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INVESTOR RIGHTS AGREEMENT

 

This INVESTOR RIGHTS AGREEMENT (this "Agreement") is made as of June 1 2005, by and among LightPath Technologies, Inc., a Delaware corporation (the "Company"), Shadow Capital, LLC, a Kansas limited liability company, and Whitney B. Garlinghouse (each an "Investor" and together the "Investors") 

WHEREAS, the Company desires to sell to the Investors, and the Investors desire to purchase, an aggregate of 350,000 shares of Common Stock of the Company (the "Shares") and 5-year warrants, exercisable to purchase an aggregate of 140,000 shares of Common Stock at $4.30 per share (the "Purchased Warrant"), upon the terms and conditions set forth in that certain Unit Subscription Agreement, dated of even date herewith, among the Company, the Investors and Kent Garlinghouse (the "Unit Subscription Agreement"); and 

WHEREAS, the terms of the Unit Subscription Agreement provide that it shall be a condition precedent to the closing of the transactions thereunder for the Company and the Investor to execute and deliver this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto hereby agree as follows:

	Definitions.  The following terms shall have the meanings provided below:

"Additional Shares" shall mean any additional shares of Common Stock which may be issued or become issuable from time to time upon the exercise of a Purchased Warrant, or a distribution with respect to, or in exchange for, or in replacement of a Purchased Warrant, as a result of anti-dilution provisions of a Purchased Warrant or otherwise.

"Board of Directors" shall mean the board of directors of the Company.

"Closing" shall have the meaning ascribed to such term in the Unit Subscription Agreement.  

"Common Stock" shall mean the Class A common stock, $.01 par value per share, of the Company.  

"Convertible Securities" means (i) options to purchase or rights to subscribe for Common Stock, (ii) securities by their terms convertible into or exchangeable for Common Stock or (iii) options to purchase or rights to subscribe for such convertible or exchangeable securities.  

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and all of the rules and regulations promulgated thereunder.

"Excluded Stock" shall mean shares of Common Stock issued or issuable by the Corporation (i) to employees, directors or consultants pursuant to any equity compensation plan approved by the Company's stockholders, including all existing equity plans for the benefit of employees, (ii) to bona fide leasing companies, strategic partners (the primary purpose of which issuance was not to raise capital), or major commercial lenders, (iii) as the purchase price in a bona fide acquisition or merger (including reasonable fees paid in connection therewith) or (iv) upon issuance upon conversion or exercise of the Purchased Warrants or other Convertible Securities outstanding on the date hereof. 

"Holder" shall mean the Investors or any transferee of the Purchased Warrants or Registrable Shares. 

"Majority Holders" shall mean, at the relevant time of reference thereto, those Holders holding more than fifty percent (50%) of the Registrable Shares held by all of the Holders.

"Other Securities" refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the Holders of the Purchased Warrants at any time shall be entitled to receive, or shall have received, upon the exercise of the Purchased Warrants, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to the terms of the Purchased Warrants or otherwise.

"Registrable Shares" shall mean any Shares and any Registrable Warrant Shares

"Registrable Warrant Shares" shall mean any shares of Common Stock or Other Securities issued or issuable from time to time upon the exercise of a Purchased Warrant, or a distribution with respect to, in exchange for, or in replacement of a Purchased Warrant, including without limitation the Warrant Shares and Additional Shares.  

"Rule 144" shall mean Rule 144 promulgated under the Securities Act and any successor or substitute rule, law or provision.

"SEC" shall mean the Securities and Exchange Commission.

"Securities Act" shall mean the Securities Act of 1933, as amended, and all of the rules and regulations promulgated thereunder.

"Warrant Shares" shall mean any shares of Common Stock issued or issuable from time to time upon the exercise of a Purchased Warrant.  

"Warrant Exercisable Date" shall mean March 1, 2006.

	Effectiveness.  This Agreement shall become effective upon the Closing.

	Mandatory Registration.

(a)As soon as practicable, but in no event more than 60 days, after the Closing, the Company will prepare and file with the SEC a registration statement on Form S-3 (or, if Form S-3 is not then available to the Company, on such form of registration statement that is then available to effect a registration of all Registrable Shares) for the purpose of registering under the Securities Act all of the Registrable Shares for resale by, and for the account of, the Investors as selling stockholder thereunder (the "Registration Statement").  The Registration Statement shall permit the Investors to offer and sell, on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, any or all of the Registrable Shares.  Such Registration Statement also shall cover, to the extent allowable under the Securities Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Shares.

