Joint Venture Contract

Exhibit 10.1

JOINT VENTURE CONTRACT


Between


CDGM Glass Co., Ltd


And


LightPath Technologies, INC

FOR THE ESTABLISHMENT OF


LightPath CDGM (Chengdu) Optical Co. Ltd


2008

Chengdu Municipality, People' s Republic of China


TABLE OF CONTENTS


1. DEFINITIONS 3

2. PARTIES TO THE CONTRACT 7

3. REPRESENTATIONS AND WARRANTIES OF THE PARTIES 7

4. ESTABLISHMENT OF THE COMPANY 11

5. PURPOSES, SCOPE OF BUSINESS AND SCALE OF PRODUCTION OF THE COMPANY 13

6. TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL 14

7. RESPONSIBILITIES OF THE PARTIES 17

8. BUILDING AND UTILITIES 20

9. INTERLLECTUAL PROPERTY AND LICENSING OF TECHNOLOGY 22

10. PURCHASE OF EQUIPMENT MATERIALS 23

11. SALES OF PRODUCTS 24

12. BOARD OF DIRECTORS AND SUPERVISORS 24

13. MANAGEMENT ORGANIZATION 32

14. LABOUR MANAGEMENT 38

15. ANNUAL OPERATING PLANS AND BUDGETS 40

16. TAXATION, THREE FUNDS AND PROFIT DISTRIBUTION 41

17. FINANCIAL AFFAIRS AND ACCOUNTING 43

18. BANK ACCOUNTS AND FOREIGN EXCHANGE 46

19. CONFIDENTIALITY AND NON-COMPETITION 46

20. DURATION OF THE COMPANY AND EXTENSION 49

21. EARLY TERMINATION 50

22. LIQUIDATION AND DISSOLUTION 51

23. LIABILITY FOR BREACH OF CONTRACT 57

24. INSURANCE 58

25. FORCE MAJEURE 59

26. APPLICABLE LAW 60

27. DISPUTE RESOLUTION 60

28. MISCELLANEOUS 61


1

SCHEDULES


Schedule 1 Contributions of Parties and Terms Thereof

Schedule 2 List of Products of the Company


2

PRELIMINARY STATEMENT


THIS JOINT VENTURE CONTRACT is entered in accordance with the Law of the People' s Republic of China on Chinese-Foreign Equity Joint Ventures and the Regulations for the Implementation of the Law of the People' s Republic of China on Chinese-Foreign Equity Joint Ventures (hereinafter collectively referred to as the " Joint Venture Law" ) and other relevant and officially promulgated Chinese laws and regulations between:


CDGM Glass Co., Ltd (hereinafter referred to as " Party A" );

AND


LightPath Technologies, INC. (hereinafter referred to as " Party B" ). LightPath Technologies, INC.

Parry A and Party B may hereinafter be referred to individually as a " Party" or collectively as the " Parties" . The Parties hereby agree to establish an equity joint venture company at No 32 Xi Xin Avenue, High-New West Zone, Chengdu Municipality, Sichuan Province, the People' s Republic of China, on the basis of the principles of equality and mutual benefit.


The Parties hereby agree as follows:


1. DEFINITIONS

Unless the terms of this Joint Venture Contract otherwise provide, the following terms shall have the meanings set forth below:


" Company" shall mean LightPath CDGM (Chengdu) Optical Co. Ltd., the equity joint venture company established by the Parties pursuant to the Joint Venture Law, other relevant and officially promulgated laws and regulations of the PRC, and this Contract.


" Affiliate" , with respect to a -Party, shall mean any corporation, partnership, joint venture or other entity controlling, controlled by or under common control with such Party, but shall not


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include the Company; a person or entity shall be deemed to " control" another person or entity if the former possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the latter.


" Assist" or " Assistance" shall mean, respectively, to actively and aggressively-support and implement, or the active and aggressive support and implementation of, an activity or application with full intent and commitment to obtain the results sought by the Party or the Company which is being assisted.

" Board" or " Board of Directors" shall mean the Board of Directors of the Company.


" Building" shall mean the building of approximately 4400 square meters (4400 m 2 ), that is released by the Company with assistance by Party A as evidenced by the Building Ownership Certificate and that is located at No 32 Xi Xin Avenue, High-New West Zone, Cheng du Municipality, Si Chuan Province.


" Business License" shall mean the business license to be issued to the Company by the Chengdu Municipal Administration Bureau for Industry and Commerce.


" Chairman" shall mean the chairman of the Board of Directors of the Company.

