Document:

Form of Supplemental Indenture

 Exhibit 4.2 
 SUSQUEHANNA BANCSHARES, INC. 
 AND 
 THE BANK OF NEW YORK, 
 as Trustee 
 SUPPLEMENTAL INDENTURE 
 Dated as of
December 12, 2007 
 to 
 JUNIOR SUBORDINATED INDENTURE 
 Dated as of November 5, 2007 
 9.375% CAPITAL EFFICIENT NOTES, SERIES I 

 SUPPLEMENTAL INDENTURE, dated as of December 12, 2007, between SUSQUEHANNA BANCSHARES, INC., a
Pennsylvania corporation (the “Company”), having its principal office at 26 North Cedar Street, Lititz, Pennsylvania 17543, and THE BANK OF NEW YORK, a New York banking corporation, having a designated corporate trust office located in
Pittsburgh, Pennsylvania, as Trustee (the “Trustee”). 
 WITNESSETH: 
 WHEREAS, the Company and the Trustee have heretofore executed and delivered a certain Indenture, dated as of November 5, 2007, (the
“Indenture”), providing for the issuance from time to time of Securities; 
 WHEREAS, Section 9.01 of the Indenture provides
that a supplemental indenture may be entered into by the Company and the Trustee without the consent of any Holder of any Securities to establish the form or terms of Securities of any series as permitted by Sections 2.01 or 3.01 of the
Indenture; 
 WHEREAS, pursuant to Sections 2.01 and 3.01 of the Indenture, the Company desires to provide for the establishment of a
new series of Securities under the Indenture, the form and substance of such Securities and the terms, provisions and conditions thereof to be set forth as provided in the Indenture and this Supplemental Indenture; 
 WHEREAS, the conditions set forth in the Indenture for the execution and delivery of this Supplemental Indenture have been satisfied; and 
 WHEREAS, all things necessary to make this Supplemental Indenture a valid agreement of the Company and the Trustee, in accordance with its terms, and a
valid amendment of, and supplement to, the Indenture have been done. 
 NOW, THEREFORE, in consideration of the premises and the purchase of
the Securities of the series established by this Supplemental Indenture by the Holders thereof from time to time on or after the date hereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all such Holders, that the
Indenture is supplemented and amended, to the extent and for the purposes expressed herein, as follows: 
 ARTICLE I 
 DEFINITIONS 
 1.1 (a) For all purposes
of this Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires, (i) references to any Article, Section or subdivision thereof are references to an Article, Section or other subdivision of this
Supplemental Indenture and (ii) capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture and the following terms used in this Supplemental Indenture shall have the following respective meanings:

 “Additional Interest” means the interest, if any, that shall accrue on any interest on the CENts the payment of which has
not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified in Section 2.1(e) from the applicable Interest Payment Date. 
  

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 “Alternative Payment Mechanism” means the alternative payment mechanism set forth in
Section 2.1(i). 
 “APM Commencement Date” means, with respect to any Deferral Period, the earlier of (i) the
first Interest Payment Date following the commencement of such Deferral Period on which the Company pays any current interest on the CENts and (ii) the fifth anniversary of the commencement of such Deferral Period. 
 “Bankruptcy Event” means any of the events set forth in Section 7.01(i) or (ii) of the Indenture. 
 “Business Day” is any day, other than (i) a Saturday, Sunday or other day on which banking institutions in The City of
New York or in Pittsburgh, Pennsylvania, are authorized or required by law or executive order to remain closed, (ii) a day on which the Corporate Trust Office of the Property Trustee (as defined in the Trust Agreement) or the Debenture
Trustee is closed for business or (iii) during any Interest Period for which interest is based on LIBOR, a day that is not a day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. 
 “Calculation Agent” means The Bank of New York, or any other firm appointed by the Company, acting as calculation agent for the CENts.

