment due to loss of income or loss of pension after termination of the employment agreement in the situation as described below, parties agree to a payment as set out below, which agreement is considered to be a settlement agreement as defined in article 7:900 of the Dutch Civil Code.

(b)In the event Executive's employment with the Company is terminated (other than as a consequence of death or Disability) either (x) by the Company for any reason other than for Cause during a Pending Change of Control (as hereinafter defined) or within one year following the occurrence of a Change of Control, or (y) by Executive for Good Reason within one year following the occurrence of a Change of Control, then Executive shall be entitled to receive from the Company, in lieu of the severance payment otherwise payable pursuant to Section 9(b), the following:

(i)a cash lump sum equal to three years of Executive's base salary in effect on the Termination Date, less the prorated amount of compensation (salary etc.), if any, paid for the period from the effective date in the notice of termination to the earliest termination date permitted under this Agreement in accordance with Dutch statutory employment law;

(ii)the Maximum Incentive Compensation; and 

(iii)full vesting of all outstanding stock options and restricted stock held by Executive.

The Company shall make the termination payments required hereunder within thirty (30) days of the Termination Date; provided, however, if such thirty (30) day period begins in one calendar year and ends in another calendar year, Executive will not have the right to designate the calendar year of payment.
(c)For purposes of this Agreement, the term “Change of Control” shall mean:

(i)    The acquisition, other than from the Company, by any individual, entity or group (within the meaning of Rule 13d-3 promulgated under the Exchange Act or any successor provision) (any of the foregoing described in this Section 18 (b)(i) hereafter a “Person”) of 20% or more of either (a) the then outstanding shares of Capital Stock of the Company (the “Outstanding Capital Stock”) or (b) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Voting Securities”), provided, however, that any acquisition by (x) the Company or any of its subsidiaries, or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (y) any Person that is eligible, pursuant to Rule 13d-1 (b) under the Exchange Act, to file a statement on Schedule 13G with respect to its beneficial ownership of Voting Securities, whether or not such Person shall have filed a statement on Schedule 13G, unless such Person shall have filed a statement on Schedule 13D with respect to beneficial ownership of 35% or more of the Voting Securities or (z) any corporation with respect to which, following such acquisition, more than 60% respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Capital Stock and Voting Securities immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the Outstanding Capital Stock and Voting Securities, as the case may be, shall not constitute a Change of Control; or

(ii)    Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to the date hereof whose election or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A, or any successor section, promulgated under the Exchange Act); or

(iii)    Approval by the shareholders of the Company of a reorganization, merger or consolidation (a “Business Combination”), in each case, with respect to which all or substantially all holders of the Outstanding Capital Stock and Voting Securities immediately prior to such Business Combination do not, following such Business Combination, beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from the Business Combination; or

(iv)    (a) a complete liquidation or dissolution of the Company or (b) a sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to 

which, following such sale or disposition, more than 60% of respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors is then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Capital Stock and Voting Securities immediately prior to such sale or disposition in substantially the same proportion as their ownership of the Outstanding Capital Stock and Voting Securities, as the case may be, immediately prior to such sale or disposition.

(v)    The first purchase under a tender offer or exchange offer for 20% or more of the outstanding shares of stock (or securities convertible into stock) of the Company, other than an offer by the Company or any of its subsidiaries or any employee benefit plan sponsored by the Company or any of its subsidiaries.

(d)    For purposes of this Agreement, the term “Pending Change of Control” shall mean the occurrence of one of the following events as the result of which a Change in Control pursuant thereto is reasonably expected within ninety (90) days after the date of determination as to whether there is a Pending Change in Control: (i) the Company executes a letter of intent, term sheet or similar instrument with respect to a transaction or series of transactions, the consummation of which would result in a Change of Control; (ii) the Board approves a transaction or series of transactions, the consummation of which would result in a   Change of Control; (iii) a Person makes a public announcement of a tender offer for the Common Stock of the Company, the consummation of which would result in a Change of Control; or (iv) a Person makes a public announcement of, or makes a public filing with respect to, the intention of that Person to seek to change the membership of the Board of Directors of the Company in a manner that would result in a Change of Control.  A Pending Change of Control shall cease to exist upon a Change of Control.

20.Notices.  Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and if sent by registered or certified mail, return receipt requested to his residence in the case of the Executive, or to its principal office in the case of the Company, or to such other addresses as they may respectively designate in writing.

21.Entire Agreement; Waiver.  This employment agreement constitutes the entire agreement made between the parties and supersedes any and all previous understandings and commitments agreed between the Executive and the Company or any of its affiliates or corporate bodies, including the Executive's Change in Control Severance Agreement and the preceding employment agreement of the Executive with Tempress Holding B.V. or Tempress Group Holding B.V., and may not be changed orally but only by an agreement in writing, signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.  Waiver of or failure to exercise any rights provided by this Agreement in any respect shall not be deemed a waiver of any further or future rights.