(b)The Company agrees to use best efforts to cause the Registration Statement to become effective as soon as practicable after filing.

(c)At least thirty (30) days prior to the Warrant Exercisable Date, the Company shall prepare and file with the SEC one or more Registration Statements on Form S-3 (the "New Registration Statements") or amend the Registration Statement filed pursuant to clause (b) above, if such Registration  Statement  has not previously been declared effective (or, if Form S-3 is not then available to the Company, on such form of registration statement  as is then available to effect a registration for resale of Registrable Warrant Shares or Additional Shares, subject to the Investors' consent) covering the resale of the Registrable Warrant Shares or Additional Shares, as applicable, but only to the extent such Registrable Warrant Shares or Additional Shares are not at the time covered by an effective Registration Statement.  The New Registration Statements need not include Additional Shares which are not currently issuable at the time of filing or effectiveness of the New Registration Statements, such as Additional Shares which may be issuable as a result of anti-dilution provisions set forth in Section 5 or 6 of the Purchased Warrants which have not been triggered at such times; provided that such Additional Shares shall be included promptly in the New Registration Statements by amendment or by filing a New Registration Statement, as necessary, promptly after they become issuable.  Unless otherwise specifically provided herein, the term Registration Statement shall include without limitation any New Registration Statement, as amended from time to time.  Such Registration Statement also shall cover, to the extent allowable under the Securities Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Warrant Shares and Additional Shares. The Company agrees to use best efforts to cause the Registration Statement, as amended from time to time, and each New Registration Statement, as amended from time to time, to become effective as soon as practicable after filing of each amendment and each New Registration Statement.

(d)The Company shall be required to keep the Registration Statement, as amended, effective until such date that is the earlier of (i) 3-1/2 years after the Warrant Exercisable Date, (ii) the date when all of the Registrable Shares registered thereunder shall have been sold, or (iii) such time as all the Registrable Shares held by the Investor can be sold pursuant to Rule 144(k) without volume limitations and without compliance with the registration requirements of the Securities Act (such date is referred to herein as the "Mandatory Registration Termination Date").  Thereafter, the Company shall be entitled to withdraw the Registration Statement and the Investor shall have no further right to offer or sell any of the Registrable Shares pursuant to the Registration Statement (or any prospectus relating thereto).  

(e)Until the Registration Statement becomes effective, the Company shall not grant any registration rights that are pari passu or senior to the registration rights of the Investor under this Agreement.  The Company represents that no stockholders other than the Investors have the right to sell any Common Stock or other securities of the Company pursuant to the Registration Statement. 

	Obligations of the Company.  In connection with the Company's obligation under Section 3 hereof to file a Registration Statement with the SEC and to use its reasonable efforts to cause the Registration Statement to become effective as soon as practicable after filing, the Company shall, as expeditiously as reasonably possible, subject to Section 9 hereof:

	Prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Registration Statement effective until the Mandatory Registration Termination Date;

	Furnish to the selling Investors such reasonable number of copies of the Registration Statement, prospectus and preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents (including, without limitation, prospectus amendments and supplements as are prepared by the Company in accordance with Section 4(a) above) as the selling Investors may reasonably request, in order to facilitate the public or other disposition of the selling Investors' Registrable Shares; 

	Use reasonable efforts to register and qualify the Registrable Shares covered by the Registration Statement under such other securities or Blue Sky laws of all states requiring such securities or Blue Sky registration or qualification, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; and

	Use reasonable efforts to cause all such Registrable Shares registered hereunder to be listed on each securities exchange (including without limitation any Nasdaq market) on which securities of the same class issued by the Company are then listed.

	Furnish Information.  

(a)It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement that the selling Investors shall furnish to the Company such information regarding them and the securities held by them as the Company shall reasonably request and as shall be required in order to effect any registration by the Company pursuant to this Agreement.