 “Capital Securities” has the meaning set forth in the Trust Agreement. 
 “CENts” or “CENt” has the meaning set forth in Section 2.1(a). 
 “Common Equity Issuance Cap” has the meaning set forth in clause (1) of Section 2.1(i). 
 “Common Stock” means any of the Company’s equity securities (including equity securities held as treasury shares and equity
securities sold pursuant to any dividend reinvestment plan and employee benefit plans of the Company) that have no preference in the payment of dividends or amounts payable upon the Company’s liquidation, dissolution or winding up (including a
security that tracks the performance of, or relates to the results of, a business, unit or division of the Company), and any securities issued in exchange therefor in connection with a merger, consolidation, binding share exchange, business
combination, recapitalization or other similar event. 
 “Current Stock Market Price” of the Common Stock on any date means
(i) the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in
composite transactions by the Nasdaq Global Select Market or, if the Common Stock is not then listed on the Nasdaq Global Select Market, as reported by the principal U.S. securities exchange on which the Common Stock is traded or quoted,
(ii) if the Common Stock is not listed on any U.S. securities exchange on the relevant date, the last quoted 

  

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bid price for the Common Stock in the over-the-counter market on the relevant date as reported by the National Quotation Bureau or similar organization, or
(iii) if the Common Stock is not so quoted, the average of the mid-point of the last bid and ask prices for the Common Stock on the relevant date from each of at least three nationally recognized independent investment banking firms selected by
the Company for this purpose. 
 “Deferral Period” means each period beginning on an Interest Payment Date with respect to
which the Company elects pursuant to Section 2.1(g) to defer all or part of any interest payment and ending, subject to Section 2.1(p), on the earlier of (i) the tenth anniversary of such Interest Payment Date and (ii) the next
Interest Payment Date on which the Company has paid the deferred amount, all deferred amounts with respect to any subsequent period and all other accrued interest on the CENts. 
 “Distributions” has the meaning set forth in the Trust Agreement. 
 “Distribution Date” means a date on which Distributions are payable. 
 “Eligible Proceeds” means, with respect to any Interest Payment Date, the net proceeds (after underwriters’ or placement
agents’ fees, commissions or discounts and other expenses relating to the issuance or sale) the Company has received during the 180-day period prior to such Interest Payment Date from the issuance or sale of Qualifying APM Securities (excluding
sales of Qualifying Preferred Stock and Mandatorily Convertible Preferred Stock in excess of the Preferred Stock Issuance Cap) to Persons that are not Subsidiaries. 
 “Existing Parity Securities” has the meaning set forth in Section 2.1(g). 
 “Extension Date” has the meaning set forth in clause (iii) of Section 2.1(d). 
 “Federal
Reserve” means the Board of Governors of the Federal Reserve System collectively with any successor federal bank regulatory agency having primary jurisdiction over the Company. 
 “Final Repayment Date” has the meaning set forth in clause (iii) of Section 2.1(d). 
 “Guarantee” means the Company’s guarantee of the CENts issued as described in Section 2.1(a). 
 “Interest Payment Date” has the meaning set forth in Section 2.1(e). 
 “Interest Period” means the period from and including any Interest Payment Date (or, in the case of the first Interest Payment Date, the
issue date of the CENts) to but excluding the next Interest Payment Date. 
 “LIBOR” means, with respect to any Interest
Period, the rate (expressed as a percentage per annum) for deposits in U.S. dollars having the relevant maturity commencing on the first day of that Interest Period that appears on the Reuters Screen LIBOR01 Page as of 11:00 a.m. (London time) on
the LIBOR Determination Date for that Interest Period. If such rate does not appear on the Reuters 

  