22.Binding Effect; Assignment.  The rights and obligations of this Agreement shall bind and inure to the benefit of any successor of the Company by reorganization, merger or consolidation, or any assignee of all or substantially all of the Company's business or properties.  The Executive's rights hereunder are personal to and shall not be transferable nor assignable by the Executive.

23.Headings.  The headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

24.Governing Law; Arbitration.  Dutch statutory employment laws and regulations will apply with regard to termination, restrictions regarding termination resulting from Disability and to such other 

matters required by the Dutch statutory employment laws.  In all other regards, this Agreement shall be construed in accordance with and governed for all purposes by the laws and public policy of the State of Arizona applicable to contracts executed and to be wholly performed within such state.  The Company and Executive agree to make a good faith effort to settle any disputes by mutual agreement. Any dispute or controversy arising out of or relating to this Agreement not so resolved shall be settled by arbitration in accordance with the rules of the American Arbitration Association and judgment upon the award may be entered in any court having jurisdiction thereover.  The arbitration shall be held in Maricopa County or in such other place as the parties hereto may agree.

25.    Further Assurances.  Each of the parties agrees to execute, acknowledge, deliver and perform, and cause to be executed, acknowledged, delivered and performed, at any time and from time to time, all such further acts, deeds, assignments, transfers, conveyances, powers of  

26.attorney and/or assurances as may be necessary or proper to carry out the provisions or intent of this Agreement.

27.Severability.  The parties agree that if any one or more of the terms, provisions, covenants or restrictions of this Agreement shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

28.Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

IN WITNESS WHEREOF, AMTECH SYSTEMS, INC. has caused by instrument to be signed by a duly authorized officer and the Executive has hereunto set his hand the day and year first above written.

AMTECH SYSTEMS, INC.

By /s/Bradley C. Anderson                /s/Fokko Pentinga            
     Bradley C. Anderson                                             Fokko Pentinga, Executive
      Executive Vice President and 
         Chief Financial Officerex4_1.htm

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of July 6, 2012, between Pressure BioSciences, Inc., a Massachusetts corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS, the Company has determined that it is in its best interests to obtain equity financing through the issuance and sale of units (the “Units”), each comprised of (i) one share of Preferred Stock (as defined below) and (ii) a warrant to purchase five shares of Common Stock (as defined below); and

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, the number of Units set forth on such Purchaser’s signature page hereto, 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 each Purchaser agree as follows:

 

ARTICLE I.

 

DEFINITIONS

 

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

 

“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 144 under the Securities Act.

 

“Articles of Amendment” means the Articles of Amendment to the Company’s Restated Articles of Organization, as amended, in the form of Exhibit A attached hereto, that includes a Certificate of Designation setting forth the rights, preferences, powers, privileges, restrictions, qualifications and limitations of the Preferred Stock.

 

“Business Day” means any day except Saturday, Sunday, any day which shall be 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.

 

“Closing” and “Closings” means each of the closings of the purchase and sale of the Units pursuant to Section 2.2.  In the event there is more than one closing, the term “Closing” shall apply to each such closing unless otherwise specified.

 

“Closing Date” means the date on which the Company closes the purchase and sale of the Units.  In the event there is more than one Closing, the term “Closing Date” shall apply to each such Closing unless otherwise specified.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $.01 per share, and any other class of securities into which such securities may hereafter be reclassified or changed into.

 

“Common Stock Equivalents” means any securities of the Company or its Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants, stock appreciation rights, restricted stock units, or other instrument that are at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“Company Counsel” means Pepper Hamilton LLP, with offices located at 125 High Street, 19th Floor, High Street Tower, Boston, Massachusetts, 02110.

 

“Conversion Shares” means such shares of Common Stock which, from time to time, have been issued, or may be issuable, upon conversion of the Preferred Stock.

 

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.

 

“Effectiveness Date” has the meaning set forth in the Registration Rights Agreement.

 

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

 

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

 

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

 

 “Per Unit Purchase Price” means an amount equal to the greater of (a) (i) $5.00 and (b) (i) ten (10) times the VWAP of the Common Stock for the five trading days as reported by the Trading Market on the Trading Day immediately preceding the Closing Date with respect to which the particular Units are being purchased.

 

“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 the Series G Convertible Preferred Stock of the Company, $.01 par value, issued or issuable to each Purchaser pursuant to this Agreement with such rights, preferences, powers, privileges, restrictions, qualifications and limitations as are set forth in the Certificate of Designation included in the Articles of Amendment.

 

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

 

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

 

“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Conversion Shares and Warrant Shares under the circumstances and conditions set forth in the Registration Rights Agreement.

 

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

 

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

 

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

 

“Securities” means, as the context requires, the Preferred Stock, the Warrants, the Conversion Shares, the Warrant Shares, and any combination of the foregoing or all of the foregoing.