(b)The Registration Statement will provide for a plan of distribution with respect to the Registrable Shares substantially as follows:  The Registrable Shares may be sold from time to time by the Investors, or by pledgees, donees, transferees or other successors in interest.  Such sales may be made on one or more exchanges or in the over-the-counter market, or otherwise at prices and at terms then prevailing or at prices related to the then-current market price, or in negotiated transactions.  The Registrable Shares may be sold by one or more of the following:  (i) a block trade in which the broker or dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; (ii) purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to the resale registration statement; (iii) an exchange distribution in accordance with the rules of such exchange; (iv) ordinary brokerage transactions and transactions in which the broker solicits purchasers; and (v) transactions between sellers and purchasers without a broker/dealer.  In addition, any securities covered by the Registration Statement which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to the Registration Statement.  However, the selling Investors may not engage in short sales, short sales versus the box, puts and calls or other transactions in securities of the issuer or derivatives thereof, and may not sell and deliver the shares in connection therewith.  In effecting sales, brokers or dealers engaged by the selling Investors may arrange for other brokers or dealers to participate.  Brokers or dealers will receive commissions or discounts the from selling Investor in amounts to be negotiated immediately prior to the sale. 

	Expenses of Registration.  All expenses incurred by the Company in connection with the registration of the Registrable Shares pursuant to this Agreement (excluding underwriting, brokerage and other selling commissions and discounts), including without limitation all registration and qualification and filing fees, printing expenses, fees and disbursements of counsel for the Company, and the Legal Fee set forth and limited in Section 6.9 of the Unit Subscription Agreement, shall be borne by the Company.

	Indemnification.

	To the extent permitted by law, the Company will indemnify and hold harmless each selling Investor against any losses, claims, damages or liabilities to which it may become subject under the Securities Act, the Exchange Act, and other federal or state securities laws, or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (i) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in the Registration Statement, in any preliminary prospectus or final prospectus relating thereto or in any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, (ii) arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading or (iii) arise out of any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any other federal or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any other federal or state securities law; and will reimburse such selling Investor for any legal or other expenses reasonably incurred by him in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 7(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed), nor shall the Company be liable in any such case for any such loss, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or alleged untrue statement or omission made in connection with the Registration Statement, any preliminary prospectus or final prospectus relating thereto or any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, in reliance upon and in conformity with written information furnished by a selling Investor, any broker/dealer acting on its behalf or any controlling person with respect to them. 

	To the extent permitted by law, each selling Investor will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statement, each person, if any, who controls the Company within the meaning of the Securities Act, and any other selling Investor, against any losses, claims, damages or liabilities to which the Company or any such director, officer, controlling person or such other selling Investor may become subject to, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in the Registration Statement or any preliminary prospectus or final prospectus, relating thereto or in any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent and only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, in any preliminary prospectus or final prospectus relating thereto or in any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, in reliance upon and in conformity with written information furnished by the selling Investor; and such selling Investor will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, or other selling Investor in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that the indemnity agreement contained in this Section 7(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the selling Investor(s) against which the request for indemnity is being made (which consent shall not be unreasonably withheld or delayed).  Each Investor's liability under this Section 7(b) shall be limited to the aggregate purchase price of the Shares and Warrant Shares.

(c)Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof and the indemnifying party shall have the right to participate in and, to the extent the indemnifying party desires, jointly with any other indemnifying party similarly noticed, to assume at its expense the defense thereof with counsel mutually satisfactory to the indemnifying parties with the consent of the indemnified party which consent will not be unreasonably withheld, conditioned or delayed.  In the event that the indemnifying party assumes any such defense, the indemnified party may participate in such defense with its own counsel and at its own expense, provided, however, that the counsel for the indemnifying party shall act as lead counsel in all matters pertaining to such defense or settlement of such claim and the indemnifying party shall only pay for such indemnified party's reasonable legal fees and expenses for the period prior to the date of its participation in such defense, and provided further, however, that the indemnified party (together with all indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if the representation of the indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between the indemnified party and any other party represented by such counsel in such proceeding.  Notwithstanding the foregoing, the indemnifying party shall not be obligated to pay the fees of more than one separate counsel.  The failure to notify an indemnifying party of the commencement of any such action will not relieve such indemnifying party of any liability to the indemnified party under this Section 7 (except to the extent that such failure materially and adversely affects the indemnifying party's ability to defend such action), nor shall the omission so to notify an indemnifying party relieve such indemnifying party of any liability which it may have to any indemnified party otherwise other than under this Section 7.  No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation and otherwise in form and substance reasonably satisfactory to the indemnified party.