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Screen LIBOR01 Page, LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars for the relevant maturity commencing on the first
day of that Interest Period and in a principal amount of not less than $1,000,000 are offered to prime banks in the London interbank market by four major banks in the London interbank market selected by the Calculation Agent (after consultation with
the Company), at approximately 11:00 a.m., London time on the LIBOR Determination Date for that Interest Period. The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two
such quotations are provided, LIBOR with respect to that Interest Period will be the arithmetic mean (rounded upward if necessary to the nearest whole multiple of 0.00001%) of such quotations. If fewer than two quotations are provided, LIBOR with
respect to that Interest Period will be the arithmetic mean (rounded upward if necessary to the nearest whole multiple of 0.00001%) of the rates quoted by three major banks in New York City selected by the Calculation Agent, at approximately 11:00
a.m., New York City time, on the first day of that Interest Period for loans in U.S. dollars to leading European banks for the relevant maturity commencing on the first day of that Interest Period and in a principal amount of not less than
$1,000,000. However, if fewer than three banks selected by the Calculation Agent to provide quotations are quoting as described above, LIBOR for that Interest Period will be the same as LIBOR as determined for the previous Interest Period, or in the
case of the Interest Period beginning on December 12, 2037, 9.375%. The establishment of LIBOR for each Interest Period by the Calculation Agent shall (in the absence of manifest error) be final and binding. For the purposes of this definition,
“Calculation Agent” means JPMorgan Chase Bank, National Association, or any other firm appointed by us, acting as calculation agent; “LIBOR Determination Date” means the second London Banking Day immediately preceding the first
day of the relevant Interest Period; a “London Banking Day” is any day on which commercial banks are open for general business (including dealings in deposits in U.S. dollars); and “Reuters Screen LIBOR01 Page” means the display
designated on page 3750 on the Reuters Screen LIBOR01 Page (or such other page as may replace the Reuters Screen LIBOR01 Page on the service or such other service as may be nominated by the British Bankers’ Association for the purpose of
displaying London interbank offered rates for U.S. Dollar deposits). 
 “Mandatorily Convertible Preferred Stock” means
preferred stock with (a) no prepayment obligations of the liquidation preference on the part of the issuer thereof, whether at the election of the holders or otherwise, and (b) a requirement that the preferred stock converts into Common
Stock within three years from the date of its issuance at a conversion ratio within a range established at the time of issuance of the preferred stock, subject to customary anti-dilution adjustments. 
 “Market Disruption Event” means the occurrence or existence of any of the following events or sets of circumstances: 
 (a) trading in securities generally (or in the Common Stock or the Company’s preferred stock specifically) on the New York Stock Exchange or
any other national securities exchange or over-the-counter market on which the Common Stock and/or the Company’s preferred stock is then listed or traded shall have been suspended or its settlement generally shall have been materially disrupted
or minimum prices shall have been established on any such exchange or market by the Commission, the relevant exchange or market or by any other regulatory body or governmental agency having jurisdiction, and the establishment of such minimum prices
materially disrupts or otherwise has a material adverse effect on trading in, or the issuance and sale of, Common Stock or the Company’s preferred stock or Qualifying APM Securities or Qualifying Capital Securities, as the case may be;

  

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 (b) the Company would be required to obtain the consent or approval of its stockholders or a regulatory
body (including, without limitation, any securities exchange) or governmental authority to issue Qualifying APM Securities pursuant to Section 2.1(i) or to issue Qualifying Capital Securities pursuant to Section 2.1(d), as the case may be,
and the Company fails to obtain such consent or approval notwithstanding its commercially reasonable efforts to obtain such consent or approval (including, without limitation, failing to obtain approval for such issuance if required from the Federal
Reserve after having given notice to the Federal Reserve as required under Section 2.1(i)); or 
 (c) a banking moratorium shall have
been declared by the federal or state authorities of the United States and such moratorium materially disrupts or otherwise has a material adverse effect on trading in, or the issuance and sale of, Common Stock or the Company’s preferred stock
or Qualifying APM Securities or Qualifying Capital Securities, as the case may be; 
 (d) a material disruption shall have occurred in
commercial banking or securities settlement or clearance services in the United States and such disruption materially disrupts or otherwise has a material adverse effect on trading in, or the issuance and sale of, Common Stock or the Company’s
preferred stock or Qualifying APM Securities or Qualifying Capital Securities, as the case may be; 
 (e) the United States shall have become
engaged in hostilities, there shall have been an escalation in hostilities involving the United States, there shall have been a declaration of a national emergency or war by the United States or there shall have occurred any other national or
international calamity or crisis and such event materially disrupts or otherwise has a material adverse effect on trading in, or the issuance and sale of, Common Stock or the Company’s preferred stock or Qualifying APM Securities or Qualifying
Capital Securities, as the case may be; 
 (f) there shall have occurred such a material adverse change in general domestic or international
economic, political or financial conditions, including as a result of terrorist activities, and such change materially disrupts or otherwise has a material adverse effect on trading in, or the issuance and sale of, Common Stock or the Company’s
preferred securities or Qualifying APM Securities or Qualifying Capital Securities, as the case may be; 
 (g) an event occurs and is
continuing as a result of which the offering document for the offer and sale of Qualifying APM Securities or Qualifying Capital Securities, as the case may be, would, in the Company’s reasonable judgment, contain an untrue statement of a
material fact or omit to state a material fact required to be stated in such offering document or necessary to make the statements in such offering document not misleading and either (i) the disclosure of such event at such time, in the
Company’s reasonable judgment, is not otherwise required by law and would have a material adverse effect on its business or (ii) the disclosure relates to a previously undisclosed proposed or pending development or material business
transaction, and the Company has a bona fide business reason for keeping the same confidential or the disclosure of which would impede the Company’s ability to consummate such transaction; provided that no single suspension period
described in this clause (g) shall exceed 90 consecutive days and multiple suspension periods described in this clause (g) shall not exceed an aggregate of 180 days in any 360-day period; or 
  