 

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

 

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for Units purchased hereunder as specified on such Purchaser’s signature page to this Agreement next to the heading “Subscription Amount,” payable in United States dollars and in immediately available funds, or at the sole election of the Company, through conversion of outstanding indebtedness of the Company to the Purchaser.

 

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof.  For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control any managing member or general partner of such limited liability company, partnership, association or other business entity.

 

“Trading Day” means a day on which the Common Stock is traded on a Trading Market.

 

“Trading Market” means the OTC QB Market or if the OTC QB Market is not the primary market on which the Common Stock is then traded, such other primary market or exchange on which the Common Stock is listed or quoted for trading on the date in question.

 

“Transaction Documents” means this Agreement, the Registration Rights Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer Agent” means Computershare Trust Company, with a mailing address of 350 Indiana Street, Suite 800, Golden, Colorado 80401 and a telephone number of (303) 262-0600.

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a)  if the OTC QB Market is the Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC QB Market, (b) if the Common Stock is then listed or quoted on a Trading Market other than the OTC QB Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on such Trading Market as reported by Bloomberg Financial L.P. or if not reported by Bloomberg Financial L.P., as reported by other nationally-recognized business news service, (c) if the Common Stock is not then listed or quoted for trading on a Trading Market and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

“Warrants” means the warrants to purchase Common Stock issued to the Purchasers pursuant to this Agreement, which warrants shall be in the form of Exhibit C attached hereto.

 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

ARTICLE II.

 

PURCHASE AND SALE

 

2.1 [Reserved]

 

2.2 Articles of Amendment.  On or before the initial Closing, the Company shall adopt and file with the Secretary of the Commonwealth of Massachusetts the Articles of Amendment.

 

2.3 Closing.

 

(a) Upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and each Purchaser, severally and not jointly, agrees to purchase, at the Per Unit Purchase Price, that number of Units set forth below such Purchaser’s name on such Purchaser’s signature page to this Agreement (calculated by dividing such Purchaser’s Subscription Amount by the Per Unit Purchase Price).  At or prior to the Closing, each Purchaser shall deliver to the Company its Subscription Amount for the Units being purchased by such Purchaser at the Closing and the Company shall record in the name of each Purchaser its respective shares of Preferred Stock comprising such Units and shall deliver to each Purchaser its respective Warrants comprising such Units, and the Company and each Purchaser shall deliver the other items set forth in Section (b) deliverable at the Closing.  Upon satisfaction of the conditions set forth in Section (b) and Section 2.5, the Closing shall occur at the offices of the Company Counsel, remotely via the exchange of documents and signatures or at such other location or by such other means as the parties shall mutually agree.

 

(b) The initial Closing of the purchase and sale of the Units in the aggregate amount of $600,000 shall take place on the date hereof.  After the initial Closing and from time to time until August 31, 2012, the Company may sell, on the same terms and conditions as those contained in this Agreement, an amount of Units, together with Units sold in all prior Closings, having an aggregate purchase price of up to $1,200,000, with the Per Unit Purchase Price being determined on the basis of such subsequent Closing Date.

 

2.4 Closing Deliveries.

 

(a) On or prior to the Closing (except as otherwise required below), the Company shall deliver or cause to be delivered to each Purchaser purchasing Units at such Closing the following:

 

	
(i)  

	
this Agreement duly executed by the Company;

 

	
(ii)  

	
in the discretion of the Company, either (A) a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver, on an expedited basis, a certificate evidencing the number of shares of Preferred Stock contained in such Purchaser’s Units, or (B) a certificate evidencing the number of shares of Preferred Stock contained in such Purchaser’s Units, (in each case determined by dividing such Purchaser’s Subscription Amount by the Per Unit Purchase Price), and in each case registered in the name of such Purchaser;

 

	
(iii)  

	
a Warrant, registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 50% of such Purchaser’s Subscription Amount divided by $5.00, with an exercise price equal to (i) $0.50, in the case of Purchasers who purchase Units in the initial Closing, or (ii) $0.60, in the case of Purchasers who purchase Units in subsequent Closings, subject to adjustment therein (such Warrant certificate shall be delivered within three Trading Days of the Closing Date);

 

	
(iv)  

	
the Registration Rights Agreement duly executed by the Company; and

 

	
(v)  

	
any necessary documents or instruments to be delivered by the Company to the Purchaser to reflect any reductions in the exercise price of warrants held by the Purchaser which is subject to adjustment pursuant to Section 4.7 hereof.

 

(b) On or prior to the Closing, each Purchaser purchasing Units at such Closing shall deliver or cause to be delivered to the Company the following:

 

	
(i)  

	
this Agreement duly executed by such Purchaser;

 

	
(ii)  

	
such Purchaser’s Subscription Amount by wire transfer or check to the account as specified by the Company ;

 

	
(iii)  

	
the Registration Rights Agreement duly executed by such Purchaser;

 

	
(iv)  

	
if the Purchaser is a U.S. citizen, resident for U.S. federal income tax purposes, or otherwise subject to U.S. federal income tax, an IRS Form W-9 completed with respect to such Purchaser in accordance with the instructions accompanying such form; and

 

	
(v)  

	
any necessary documents or instruments required to be delivered by the Purchaser to the Company to reflect any reductions in the exercise price of warrants held by the Purchaser which are subject to adjustment pursuant to Section 4.7 hereof.