	If the indemnification provided in this Section 7 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that shall have resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations.  The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

	The obligations of the Company and Investors under this Section 7 shall survive the completion of any offering of Registrable Shares in a Registration Statement under Section 3, and otherwise.

	Reports Under the Exchange Act.  With a view to making available to the Investor the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit the Investors to sell the Registrable Shares to the public without registration, the Company agrees to use reasonable efforts: (i) to make and keep public information available, as those terms are understood and defined in the General Instructions to Form S-3, or any successor or substitute form, and in Rule 144, (ii) to file with the SEC in a timely manner all reports and other documents required to be filed by an issuer of securities registered under the Securities Act or the Exchange Act and (iii) undertake any additional actions reasonably necessary to maintain the availability of the Registration Statement or the use of Rule 144.

	Selling Procedures.  Any sale of Registrable Shares pursuant to the registration statement filed in accordance with Section 3 hereof shall be subject to the following conditions and procedures:

(a)Updating the Prospectus.

	If the Company informs the selling Investor that the Registration Statement or final prospectus then on file with the SEC is not current or otherwise does not comply with the Securities Act, the Company shall use best efforts to provide to the selling Investor a current prospectus that complies with the Securities Act as soon as reasonably practicable.  

	If the Company requires more than ten (10) business days to update the prospectus under Section 9(a)(i) above, the Company shall have the right to delay the preparation of a current prospectus that complies with the Securities Act without explanation to such Investor, subject to the limitations set forth in Section 9(b) below, for a period of not more than forty-five (45) days (or two periods which total not more than ninety (90) days in the aggregate) during any twelve-month period.

(b)General.  Notwithstanding the foregoing, upon receipt of any notice from the Company of (i) any request by the SEC or any other federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or related prospectus or for additional information relating to the Registration Statement, (ii) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (iii) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (iv) the happening of any event which makes any statement made in the Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or which requires the making of any changes in the Registration Statement or prospectus so that, in the case of the Registration Statement, it will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (v) that, in the judgment of the Company's Board of Directors, it is advisable to suspend use of the prospectus for a discrete period of time due to pending corporate developments, public filings with the Commission or that there exists material nonpublic information about the Company that the Board of Directors, acting in good faith, determines not to disclose in a registration statement, then the Company may suspend use of the prospectus (each a "Suspension"), in which case the Company shall promptly so notify each Investor and each Investor shall not dispose of Registrable Shares covered by the Registration Statement or prospectus until copies of a supplemented or amended prospectus are distributed to the Investor or until the Investor is advised in writing by the Company that the use of the applicable prospectus may be resumed; provided, however, that, notwithstanding the foregoing, the Company may suspend use of the prospectus pursuant to Sections 9(a)(ii), 9(b)(iv) and 9(b)(v), and an Investor may be prohibited from selling or otherwise disposing of the Registrable Shares covered by the Registration Statement or prospectus, on not more than two occasions in total during any twelve-month period and for no more than ninety (90) days in the aggregate during any such twelve-month period.  The Company shall use its best efforts to ensure the use of the prospectus may be resumed as soon as practicable.  The Company shall use its best efforts to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the securities for sale in any jurisdiction, at the earliest practicable moment.  The Company shall, upon the occurrence of any event contemplated by clause (iv), prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Shares being sold thereunder, such prospectus will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

	Pre-emptive Rights.  In the event that at any time after the date hereof the Company proposes to issue additional shares of Common Stock or Convertible Securities, other than Excluded Stock, the Company shall send a notice (an "Additional Share Notice") to the Holder setting forth the terms of such proposed issuance.  The Holder shall be entitled to purchase the proposed number of shares of Common Stock or Convertible Securities, proposed to be issued in proportion to the Holder's Proportionate Percentage (as hereafter defined) on substantially the same terms set forth in the Additional Share Notice by (a) notice to the Company (the "Purchase Notice") within 10 days of the date of the Additional Share Notice and (b) payment of the price for such shares of Common Stock or Convertible Securities, by wire transfer of immediately available funds or such other method of payment as the Company may approve, within 10 days after delivery to the Company of the Purchase Notice.  The "Proportionate Percentage" of the Holder means the percentage obtained by dividing (a) the aggregate number Registrable Shares held by the Holder by (b) the aggregate number of shares of Common Stock of the Company then issued and outstanding (including, for purposes of this calculation, all Registrable Shares).  The pre-emptive right set forth in this Section 10 shall terminate when the Registration Statement becomes effective.