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 (h) the Company reasonably believes that the offering document for the offer and the sale of Qualifying
APM Securities or Qualifying Capital Securities, as the case may be, would not be in compliance with a rule or regulation of the Commission (for reasons other than those referred to in clause (g)) and the Company determines that it is unable to
comply with such rule or regulation or such compliance is unduly burdensome, provided that no single suspension period described in this clause (h) shall exceed 90 consecutive days and multiple suspension periods described in this clause
(h) shall not exceed an aggregate of 180 days in any 360-day period. 
 “Parity Securities” means any debt securities
that the Company may issue in the future that rank pari passu upon the Company’s liquidation with the CENts. 
 “Preferred Stock Issuance Cap” has the meaning set forth in clause (2) of Section 2.1(i). 
 “Qualifying APM Securities” means Common Stock, Qualifying Preferred Stock, Qualifying Warrants and Mandatorily Convertible Preferred Stock, provided that the Company may, without the consent of the Holders of the CENts,
amend the definition of “Qualifying APM Securities” to eliminate Common Stock or Qualifying Warrants (but not both) and/or Mandatorily Convertible Preferred Stock from the definition if, after the issue date, an accounting standard or
interpretive guidance of an existing accounting standard issued by an organization or regulator that has responsibility for establishing or interpreting accounting standards in the United States becomes effective such that there is more than an
insubstantial risk that failure to eliminate Common Stock and/or Mandatorily Convertible Preferred Stock from the definition would result in a reduction in the earnings per share of the Company as calculated for financial reporting purposes.

 “Qualifying Warrants” means any net share settled warrants to purchase Common Stock that (i) have an exercise price
per share greater than the Current Stock Market Price as of the date of issuance thereof and (ii) the Company is not entitled to redeem for cash and the holders of which are not entitled to require the Company to repurchase for cash in any
circumstances. 
 “Rating Agency” means any nationally recognized statistical rating organization within the meaning of
Section 3(a)(62) under the Securities Exchange Act of 1934 that currently publishes a rating for the Company. 
 “Repayment
Date” means the Scheduled Maturity Date and each Interest Payment Date thereafter until the Company shall have repaid or redeemed all of the CENts. 
 “Replacement Capital Covenant” means the Replacement Capital Covenant, dated as of December 12, 2007, of the Company, as the same may be amended or supplemented from time to time in accordance
with the provisions thereof. 
 “Scheduled Maturity Date” has the meaning set forth in clause (i) of
Section 2.1(d). 
  

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 “Share Cap” has the meaning set forth in clause (5) of Section 2.1(i).