 

2.5       Closing Conditions.

 

(a) The obligations of the Company hereunder in connection with the sale of Units to each Purchaser at 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 such Purchaser contained herein;

 

(ii) all obligations, covenants and agreements of such 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 2.4(b) of this Agreement.

 

(b) The respective obligations of each 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 (as if made on the Closing Date) of the representations and warranties of the Company contained herein (except that the representations and warranties of the Company contained herein that are qualified by materiality or Material Adverse Effect shall be true and correct in all respects when made and on the Closing Date (as if made on the Closing Date));

 

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

 

(iii) the delivery by the Company of the items set forth in Section 2.4(a) of this Agreement.

 

ARTICLE III.

 

REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company.  Except as set forth in the Disclosure Schedules or disclosed in the SEC Reports, which Disclosure Schedules shall be deemed a part hereof and shall qualify the representations made herein, the Company hereby makes the following representations and warranties to each Purchaser:

 

(a) Subsidiaries.  All of the direct and indirect Subsidiaries of the Company are set forth on Schedule 3.1(a).  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.

 

(b) Organization and Qualification.  Each of the Company and its 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 (as applicable), 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 or 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 its 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, would not, individually or in the aggregate, 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, or condition (financial or otherwise) of the Company and its 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”).

 

(c) Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in connection therewith other than the Required Approvals.  Each Transaction Document 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 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 of the Transaction Documents by the Company, the issuance and sale of the Units, and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Company  Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (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 such 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 such Subsidiary is a party or by which any property or asset of the Company or any such 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 Company Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or such a Subsidiary is bound or affected, except in the case of each of clauses (ii) and (iii), such as would not, individually or in the aggregate, 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 filing of the Articles of Amendment with, and the acceptance of such filing by, the Secretary of the Commonwealth of Massachusetts, (ii) filings required pursuant to Section 4.3 of this Agreement, (iii) the filing with, and the declaration of effectiveness by, the Commission of the Registration Statement, (iv) application(s) and notification(s) to each applicable Trading Market for the listing of the Common Stock for trading thereon in the time and manner required thereby, (v) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws and (vi) those set forth on Schedule 3.1(g) hereof (collectively, the “Required Approvals”)..

 

(f) Issuance of Units.  The shares of Preferred Stock constituting a part of the Units 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, applicable federal and state securities laws and Liens created by or imposed by a Purchaser.  The Warrants have been duly authorized and constitute the binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.  The Conversion Shares and the Warrant Shares have in each case been duly reserved for issuance, and upon issuance in accordance with the terms of the Company’s Restated Articles of Organization, as amended, and the terms of the Warrants, as applicable, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under the Transaction Documents, applicable federal and state securities laws and Liens created by or imposed by a Purchaser.

 

(g) Capitalization.  The number of shares and type of all authorized, issued and outstanding capital stock of the Company as of June 20, 2012 is set forth on Schedule 3.1(g).  Since such date, the Company has not issued any capital stock other than pursuant to (i) this Agreement, the conversion of any Preferred Stock, or the exercise of any Warrants, (ii) the exercise of employee stock options under the Company’s stock option plans, if any, (iii) the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plan, if any, and (iv) the conversion or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act.  Except as set forth on Schedule 3.1(g), 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 set forth on Schedule 3.1(g), or as a result of the purchase and sale of the Units pursuant to the terms of this Agreement, 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.  Except as set forth on Schedule 3.1(g) or as set forth in Section 4.7 hereof, the issuance and sale of the Units will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) 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.

 

(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, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in 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 and absence of footnotes thereto.

 

(i) Material Changes; Undisclosed Events, Liabilities or Developments.  Except as set forth on Schedule 3.1(i), since the date of the latest Annual Report on Form 10-K or, if filed subsequent to the latest Annual Report on Form 10-K, the latest Quarterly Report on Form 10-Q or Current Report on Form 8-K, filed by the Company 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, and (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 other than dividends paid to holders of the Company’s Series E Convertible Preferred Stock, $.01 par value, as provided in the Company’s Amended and Restated Articles of Organization, as amended.

 

(j) Certain Fees.  No brokerage or finder’s fees or commissions are or will be payable by the Company 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.

 

(k) Listing and Maintenance Requirements.  The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.  Assuming the sale of Units having an aggregate purchase price of at least $1,200,000, the Company will be, and the Company will have no reason to believe that it will not in the foreseeable future continue to be, in compliance with all the listing and maintenance requirements of the Trading Market.

 

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

 

(m) Disclosure.  All disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, with respect to the representations and warranties made herein are true and correct with respect to such representations and warranties and do 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.