	Issuance of Certain Securities; Investors' Securities Transactions.  

(a)The Company shall not issue any (a) Convertible Securities or similar securities that contain a provision that provides for any change or determination of the applicable conversion price, conversion rate, or exercise price (or a similar provision which might have a similar effect) based on any determination of the Market Price or other value of the Company's securities or any other market based or contingent standard; provided that the Company shall not be barred from agreeing to weighted average anti-dilution provisions similar to those set forth in the Purchased Warrant, (b) any preferred stock, debt instruments or similar securities or investment instruments providing for (i) preferences or other payments substantially in excess of the original investment by purchasers thereof or (ii) dividends, interest or similar payments other than dividends, interest or similar payments computed on an annual basis and not in excess, directly or indirectly, of the lesser of a rate equal to (A) twice the interest rate on 10 year US Treasury Notes and (B) 20%. 

(b)An Investor shall not engage in open market or other transactions in the Company's securities that would cause such Investor, the Investors as a group, or a group with which one or more of the Investors is affiliated or associated, to acquire or obtain the right to acquire beneficial ownership of 20% or more of the outstanding shares of the Company's Common Stock.

12.Assignment.  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. In addition, and whether or not any express assignment shall have been made, the provisions of this Agreement which are for the benefit of the Investors shall also be for the benefit of and enforceable by any subsequent holder of any Registrable Securities who has executed a copy of this Agreement or otherwise indicated its agreement to be bound hereby.  Without limitation on the Investors' rights to transfer Registrable Securities, the Company acknowledges that an Investor may, at any time, transfer any of the Registrable Securities which it may own, beneficially or of record, to its affiliates, and that, upon the consummation of any such transfer, the provisions of this Agreement shall be binding upon and inure to the benefit of each transferee of such Registrable Securities.

	Entire Agreement.  This Agreement (including the exhibits hereto), the Unit Subscription Agreement and the Purchased Warrants constitute and contain the entire agreement and understanding of the parties with respect to the subject matter hereof, and such agreements also supersede any and all prior negotiations, correspondence, agreements or understandings with respect to the subject matter hereof.

	Miscellaneous.

(a)Termination.  The rights and obligations of the parties to this Agreement, unless terminated earlier elsewhere in this Agreement, shall terminate and be of no further force or effect upon the Mandatory Registration Termination Date; provided, that the provisions of Section 7 shall survive such termination in accordance with the terms thereof.

(b)Amendments.  This Agreement may be amended, modified or terminated, and rights or provisions may be waived, only with the written consent of the Majority Holders and the Company.

(c)Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Florida.  Each party hereby irrevocably consents and submits to the jurisdiction of any State of Florida or United States Federal Court sitting in the State of Florida, County of Orange, over any action or proceeding arising out of or relating to this Agreement and irrevocably consents to the service of any and all process in any such action or proceeding by registered mail addressed to such party at its address specified herein (or as otherwise noticed to the other party).  Each party further waives any objection to venue in Florida and any objection to an action or proceeding in such state and county on the basis of forum non conveniens.  Each party also waives any right to trial by jury. 

(d)Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors or assigns.  This Agreement shall also be binding upon and inure to the benefit of any transferee of any of the Registrable Shares.  Notwithstanding anything in this Agreement to the contrary, if at any time an Investor shall cease to own any Registrable Shares, all of such Investor's rights under this Agreement shall immediately terminate.

(e)Notices

	Any notices, reports or other correspondence (hereinafter collectively referred to as "correspondence") required or permitted to be given hereunder shall be sent by mail, courier (overnight or same day) or fax or delivered by hand to the party to whom such correspondence is required or permitted to be given hereunder (except that notices of Suspensions or stop orders must be made by fax).  Notice shall be deemed given three days after deposit in the mail, immediately upon delivery if sent by courier or delivered by hand, or immediately upon receipt if delivered by fax with electronic confirmation of delivery.

	All correspondence to the Company shall be addressed as follows:

LightPath Technologies, Inc.