 “Trust” has the meaning set forth in Section 2.1(a). 
 “Trust Agreement” has the meaning set forth in Section 2.1(a). 
 (b) “Applicable Percentage,” “Qualifying Preferred Stock” and “Qualifying Capital Securities” shall
have the respective meanings set forth in the Replacement Capital Covenant. 
 ARTICLE II 
 TERMS OF SERIES OF SECURITIES 
 2.1.
Pursuant to Sections 2.01 and 3.01 of the Indenture, there is hereby established a series of Securities, the terms of which shall be as follows: 
 (a) Designation. The Securities of this series shall be known and designated as the “9.375% Capital Efficient Notes, Series I” of the Company (the “CENts”). The CENts initially shall be
issued to Susquehanna Capital I, a Delaware statutory trust (the “Trust”). The Trust Agreement for the Trust shall be the Amended and Restated Trust Agreement, dated as of December 12, 2007, among the Company, as Depositor, The Bank
of New York, as Delaware Trustee and Property Trustee, the Administrative Trustees (as defined therein) and the Holders (as defined therein) named therein (the “Trust Agreement”). The Guarantee will be issued pursuant to the Guarantee
Agreement, dated as of December 12, 2007, between the Company and The Bank of New York, as Guarantee Trustee. 
 (b) Aggregate
Principal Amount. The aggregate principal amount of the CENts that may be authenticated and delivered under the Indenture and this Supplemental Indenture is unlimited. $110,010,000 aggregate principal amount of the CENts are issued on the date
of this Supplemental Indenture. The Company has the right to issue additional CENts of this series in the future. Any such additional CENts shall have the same terms as the CENts issued on the date of this Supplemental Indenture but may be offered
at a different offering price and accrue interest from a different date than the CENts issued on the date of this Supplemental Indenture. Any such additional CENts will be treated as part of the same series as the CENts issued on the date of this
Supplemental Indenture for all purposes under the Indenture. 
 (c) Denominations. The CENts shall be issued only in fully registered
form, and the authorized denominations of the CENts shall be $25.00 principal amount and any integral multiple thereof. 
 (d) Scheduled Maturity Date. (i) Subject to clause (ii) of this
Section 2.1(d), the principal amount of, and all accrued and unpaid interest on, the CENts shall be payable in full on December 12, 2057, or if such day is not a Business Day, the following Business Day (the “Scheduled Maturity
Date”). The entire principal amount of the CENts outstanding shall be due and payable on the Scheduled Maturity Date in the event the Company does not deliver an Officers’ Certificate to the Trustee pursuant to clause (vii) of this
Section 2.1 (d) during the period from and including the 15th day to and including the 10th day immediately preceding the Scheduled Maturity Date. 
  

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 (ii) In the event the Company delivers an
Officers’ Certificate to the Trustee pursuant to clause (vii) of this Section 2.1(d) in connection with any Interest Payment Date, (A) the principal amount of CENts payable on such Interest Payment Date shall be equal to the
Applicable Percentage of the net cash proceeds that the Company will have received from the issuance of Qualifying Capital Securities during the period referred to in paragraph (B) of clause (v) of this Section 2.1(d), subject to
clause (viii) of this Section 2.1(d), (B) such principal amount shall be repaid on such Interest Payment Date pursuant to Article III and (C) the remaining CENts shall remain outstanding and shall be payable on the
immediately succeeding Interest Payment Date or such earlier date on which they are redeemed or shall become due and payable pursuant to Section 7.02 of the Indenture. The entire principal amount of the CENts outstanding shall be due and
payable on any Interest Payment Date in the event the Company does not deliver an Officers’ Certificate to the Trustee during the period from and including the 15th day to and including the 10th day immediately preceding such Interest Payment Date. 
 (iii) The principal of, and all accrued and unpaid interest on, all outstanding CENts shall be due and payable on the “Final Repayment Date.”
The Final Repayment Date shall initially be December 12, 2067, but the Company may elect to extend the Final Repayment Date up to two times in 10-year increments on either or both of December 12, 2017 and December 12, 2027 (each, an
“Extension Date”) and, as a result, the Final Repayment Date may be extended to December 12, 2077 or December 12, 2087, provided that all “extension criteria” described below are satisfied. If the Final Repayment Date
falls on a day that is not a Business Day, the Final Repayment Date shall be the following business day. 
 With respect to each Extension
Date, the following criteria shall constitute the “extension criteria:” 
 (A) on the applicable Extension Date the CENts are rated
at least Baa3 by Moody’s Investors Service Inc. (“Moody’s”) or BBB- by Standard & Poor’s Ratings Service, a division of McGraw-Hill, Inc. (“S&P”), or, if Moody’s and S&P (or their respective
successors) are no longer in existence, the equivalent rating by a nationally recognized statistical rating organization; 
 (B) during the
three years prior to the applicable Extension Date: 
 (1) no event of default has occurred in respect of any of the Company’s then
outstanding debt for money borrowed; and 
 (2) the Company did not have (and does not have at the Extension Date) any outstanding deferred
payments under any of its then-outstanding preferred stock or debt securities; and 
 (C) on the applicable Extension Date the Company
delivers a written certification to the Trustee dated as of such date stating that on such extension date (i) it believes that the likelihood that it will elect to defer interest on the CENts is remote, (ii) it expects to make all required
payments on the CENts in accordance with their terms and (iii) it expects to be able to satisfy its obligations under the Replacement Capital Covenant. 
  