" China" or the " PRC" shall mean the People' s Republic of China.

" Confidential Information" shall mean technology and know-how as well as trade secrets, strategic business or marketing information, business projections, secret processes and other processes, data, formulae, programs, manuals, designs, sketches, photographs, plans, drawings, specifications, reports, studies, findings, non-patented inventions and ideas, and other information relating to the production, packaging, use, pricing, or sales and distribution, whether of a technical, engineering, operational, business or economic nature, whenever designated as " Confidential" by Party A or Party B or their Affiliates and provided by Party A, Party B or their Affiliates in connection with the establishment of the Company and any matters related thereto, the implementation of and/or the conduct of the


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business contemplated by this Contract and the other contracts contemplated herein. Confidential Information, however, shall not include information which is now or hereafter becomes part of the public domain through authorized publication, information which the receiving Party can demonstrate was in its possession at the time of receipt, and information which hereafter comes into the possession of the receiving Party And was or is not acquired by the receiving Party directly or indirectly from the providing Party or sources under an obligation of secrecy to such providing Party.


" Contract" shall mean this Joint Venture Contract.


" Director" shall mean a member of the Board of Directors.

" Effective Date" shall mean the day on which this Contract has been approved by all of the following parties, whichever occurs later: (i) each Party; and (ii) the Examination and Approval Authority.


" Establishment Date" shall mean the date on which the Business License of the Company is issued.


" Examination and Approval Authority" shall mean the relevant Chinese authority in Chengdu as is duly authorized by law to approve this Contract.


" Event of Force Majeure" shall mean any event, foreseeable or unforeseeable, the consequences of which are reasonably unavoidable or beyond the reasonable control of a Party, and which prevents total or partial performance of a non-payment obligation under this Contract by such Party.


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" Foreign Exchange" shall mean any foreign currency except RMB which can be freely exchanged, converted, or traded in the open international currency market.


" Initial Contribution Date" shall mean the mutually convenient date determined by the Parties in accordance with this Contract on which the Parties shall simultaneously contribute in full their respective initial contributions to the registered capital of the Company in the amounts set forth in Schedule 1 hereof.

" Joint Venture Term" shall mean the duration of the Company as provided for in Article 21 hereof in this contract.


" Raw Materials" shall mean raw glass and glass preforms for ground and polished lenses, as well as, molded glass applications. Typical configurations of preforms are bi-convex, plano-convex, spherical and plano-plano.


" Management Personnel" shall mean the General Manager, Deputy General Manager and such other senior personnel positions of the Company that are designated as Management Personnel positions by the Board from time to time.


" Product" or " Products" shall mean lenses with diameter less than 20mm to be manufactured by the Company as more particularly described in Schedule 2 hereto, as such schedule may be amended or modified by the Board from time to time.


" Renminbi" or " RMB" shall mean the lawful currency of the PRC.

" Three Funds" shall mean, collectively, the Company' s reserve fund, bonus and welfare fund and enterprise expansion fund.


" United States Dollars" or " US$" shall mean the lawful currency of the United States of America.


" Working Personnel" shall mean all employees and staff of the Company other than Senior Management Personnel and members of the Board.


6 2. PARTIES TO THE CONTRACT


The Parties to this Contract are as follows:


(a) CDGM Glass Co., Ltd, a company registered with the Chengdu_Municipal Administration of Industry and Commerce (Business License No. 5101001810292) and with its legal address at No 6 South Jianshe Zhi Road, Chengdu City, Sichuan Province, PRC.


The legal representative of Party A is:


Name:


Li Zong Qiao


Position:


Chairman


Nationality:


People' s Republic of China


(b) LightPath Technologies, INC , a company organized and existing under the laws of United States with its registered office at 2603 Challenger Tech Court, Suite 100 Orlando, Florida, US.


The legal representative of Party B is:


Name:


Robert, Ripp


Position:


Chairman


Nationality:


American


7 3. REPRESENTATIONS AND WARRANTIES OF THE PARTIES


3.1 Representations and Warranties of Party A


Party A hereby represents and warrants to Party B as follows:

(a) Party A is a company duly organized and validly existing under the laws of the PRC and is in compliance with all conditions required to maintain its status as an enterprise legal person under the laws of the PRC.


(b) Party A has submitted to Party B a valid, true and complete copy of its current business license bearing a current annual inspection seal from the relevant administration for industry and commerce.