2603 Challenger Tech Ct., Suite 100

Orlando, Florida 32826

Attention:  Chief Executive Officer

Fax number: (407) 823-9176

with a copy to:

Baker & Hostetler LLP

SunTrust Center, Suite 2300

200 South Orange Avenue

Orlando, Florida 32801-3432

Attention:  Jeffrey E. Decker

Fax number: (407) 841-0168 

	All correspondence to any Investor shall be sent to the most recent address furnished by such Investor to the Company.

with a copy to: 

Bryan Cave LLP

One Kansas City Place

1200 Main Street, Suite 3500

Kansas City, MO  64105-2100

Attention:  James P. Pryde

Fax number: (816) 374-3300

	An Investor may change the address to which correspondence to it is to be addressed by notification as provided for herein.

(f)Injunctive Relief.  The parties acknowledge and agree that in the event of any breach of this Agreement, remedies at law may be inadequate, and each of the parties hereto shall be entitled to seek specific performance of the obligations of the other parties hereto and such appropriate injunctive relief as may be granted by a court of competent jurisdiction.

(g)Severability.  If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable under applicable law, such provision shall be replaced with a provision that accomplishes, to the extent possible, the original business purpose of such provision in a valid and enforceable manner, and the balance of the Agreement shall be interpreted as if such provision were so modified and shall be enforceable in accordance with its terms.

(h)Counterparts.  This Agreement may be executed in a number of counterparts, any of which together shall for all purposes constitute one Agreement, binding on all the parties hereto notwithstanding that all such parties have not signed the same counterpart.

 

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SIGNATURE PAGE

TO

LIGHTPATH TECHNOLOGIES, INC.

INVESTOR RIGHTS AGREEMENT

Dated June 1, 2005

 

IN WITNESS WHEREOF, the parties hereto have executed this Investor Rights Agreement as of the date and year first above written.
LIGHTPATH TECHNOLOGIES, INC.

By:/s/ Robert Burrows

Robert Burrows

Chief Financial Officer

INVESTORS:

SHADOW CAPITAL, LLC

By: /s/ B. Kent Garlinghouse

Kent Garlinghouse

Title: Manager

 

 

 

/s/ Whitney B. Garlinghouse

WHITNEY B. GARLINGHOUSESEVERANCE AGREEMENT

			
	[ADVO letterhead]	 	Exhibit 10.1

  
  
 June 2, 2005 
  
 Mr. Jeffrey E. Epstein 
 (address intentionally omitted) 
  
 Dear Jeff: 
  
 In connection with your “at-will” employment as Executive Vice President and Chief Financial Officer by ADVO, Inc.
(“ADVO” or collectively with its affiliates or subsidiaries, the “Company”) effective as of June 6, 2005, ADVO is pleased to offer you the severance benefits set forth in this letter agreement (the “Agreement”):

  
 1. Non-Solicitation, Non-Competition and
Non-Disclosure. In exchange for the benefits provided to you pursuant to this Agreement, you agree to be bound by and comply with the following terms and covenants concerning non-solicitation, non-competition and non-disclosure.
Notwithstanding anything to the contrary in this Agreement and regardless of your eligibility to receive severance benefits pursuant to this agreement, you agree to adhere to (x) the non-competition provisions set forth in Paragraph 1(d) below for a
period of six (6) months from your date of termination and (y) the non-disclosure provisions set forth in Paragraph 1(e) below indefinitely. If you are eligible to receive severance benefits pursuant to this Agreement, then during the Severance
Period (as defined in Paragraph 3(b)) with respect to non-solicitation and non-competition, and indefinitely with respect to non-disclosure, you agree that you will not, directly or indirectly, whether for yourself or for any other individual or
entity (other than the Company): 
  
 (a) solicit any person
or entity who is, or was, within the twelve (12) months preceding the termination of your employment with the Company, a customer, customer representative (such as an agency), a prospect (with respect to which the Company has incurred substantial
costs or with which you have been involved), or a client of the Company, with the twelve (12) month period reduced to six (6) months for prospects with which you have not been involved; 
  
 (b) hire away or endeavor to entice away from the Company any employee or any other person or entity whom the Company
engages to perform services or supply products and including, but not limited to, any independent contractors, consultants, engineers, or sales representatives or any contractor, subcontractor, supplier, or vendor; 
  
 (c) hire any person whom the Company employs or employed within the
twelve (12) months preceding the date as of which you attempt to hire the person; 
  