 

3.2 Representations and Warranties of Each Purchaser.  Each Purchaser, for itself, himself or herself and for no other Purchaser, hereby represents and warrants as follows:

 

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

 

(b) Own Account.  Such Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state or other 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 or other securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state or other securities law, and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws) in violation of the Securities Act or any applicable state or other securities law.

 

(c) Purchaser Status.  At the time such Purchaser was offered the Securities such Purchaser was, on the date hereof it is, and on the applicable Closing Date it will be, an “accredited investor” as defined in Rule 501(a) under the Securities Act.

 

(d) Experience of Such Purchaser.  Such Purchaser, either alone or together with such Purchaser’s 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.  Such 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.

 

(e) General Solicitation.  Such 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.

 

(f) Provision of Information. Such Purchaser 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 Securities and the finances, operations and business of the Company; and (ii) the opportunity to request such additional information which the Company possesses or can acquire without unreasonable effort or expense.  All of such Purchaser’s questions have been answered to its satisfaction and such Purchaser has received all of such requested additional information.

 

(g) Certain Fees.  No brokerage or finder’s fees or commissions are or will be payable by such Purchaser 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.

 

(h) Residency.  The residence or principal place of business of such Purchaser is set forth on such Purchaser’s signature page to this Agreement, and all communications between such Purchaser and the Company regarding the transactions contemplated by this Agreement took place within or from the state of such residence or principal place of business.

 

(i) Acknowledgement.  Such Purchaser acknowledges that the Company has relied upon the representations and warranties of such Purchaser set forth in this Section 3.2 in its determination that no registration under the Securities Act is required for the offer and sale of the Securities by the Company to such Purchaser as contemplated by this Agreement.

 

(j) Transactions in Common Stock.

 

(i) Each Purchaser represents, warrants and covenants that, at no time in the thirty (30) days preceding the date hereof and through the date of any Closing in which such Purchaser participates, such Purchaser and, to the Purchaser’s knowledge, its Affiliates have not engaged in, directed or otherwise participated in, and shall not engage in, direct or otherwise participate in, any transactions, whether directly or indirectly through or with another Person, involving securities of the Company (including without limitation the Common Stock) to maintain or otherwise affect, or that are intended to maintain or otherwise affect, the trading price of the Common Stock.

 

(ii) Each Purchaser represents, warrants and covenants that, at no time in the thirty (30) days preceding the date hereof and through the date of any Closing in which such Purchaser participates, such Purchaser and, to such Purchaser’s knowledge, its Affiliates have not engaged, and shall not engage, in any short-selling of Common Stock, and that such Purchaser shall not use any of the Securities acquired pursuant to this Agreement to cover any short position in the Common Stock if doing so would be in violation of any applicable federal or state securities laws.  For the six (6) months following the Closing, such Purchaser shall not, and shall cause it Affiliates not to, engage in any short selling of Common Stock.

 

(iii) Each Purchaser shall indemnify the Company for any and all losses, damages, costs and expenses (including attorneys’ fees) that the Company may incur as a result of any breach by the Purchaser of this Section 3.2(j).

 

ARTICLE IV.

 

OTHER AGREEMENTS OF THE PARTIES

 

4.1 Transfer Restrictions.

 

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

 

(b) Certificates evidencing any Securities will contain the following legend or such other legend as may be reasonably appropriate under the Securities Act so long as is required by this Section 4.1:

 

THE OFFER AND SALE OF THIS SECURITY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, SUCH SECURITY 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.

 

(c) If the Purchaser or other holder of the Securities is not an Affiliate of the Company, certificates evidencing the Securities shall not contain any legend (including the legend set forth in Section 4.1(b), (i) while a registration statement (including the Registration Statement) covering the resale of such Security is effective under the Securities Act, (ii) following any sale of such Securities pursuant to Rule 144, (iii) if such Securities are eligible for sale under Rule 144 without volume limitations, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission).  The Company agrees that at such time as such legend is no longer required with respect to Securities under this Section 4.1(c), it will, no later than five Trading Days following the delivery by a Purchaser to the Transfer Agent of a certificate representing such Securities, cause to be delivered to such Purchaser a certificate representing such Securities that is free from all restrictive and other legends.  The Company may not make any notation on its records or give instructions to any Transfer Agent that enlarge the restrictions on transfer set forth in this Section.  Certificates for Securities subject to legend removal hereunder may be transmitted by the Transfer Agent to the applicable Purchaser by crediting the account of such Purchaser’s prime broker with the Depository Trust Company System through its Deposit Withdrawal Agent Commission system if the Company is a participant in such system, and otherwise by the Company or by the Transfer Agent by physical delivery to such Purchaser as provided in the notice section of this Agreement.

4.2 Furnishing of Information.  As long as any Purchaser owns Securities and the Company remains subject to the requirements of the Exchange Act, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act.  As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Securities under Rule 144, and will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act within the requirements of the exemption provided by Rule 144.