(c) Party A has taken all appropriate and necessary corporate action to (i) empower its legal representative or such other duly authorized representative whose signature is affixed hereto and thereto to sign this Contract, (ii) authorize the execution and delivery of this Contract and all of the contracts contemplated herein to which it is a party, and (iii) authorize the performance and observance of the terms and conditions hereof and thereof.


(d) Party A has obtained all consents, approvals and authorizations necessary for the valid execution and delivery of this Contract and all of the contracts contemplated herein to which it is a Party and to observe and perform its obligations hereunder and thereunder; provided, however, that this Contract shall be subject to the approval of the Examination and Approval Authority or other examination and approval authority before the same may become effective.


(e) Except the litigation known by Party B, No litigation, arbitration or administrative proceeding is currently taking place or pending or, to the best knowledge of Party A or its relevant Affiliates, threatened against Party A or its relevant Affiliates. Furthermore, neither Party A nor any of its relevant Affiliates is in violation of any law, regulation, government directive whether having force of law or not, or in default under any judgment, order, authorization, agreement or obligation applicable to the business of Party A or its relevant Affiliates.


8 (f) Upon the approval of the Examination and Approval Authority, this Contract shall constitute the legal, valid and binding obligation of Party A enforceable against Party A in accordance with its terms.


(g) Party A' s execution; delivery and performance of this Contract or any of the other contracts contemplated herein will not violate any of their constitutive documents, any other agreement or obligation of Party A or its relevant Affiliates, or currently effective law, regulation or decree of China that may be applicable to any aspect of the transactions contemplated hereunder.

(h) All information supplied to Party B by Party A in relation to this Contract, including information concerning the business and financial status of Party A or its relevant Affiliates and any assets, inventories and outstanding contractual arrangements with their respective suppliers and customers, is true and correct in all material respects, whether any of the same has been verified or audited by an independent third party or not.


(i) Party A has shared to date and shall continue to share with Party B copies of all PRC government open documents concerning this Contract and the other contracts and documents set forth herein and therein as soon as said documents come into its possession.


3.2 Representations and Warranties of Party B


Party B hereby represents and warrants to Party A as follows:

(a) Party B is a company duly organized, validly existing and in good standing under the laws of United States.


9 (b) Party B has submitted to Party A a valid, true and complete copy of its certificate of incorporation.

(c) Party B has taken all appropriate and necessary corporate action (i) to empower its duly authorized representative whose signature is affixed hereto or thereto to sign this Contract and all of the contracts contemplated herein to which it is a party, (ii) authorize the execution and delivery of this Contract and all of the contracts contemplated herein to which it is a party, (iii) to authorize the performance and observance of the terms and conditions hereof and thereof.br/>


(d) Party B has obtained all consents, approvals and authorizations necessary for the valid execution and delivery of this Contract and all of the contracts referred to herein to which it is a party; provided, however, that this Contract shall be subject to the approval of the Examination and Approval Authority before the same may become effective.

(e) Upon the approval of the Examination and Approval Authority, this Contract shall constitute the legal, valid and binding obligation of Party B enforceable against Party B in accordance with its terms.


(f) Party B' s execution, delivery and performance of this Contract or any of the other contracts contemplated herein will not violate any of their constitutive documents, any other agreement or obligation of Party B or its relevant Affiliates, or currently effective law, regulation or decree of the United States that may be applicable to any aspect of the transactions contemplated hereunder.


10 (g) Except the litigation already known by Party A, no litigation, arbitration or administrative proceeding is currently taking place or pending or, to the best knowledge of Party B or its relevant Affiliates, threatened against Party B or its relevant Affiliates. Furthermore, neither Party B nor any of its relevant Affiliates is in violation of any law, regulation, government directive whether having force of law or not, or in default under any judgment, order, authorization, agreement or obligation applicable to the business of Party B or its relevant Affiliates.


3.3 Prior Obligations. The Company shall not be liable or have any responsibility whatsoever for any obligations or liabilities not concerning to this Contract of a Party that existed on or were incurred prior to the Effective Date.


4. ESTABLISHMENT OF THE COMPANY


4.1 Establishment of the Company


In accordance with the Joint Venture Law and other relevant and officially promulgated PRC laws and regulations, the Parties hereby agree to establish the Company pursuant to the terms of this Contract. The Company shall be a legal person under the laws of the PRC subject to the protection and jurisdiction of PRC law.

4.2 Name and Address of the Company


(a) The name of the Company shall be " LightPath CDGM (Chengdu) Optical Co. Ltd." in English and in Chinese. " LightPath CDGM (Chengdu) Optical Co. Ltd."