 (d) be employed by, lend money to, or engage in any business competitive with the Company in the United States of America, including, without limitation, acting, either singly or jointly or as agent for, or as
an employee of or consultant to, any one or more persons, firms, entities, or corporations directly or indirectly (as a director, independent contractor, representative, consultant, member, or otherwise) that compete with the Company. Nothing
in this Paragraph 1(d) shall prohibit you from owning or acquiring up to 1% of the outstanding securities of any corporation or other business enterprise in competition with the Company that is listed on a national securities exchange, provided that
you are otherwise in compliance with the provisions of this Paragraph, you own such securities for investment purposes only and you have no involvement beyond passive investing in such business; or 

 (e) at any time, whether during or after the termination of employment, for any reason whatsoever
(other that to promote and advance the business of the Company), reveal to any person or entity (both commercial and non-commercial) any of the trade secrets or confidential or proprietary business information concerning the Company: including its
research and development activities; client lists; database specifications; show-how and know-how; marketing plans and strategies; pricing and costing policies; customer and supplier lists and accounts; or nonpublic financial information of the
Company, except as may be required in the ordinary course of performing your duties as an employee of the Company. This restriction shall not apply to: (i) information that may be disclosed generally or is in the public domain through no fault of
yours; (ii) information received from a third party outside the Company that was disclosed without a breach of any confidentiality obligation; (iii) information approved for release by written authorization of the Company; or (iv) information that
may be required by law or an order of any court, agency or proceeding to be disclosed. You shall keep secret all matters of such nature entrusted to you and you shall not use or disclose any such information for the benefit of any third party in any
manner which may injure or cause loss to the Company, whether directly or indirectly. 
  
 2. Notice of Termination. Except as otherwise provided in this Agreement, any termination of your employment, whether by you or ADVO, will be communicated by thirty (30) days prior written notice to the
other party. All notices provided for in this Agreement will be in writing and will be effective when delivered or mailed by U.S. mail, postage prepaid, at the addresses shown above or to such other address as either ADVO or you may have furnished
to the other in writing. 
  
 3. Severance Payments and
Benefits. 
  
 (a) ADVO will provide you with the
severance payments and benefits listed below in the event that you are terminated by the Company without “Cause,” or if you resign for “Good Reason,” and provided that you continue to adhere to any post-termination obligations
including, but not limited to, the non-competition, non-solicitation and non-disclosure covenants set forth in this Agreement. If you are terminated in connection with a “Change in Control” as such term is defined in your Change in Control
Executive Severance Agreement with ADVO, the severance provisions therein shall prevail, except that the outstanding equity incentives that you received pursuant to your offer letter that have not yet vested shall immediately vest and become fully
exercisable. To the extent the terms of the grant agreements governing such initial equity incentives are inconsistent with the terms of this Agreement, the terms of this Agreement shall govern. With respect to the Change in Control Executive
Severance Agreement, ADVO agrees that it will not invoke the sixty (60) day non-renewal provision in Section 1(m), unless such provision is invoked by ADVO for members of the ADVO Operating Committee generally. 
  
 For purposes of this Agreement, “Cause” means: 
  

	 	(i)	neglect, failure to perform, or refusal to attend to the material duties you have been assigned; 

  

	 	(ii)	commission of an act of fraud, material dishonesty, intentional misappropriation, or gross negligence with respect to the Company or other act of willful disregard for the
Company’s best interests, or engaging in conduct likely to result in any of the foregoing; or 

  

	 	(iii)	conviction of, or pleading guilty or no contest to, a felony (or to a felony charge reduced to misdemeanor), or, with respect to your employment, to any misdemeanor (other
than a traffic violation) or, with respect to your employment, knowingly violating any federal or state securities or tax laws. 

  

 2 

 A termination for Cause will be effective immediately upon the Company’s mailing or written transmission of notice
of such termination. Before terminating your employment for Cause under clauses (i)—(ii) above, the Company will specify in writing to you the nature of the act, omission, refusal, or failure that it deems to constitute Cause and, if the Board
of Directors reasonably considers the situation to be correctable, it shall give you 30 days after you receive such notice to correct the situation (and thus avoid termination for Cause), unless the Company agrees to extend the time for
correction. You agree that the Board will have the discretion to determine Cause and whether your correction is sufficient. 
  
 For purposes of this Agreement, “Good Reason” means that without your consent, ADVO: 
  

	 	(i)	materially reduces your base pay, other than a pro rata reduction applicable to members of the ADVO Operating Committee (other than the CEO) generally; or

  

	 	(ii)	assigns you duties materially inconsistent with, or substantially diminishes, your status or responsibilities as CFO. 