 

4.3 Securities Laws Disclosure; Publicity.  Promptly following the Closing and in accordance with federal securities laws and regulations, the Company shall file a Current Report on Form 8-K, disclosing the material terms of the transactions contemplated hereby and filing the Transaction Documents as exhibits thereto.  The Company intends to and may issue press releases with respect to the transactions contemplated hereby without the prior consent of each Purchaser.  Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (i) as required by federal securities law in connection with (A) any registration statement contemplated by the Registration Rights Agreement, (B) the Current Report on Form 8-K required by this Section 4.3, (C) any filing required by the Commission, (D) any filing required by state securities laws and regulations as set forth in Section 4.5, and (E) the filing of final Transaction Documents (including signature pages thereto) with the Commission and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (ii).  No Purchaser shall issue any press release or otherwise make any public statement with respect to the transactions contemplated hereby without the prior consent of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the Purchaser shall promptly provide the Company with prior notice of such public statement or communication.

 

4.4 Use of Proceeds.  The Company shall use the net proceeds from the sale of the Securities hereunder for general corporate working capital and corporate purposes, including, but not limited to accrued expenses, sales and marketing expenses, general and administrative expenses, applications and product development expenses and the expenses of the transaction contemplated by the Transaction Documents.

 

4.5 Form D; Blue Sky Filings.  The Company shall timely file a Form D with respect to the Securities as required under Regulation D under the Securities Act and shall provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers 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 any Purchaser.  Each Purchaser shall take all commercially reasonable actions that are reasonably requested by the Company related to, or to effectuate, the filing of a Form D or any filing required pursuant to the “Blue Sky” laws of the states of the United States which, for purposes of clarity, shall not include the payment of any fees by such Purchaser.

 

4.6 Reservation of Common Stock. The Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue the Conversion Shares pursuant to the conversion of the Preferred Stock, and the Warrant Shares pursuant to any exercise of the Warrants.

 

4.7 Adjustment to Warrant Exercise Prices.  For each share of Preferred Stock purchased by a Purchaser pursuant to this Agreement, the exercise price of certain warrants to purchase Securities of the Company held of record by such Purchaser shall be reduced as set forth more specifically in Exhibit D hereto.  The Company and Purchaser agree to execute and deliver such documents and instruments as are necessary to effectuate the reduction in the exercise price of such warrants.  All other terms of such warrants shall survive and continue under their existing terms.

 

ARTICLE V.

 

MISCELLANEOUS

 

5.1 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 Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

 

5.2 Entire Agreement.  The Transaction Documents (including the confidentiality agreements by and between the Company and any one or more of the Purchasers) 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.

 

5.3 Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or e-mail at the facsimile number or e-mail address set forth on the signature pages attached hereto 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 or e-mail at the facsimile number or e-mail address 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 Trading Day following the date of mailing, if sent by internationally recognized overnight courier service for next business day delivery, 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.

 

5.4 Amendments; Waivers.  No provision of this Agreement may be waived, amended, modified or terminated except in a written instrument signed, by the Company, and by Purchasers holding a majority of the shares of Preferred Stock Purchased as part of the Units (the “Majority Purchasers”), provided such waiver, amendment, modification, termination or waiver applies equally and proportionately to all of the Purchasers.  Any such waiver, amendment modification or termination shall be binding on each Purchaser even if such Purchaser does not sign such written consent.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

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

 

5.6 Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Majority Purchasers.  Subject to compliance with federal and state securities laws and the restrictions on transfers and assignments under the exemptions from registration upon which the Company is relying to offer, issue and sell the Securities, any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided 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 Purchasers.

 

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

 

5.8 Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the Commonwealth of Massachusetts, without regard to the principles of conflicts of law thereof.  Each party agrees that all 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, shareholders, employees, or agents) shall be commenced exclusively in the state and federal courts sitting in the Commonwealth of Massachusetts. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Boston 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 Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such 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 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.  The parties hereby waive all rights to a trial by jury.  If a party shall commence a Proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such 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 Proceeding.

 

5.9 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 against the Company and each Purchaser when counterparts have been signed by the Company and such Purchaser and delivered to each other, it being understood that the Company and such Purchaser 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.

 

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

 

5.11 Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers 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 agrees 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.

 

5.12 Independent Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document.  Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.  Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any Proceeding for such purpose.  Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents.

 

5.13 Construction. The parties agree that each of them and/or their respective counsel has 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 hereto.

 

5.14 Rescission and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever a Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

 

 

[signature pages follow]

 

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

 

	
Pressure BioSciences Inc.