(b) The legal address of the Company shall be No 32 Xi Xin Avenue, High-New West Zone, Chengdu Municipality, Sichuan Province, the People' s Republic of China.


11 4.3 Change of Name.

The Company shall immediately change its name by removing therefrom the tradename " LightPath" or without replacing it with any similar trade names, words or expressions when this Contract or the Company is terminated. If as a result of any change in the laws or regulations of China, (i) Party B' s participation in the registered capital of the Company at any time during the existence of this Contract falls below fifty percent (50%); or (ii) Party B' s representatives no longer have the power to appoint a majority of the Board of Directors of the Company, then Party B has the right to decide whether withdraw its name from the Company or not. Without Party A or Party B' s prior consent, Party A or Party B undertakes not to continue or take over the Company' s business using the tradename " LightPath" or CDGM or any similar words or expressions.


4.4 Limited Liability Company

The Company shall be a limited liability company. The liability of each of the Parties for the obligations, liabilities, debts and losses of the Company shall be limited to that Party' s obligation to make its respective contribution to the registered capital of the Company within the period required by Chinese law. Unless it has agreed otherwise in a separate agreement with a third party, a Party shall not be liable for any obligations or liabilities of the Company. Creditors of the Company shall have recourse only to the assets of the Company and shall not have any claim against the Parties for the obligations of the Company, and in case any creditor of the Company brings any action or claim against any Party for any act of omission of the Company, the Company shall defend, at its cost, such Party and hold harmless such Party against such claims or actions or any loss or expenses incurred thereby. Any Party shall not be required to provide any further funds to or on behalf of the Company beyond the amount contributed by the Party under this Contract.


12 4.5 Profits and Losses


The Parties shall share the profits, losses and risks of the Company in proportion to and, in the event of losses, to the extent of their respective contributions to the registered capital of the Company.


4.6 No Agency Relationship


Neither Party is the agent of the other Party nor does either Party have any power to bind the other Party or to assume or to create any obligation of responsibility, express or implied, on behalf of the other Party in the other Party' s name. Neither this Contract nor any of the other contracts contemplated herein shall be construed as constituting Party A and Party B as partners or as creating any other form of legal association which would impose liability upon one Party for the act or failure to act of the other.


4.7 Other Contracts


(i) the Company, Crystal Technology and Party A shall duly execute the Plant Lease Contract ; and (ii) the Company, Party A and Party B shall duly execute the Technology License Contract; and (iii) the Company and Party A shall duly execute the Raw Materials Supply Agreement.( the Company has the right to make inquiry from other resource) (iv) The company and Party B shall duly execute the Equipment Purchase Contract.


4.8 Branches and Subsidiaries


The Company may establish branch offices and/or subsidiaries in the PRC upon the approval of the Board of Directors and, if necessary, the Examination and Approval Authority and the relevant local government departments.


13 5. PURPOSES, SCOPE OF BUSINESS AND SCALE OF PRODUCTION OF THE COMPANY


5.1 Purposes and Scope of the Company


The purpose and scope of business of the Company shall be to develop, mold and manufacture the Aspheric Lenses and Assemble Modules for visible imaging applications is Cell Phones and digital Cameras (the " Products' ) and other optical products, to sell and distribute the Products in Chinese domestic and international markets, to provide technical services and after-sales services related to the Products, and to carry out any other activities necessary to accomplish the foregoing.


5.2 Estimated Scale of Production


The estimated scale of production is as set forth in the Feasibility Study. The target volume is 1Million pieces per month and is projected to be achieved after 12 months of operation. According to mutual discussion, the Company' s production scale may be expanded. On the base of current 10million USD investment, additional 10million will be invested and each party still holds 50% share.


6. TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL


6.1 Total Amount of Investment


The total amount of investment of the Company shall be [US$10.0M (10 million United States Dollars)] .


6.2 Registered Capital


The registered capital of the Company shall be [US$10.0M ($10.0 million United States Dollars)] and shall be contributed by the Parties in the following proportions:


(a) Party A' s aggregate contribution to the registered capital of the Company shall be US Dollars [$5.0M] (5.0 million United States Dollars)] representing fifty percent (50%) of the total registered capital of the Company, and shall be contributed by RMB or US Dollars remittance equivalent to the amount marked in US Dollars.


14 (b) Party B' s aggregate contribution to the registered capital of the Company shall be [US $5M] (5million United States Dollars)] representing fifty percent (50%) of the total registered capital of the Company, which shall be contributed in the form of US Dollars cash as set forth on Schedule 1.