  
 Good Reason excludes the results of any action the Company takes to comply with the
directions of a governmental entity (such as placing you on administrative leave). You must give written notice to the Company of your intention to resign for Good Reason within thirty (30) days after the occurrence of the event that you assert
entitles you to resign for Good Reason or you will waive your rights as to that reason. In the notice, you must state the condition that you consider provides you with Good Reason and you must give the Company an opportunity to cure the condition
within thirty (30) days after your notice (with the thirty (30) day period shortened to ten (10) days if the failure relates to a nonpayment of base salary and such nonpayment is not cured within five (5) days after you provide written notice of
such nonpayment to the Company). If the Company fails to cure the condition, your resignation will be effective on the forty-fifth (45th) day (or the twentieth (20th) day for nonpayment of base salary) after your notice (unless
the Company has previously waived such notice period in writing or agreed to a shorter notice period). You will not be treated as resigning for Good Reason if the Company already had Cause to terminate your employment as of the date of your notice
of resignation 
  
 (b) If you are terminated by ADVO other
than for Cause, or if you resign for Good Reason and you execute a comprehensive release of claims against the Company (and all officers, directors, employees, agents, stockholders and other related persons) in a form and scope acceptable to the
Company within five (5) business days following your termination, you will be eligible to receive an amount of severance pay equal to two (2) times your monthly base salary rate in effect immediately prior to your termination, in equal monthly
installments for twenty-four (24) months from the date of your termination (the “Severance Period”). The first severance payment will be made upon the first regularly scheduled ADVO payday on or following your execution of the release
agreement referenced above, will be made in accordance with ADVO’s normal payroll practices as established or modified from time to time, and will be subject to all federal, state and/or local payroll and withholding taxes. In addition to these
severance payments, all of the outstanding equity incentives you received pursuant to your offer letter that have not yet vested, shall immediately vest and become fully exercisable. 
  
 (c) If ADVO determines that you have violated the terms of any non-competition, non-solicitation or confidentiality
obligation owed to ADVO, then you agree that ADVO, regardless of the manner of your employment termination, can refuse to pay or cease paying and performing all severance-related obligations under this Paragraph 3. The cessation of these severance
payments and benefits shall be in addition to, and not as an alternative to, any other remedies at law or in equity available to the Company, including the right to seek an injunction, which you shall not oppose. 
  
 4. Assignment. ADVO may assign this Agreement, which will inure
to the benefit of and be enforceable by ADVO’s successors and assigns. You may not assign this Agreement. 
  

 3 

 5. Miscellaneous. 
  
 (a) In the event that any provision of this Agreement is determined to be legally invalid, the affected provision
shall be stricken from the Agreement and the remaining terms of the Agreement shall be enforced so as to give effect to the intention of the parties to the maximum extent practicable. 
  
 (b) This Agreement and any claims arising out of this Agreement (or any other claims arising out of the relationship
between the parties) shall be governed by and construed in accordance with the laws of the State of Connecticut and shall in all respects be interpreted, enforced and governed under the internal and domestic laws of such state, without giving effect
to the principles of conflicts of laws of such state. 
  
 (c)
No waiver by the Company of any breach by you of any provision hereof shall be deemed to be a waiver of any later or other breach thereof or as a waiver of any other provision of this Agreement. This Agreement may not be waived, changed,
discharged or terminated orally or by any course of dealing between the parties, but only by an instrument in writing signed by you and the Company. 
  
 (d) This Agreement is the exclusive agreement with respect to the subject matter hereof. All prior negotiations and agreements regarding the
subject matter hereof, whether oral or written, express or implied, are hereby superseded and cancelled. 
  
 If this letter sets forth our agreement, kindly sign and return to ADVO the enclosed copy of this letter. 
  

			
	 Sincerely,
  
 ADVO, INC.

		
	By:	 	/S/    DONALD SCHNEIDER        
	 	 	 Donald Schneider
 EVP and Chief Human Resources Officer

  
  
 Accepted and agreed to this 2nd day
of June , 2005 
  
  

			
	 
		
	 	 	/s/    JEFFREY E. EPSTEIN        
	 	 	Jeffrey E. Epstein

  

 4

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