 

  /s/ Richard T Schumacher

	
Address for Notice:

	
By:__________________________________________

     Name:  Richard T. Schumacher

     Title:  President and Chief Executive Officer

 

	
14 Norfolk Avenue

Easton, MA  02375

Facsimile:  (508) 580-1829

Attention:  Richard T. Schumacher

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

 

Pepper Hamilton LLP

19th Floor, High Street Tower

125 High Street

Boston, MA  02110-2736

Facsimile:  617-956-4351

Attention:  Steven R. London

	  

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

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[PURCHASER SIGNATURE PAGES TO PRESSURE BIOSCIENCES INC. SECURITIES PURCHASE AGREEMENT]

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

 

FOR INDIVIDUALS:

Name of Purchaser:                                                                                                                                                     

Signature of Purchaser:                                                                                                                                          

FOR ENTITIES:

Name of Purchaser:                                                                                                                                                     

Signature of Authorized Signatory of Purchaser:                                                                                                                                                     

Name of Authorized Signatory:                                                                                                                                          

Title of Authorized Signatory:                                                                                                                                          

FOR ALL PURCHASERS:

Email Address of Purchaser:                                                                                                                                                     

Fax Number of Purchaser:                                                                                                                                                     

Address for Notice of Purchaser:                                                      

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

Subscription Amount: $__________________

 

Units: _______________________  [TO BE COMPLETED BY THE COMPANY AT THE CLOSING.  NUMBER EQUALS SUBSCRIPTION AMOUNT DIVIDED BY THE PER UNIT PURCHASE PRICE]

Taxpayer Identification Number:  [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

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Schedule 3.1(a) Subsidiaries.

PBI BIOSEQ, INC.

PBI SOURCE SCIENTIFIC, INC.

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Schedule 3.1(g) Capitalization.

	
Stock Type

	
Authorized

	
Outstanding

	
Common

	
20,000,000

	
10,405,469

	
Undesignated Preferred Stock

	
297,836

	
0

	
Series A Convertible Preferred Stock

	
313,960

	
0

	
Series B Convertible Preferred Stock

	
279,256

	
0

	
Series C Convertible Preferred Stock

	
88,098

	
0

	
Series D Convertible Preferred Stock

	
850

	
300

	
Series E Convertible Preferred Stock

	
500

	
350

	
Series A Junior Participating Preferred Stock

	
20,000

	
0

The number outstanding in the above tables does not include shares issuable upon the conversion or exercise of any preferred stock, warrants, options or similar securities.  The Company has issued and outstanding warrants to purchase 5,066,582 shares of Common Stock.  The Company has issued and outstanding incentive and non-qualified stock options to purchase 1,555,500 shares of Common Stock and has reserved an additional 267,500 shares of Common Stock for future issuance under the Company’s equity incentive plans.

Pursuant to Section 4.12 of that certain Securities Purchase Agreement, dated November 8, 2011, by and among the Company and the purchasers named therein (the “Series D Purchasers”), as amended (the “Series D Purchase Agreement”), from November 8, 2011 until the date that is the 12-month anniversary of the Closing Date (as defined in the Series D Purchase Agreement), upon any issuance by the Company or any of its Subsidiaries of Common Stock, Common Stock Equivalents for cash consideration, indebtedness or a combination of units hereof (a “Subsequent Financing”), each Series D Purchaser has the right to participate (to the extent of such Series D Purchaser’s pro-rata portion) in up to an amount of the Subsequent Financing equal to 50% of the Subsequent Financing on the same terms, conditions and price provided for in the Subsequent Financing.

Section 3(b) of the warrants issued in connection with the transactions contemplated by the Series D Purchase Agreement (the “Series D Warrants”), provides that (i) the exercise price of the Series D Warrants and the number of warrant shares issuable pursuant to the Series D Warrants shall be adjusted in the event of a Dilutive Issuance (as defined in the Series D Warrants) and (ii) the holders of the Series D Warrants are entitled to receive written notice of Dilutive Issuances (as defined in the Warrants) (collectively, the “Dilutive Rights”). In connection with the transactions contemplated by the Agreement, the holders of the Series D Warrants  will be entitled to their Dilutive Rights.

 

Pursuant to  Section 7(b) of the Certificate of Designations creating the Series D Convertible Preferred Stock (the “Series D Preferred Stock”) the (1) the conversion price of the Series D Preferred Stock shall be adjusted in the event of a Dilutive Issuance and a Variable Rate Transaction (each, as defined in such Certificate of Designations) (collectively, the “Preferred Adjustment Rights”) and (2) the holders of Series D Preferred Stock are entitled to receive written notice of any issuance of Common Stock or Common Stock Equivalents subject to Section 7(b) (a “Dilutive Issuance Notice” together with the Preferred Adjustment Rights, the “Preferred Dilutive Rights”).  In connection with the transactions contemplated by the Agreement, the holders of Series D Preferred Stock will be entitled to their Preferred Dilutive Rights as a result of a Dilutive Issuance under the Agreement.

 

The Company currently has outstanding Convertible Promissory Notes issued to the following borrowers, in the original principal amounts set forth opposite their names:

	
Lender

	 	
Original

Principal Amount

	 	
Maturity Date

	
Robert Nieder

	 	$	7,000	 	
March 29, 2012

	
Cresta Capital Strategies, LLC

	 	$	150,000	 	
May 4, 2012

 

 

Schedule 3.1(i) Material Changes; Undisclosed Events, Liabilities or Developments.