6.3 Additional Financing

The Company may obtain additional funds through loans from domestic or foreign financial institutions on terms and conditions approved by the Board of Directors and the Parties. The Company may also obtain loans or guarantees from the Parties or their Affiliates on terms and conditions to be determined by the relevant parties; provided, however, that no Party shall be obligated to lend funds to the Company or to guarantee a loan to the Company from a third party or financial institution. In the event a Party does agree to lend funds to the Company or to guarantee a loan to the Company from a third party or financial institution, such Party shall be entitled to be paid interest on the loan at such rate or guarantee fees in such amount that such Party would have been entitled to be paid as if such Party were not a party to this Contract and as if the transaction were a negotiated arm' s length financing from a third party. The Company may sets relevant rights and interests in those of its assets permitted by law to be mortgaged or secured in order to obtain loans.


6.4 Timing of Capital Contributions

Contributions to the registered capital of the Company shall be made by the Parties in accordance with Schedule 1; provided, however, that Schedule 1 may be adjusted by the unanimous vote of the Board in light of actual conditions consistent with the requirements of relevant regulations. However, any adjustment of the Contributions will be subject to the final approval of the Examination and Approval Authority.


15 6.5 Investment Certificates

Within thirty (30) days after the Parties have made their initial capital contributions, the Company shall engage an accountant registered in China to verify such contributions. Upon the issuance of a verification report by such accountant, the Company shall issue to each contributing Party an interim investment certificate signed by the Chairman evidencing that the contribution was made. The Company may issue such interim investment certificates as each Party makes further capital contributions and the same have been verified by the accountant within thirty (30) after each contribution. Within ten (10) days after the entire registered capital of the Company has been contributed by the Parties, the Company shall request that an accountant registered in China verify each Party' s total contributions and issue a final certificate of verification. Upon receipt of the final certificate of verification from the accountant, the Company shall promptly issue a formal investment certificate to each Party setting forth the aggregate amount of such Party' s contribution(s). After issuance of such formal investment certificate and all register procedures are finished, such Party shall return to the Company for cancellation all of the interim investment certificates previously issued to such Party. Such final investment certificate shall be signed by the Chairman and affixed the seal of the Company.


6.6 Increase or Reduction of Registered Capital

Any increase or reduction in the registered capital of the Company shall be approved by the Board of Directors and submitted to the appropriate examination and approval authorities for approval. Upon receipt of such approval, the Company shall register the increase or reduction in the registered capital with the appropriate administration for industry and commerce. Each Party shall contribute towards any increase in the registered capital a proportion of such increase equal to the proportion that such


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Party' s contributions to the registered capital of the Company; provided, however, that the Parties may agree to adjust their proportional interests in the Company' s registered capital subject to the approval of the appropriate examination and approval authorities.


7. RESPONSIBILITIES OF THE PARTIES

7.1 Responsibilities of Party A:

Among its responsibilities under this Contract, Party A shall:

(a) make its contributions to the registered capital of the Company in accordance with the relevant provisions of this Contract;

(b) enter into, or cause its Affiliates to enter into, the contracts or any of its Affiliates is a party;

(c) Assist the Company in obtaining the Certificate of Approval, Business License when setting up and other permission providing for a term of validity and scope of business acceptable to both Parties;

(d) Assist the Company in filing/registering the Plant Lease Contract with all relevant government departments and handling all other necessary procedures to ensure that the Company has the exclusive right to lease the Building in accordance with the terms thereof;

(e) Assist the Company in obtaining the Chinese tax preferences, exemptions and other preferential tax treatment available to or for the Company;


17 (f) Assist the Company, if requested, in handling all licenses, approvals and registrations for the importation of technology in accordance with the terms set forth in the Technology License Contract;

(g) Assist the Company, if requested, in making import customs declarations, obtaining relevant import licenses, approvals and exemptions from customs duties and taxes for any machinery and equipment to be sold to the Company by Party B.

(h) Recommend and assist in the recruitment of suitable Chinese management personnel, technical personnel and other necessary staff and workers to be employed by the Company;

(i) Assist the Company in purchasing raw materials, articles for office use and communication facilities from the Chinese domestic market;

(j) Provide assistance to foreign workers and staff in obtaining entry visas, work licenses, and other needs for their stay and travel in the PRC;

(k) Assist the Company to find other customers for its products

(l) Assist the Company to obtain PRC government' s recognition as HI-TECH enterprise or Encouraged enterprise, if possible; and

(m) Handle other matters entrusted to it by the Compan ...