None.

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Exhibit D

 

Warrant Exercise Price Reduction

 

If a Purchaser of Units pursuant to this Agreement also holds warrants described below which were previously issued to the Purchaser in prior offerings by the Company, the exercise price of such warrants shall be adjusted as set forth below:

	
 Series A:

	
For each share of Preferred Stock purchased by a Purchaser who also purchased Series A Convertible Preferred Stock and Warrants (“Series A Warrants”) in the Company’s 2009 Private Placement, the exercise price of Series A Warrants to purchase 10 shares of Common Stock will be reduced to $0.60 per share and will remain at such reduced exercise price until the expiration date of the Series A Warrants; provided, however, if the Per Unit Purchase Price (on an as converted to Common Stock basis) is greater than $0.60 per share, but less than the exercise price of the Series A Warrants, the exercise price of such Series A Warrants to purchase 10 shares of Common Stock will be reduced to the Per Unit Purchase Price (on an as converted to Common Stock basis) and provided, further that if the Per Unit Purchase Price (on an as converted to Common Stock basis) is greater than the exercise price of the Series A Warrants, the exercise price will remain unchanged.

	
Series B:

	
For each share of Preferred Stock purchased by a Purchaser who also purchased Series B Convertible Preferred Stock and Warrants (the “Series B Warrants”) in the Company’s 2009/2010 Private Placement, the exercise price of Series B Warrants to purchase 10 shares of Common Stock will be reduced to $0.60 per share and will remain at such reduced exercise price until the expiration date of the Series B Warrants; provided, however, if the Per Unit Purchase Price (on an as converted to Common Stock basis) is greater than $0.60 per share, but less than the exercise price of the Series B Warrants, the exercise price of such Series B Warrants to purchase 10 shares of Common Stock will be reduced to the Per Unit Purchase Price (on an as converted to Common Stock basis) and provided, further that if the Per Unit Purchase Price (on an as converted to Common Stock basis) is greater than the exercise price of the Series B Warrants, the exercise price will remain unchanged.

	
  

	 

	
Series C:

	
For each share of Preferred Stock purchased by a Purchaser who also purchased Series C Convertible Preferred Stock and Warrants (the “Series C Warrants”) in the Company’s 2011 Private Placement, the exercise price of Series C Warrants to purchase 10 shares of Common Stock will be reduced to $0.60 per share and will remain at such reduced exercise price until the expiration date of the Series C Warrants; provided, however, if the Per Unit Purchase Price (on an as converted to Common Stock basis) is greater than $0.60 per share, but less than the exercise price of the Series C Warrants, the exercise price of such Series C Warrants to purchase 10 shares of Common Stock will be reduced to the Per Unit Purchase Price (on an as converted to Common Stock basis) and provided, further that if the Per Unit Purchase Price (on an as converted to Common Stock basis) is greater than the exercise price of the Series C Warrants, the exercise price will remain unchanged.

	
  

	
August/Sept 2011

	
Convertible Notes:

	
For each share of Preferred Stock purchased by a Purchaser who also purchased Convertible Notes and Warrants (the “Aug/Sept 2011 PP Warrants”) in the Company’s Aug/Sept 2011 Private Placement, the exercise price of the Aug/Sept 2011 PP Warrants to purchase 10 shares of Common Stock will be reduced to $0.60 per share and will remain at such reduced exercise price until the expiration date of the Aug/Sept 2011 Warrants; provided, however, if the Per Unit Purchase Price (on an as converted to Common Stock basis) is greater than $0.60 per share, but less than the exercise price of the Aug/Sept 2011 PP Warrants, the exercise price of such Aug/Sept 2011 PP Warrants to purchase 10 shares of Common Stock will be reduced to the Per Unit Purchase Price (on an as converted to Common Stock basis) and provided, further that if the Per Unit Purchase Price (on an as converted to Common Stock basis) is greater than the exercise price of the Aug/Sept 2011 PP Warrants, the exercise price will remain unchanged.

	
  

	
February2012

	
Private Placement

	
For each share of Preferred Stock purchased by a Purchaser who also purchased Common Stock and Warrants (the “February 2012 Warrants”) in the Company’s February 2012 Private Placement, the exercise price of February 2012 Warrants to purchase 10 shares of Common Stock will be reduced to $0.60 per share, and will remain at such reduced exercise price until the expiration date of the February 2012 Warrants; provided, however, if the Per Unit Purchase Price (on an as converted to Common Stock basis) is greater than $0.60 per share, but less than the exercise price of the February 2012 Warrants, the exercise price of such February 2012 Warrants to purchase 10 shares of Common Stock will be reduced to the Per Unit Purchase Price (on an as converted to Common Stock basis) and provided, further that if the Per Unit Purchase Price (on an as converted to Common Stock basis) is greater than the exercise price of the February 2012 Warrants, the exercise price will remain unchanged.

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