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 If the Final Repayment Date is extended, then the Company shall notify the Trustee, which shall mail notice of such
extension by first class mail, postage prepaid, addressed to the Holders of the CENts at their respective last addresses appearing in the Security Register within 30 days of such extension. Such notice shall state the applicable Extension Date and
the Final Repayment Date after giving effect to the applicable extension. From and after the applicable Extension Date, the Final Repayment Date shall be the Final Repayment Date as so extended. 
 (iv) The obligation of the Company to repay the CENts pursuant to this Section 2.1(d) on any date prior to the Final Repayment Date shall be subject
to (A) its obligations under Article XIV of the Indenture to the holders of Senior Indebtedness and (B) its obligations under Section 2.1(h) with respect to the payment of deferred interest on the CENts. 
 (v) Until the CENts are repaid in full, the Company shall use “commercially reasonable efforts” (as defined in clause (vi) of this
Section 2.1(d)), subject to a Market Disruption Event: 
 (A) to raise sufficient net cash proceeds from the issuance of
Qualifying Capital Securities during a 180-day period ending on the date not more than 15 and not less than 10 Business Days prior to the Scheduled Maturity Date on which the Company delivers the notice required by Section 3.1 to permit
repayment of the CENts in full on the Scheduled Maturity Date pursuant to clause (i) of this Section 2.1(d); and 
 (B) if the Company is unable for any reason to raise sufficient proceeds from the issuance of Qualifying Capital Securities to permit payment in full on the Scheduled Maturity Date or any subsequent Interest Payment Date, to raise
sufficient net proceeds from the sale of Qualifying Capital Securities to permit repayment of the CENts in full on the following Interest Payment Date pursuant to clause (ii) of this Section 2.1(d) until the CENts are paid or redeemed in
full, an event of default that results in acceleration of the CENts occurs or the Final Repayment Date; and 
 the Company shall apply any such net proceeds
to the repayment of the CENts as provided in clause (viii) of this Section 2.1(d). 
 (vi) For purposes of this
Section 2.1(d), “commercially reasonable efforts” to sell Qualifying Capital Securities means commercially reasonable efforts to complete the offer and sale of Qualifying Capital Securities to third parties other than Subsidiaries in
public offerings or private placements. The Company shall not be considered to have made commercially reasonable efforts to effect a sale of Qualifying Capital Securities if it determines not to pursue or complete such sale due to pricing, coupon,
dividend rate or dilution considerations. 
 (vii) The Company shall, if it has not raised sufficient net proceeds from the issuance or sale
of Qualifying Capital Securities pursuant to clause (v) of this Section 2.1(d) in connection with any Repayment Date, deliver an Officers’ Certificate to the Trustee (which the Trustee shall promptly forward upon receipt to the
Administrative Trustees, who shall forward such certificate to each holder of record of Capital Securities) no more than 15 and no less than 10 days in advance of such Repayment Date stating the 

  

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amount of net proceeds, if any, raised pursuant to clause (v) of this Section 2.1(d) in connection with such Repayment Date, the Applicable
Percentage applicable thereto and the corresponding principal amount of the CENts to be repaid on such Repayment Date pursuant to clause (i) or (ii), as the case may be, of this Section 2.1(d). The Company shall be excused from its
obligation to use commercially reasonable efforts to sell Qualifying Capital Securities pursuant to clause (v) of this Section 2.1(d) if such Officers’ Certificate further certifies that: (A) a Market Disruption Event was
existing during the 180-day period preceding the date of such Officers’ Certificate or, in the case of any Repayment Date after the Scheduled Maturity Date, the 90-day period preceding the date of such Officers’ Certificate; and
(B) either (1) the Market Disruption Event continued for the entire 180-day period or 90-day period, as the case may be, or (2) the Market Disruption Event continued for only part of the period, but the Company was unable after
commercially reasonable efforts to sell sufficient Qualifying Capital Securities during the rest of that period to permit repayment of the CENts in full. Each Officers’ Certificate delivered pursuant to this clause (vii), unless no
principal amount of CENts is to be repaid on the applicable Repayment Date, shall be accompanied by a notice of repayment pursuant to Section 3.1 setting forth the principal amount of the CENts to be repaid on such Repayment Date, which amount
shall be determined after giving effect to clause (viii) of this Section 2.1(d). 
 (viii) Payments in respect of the CENts on any
Repayment Date will be applied, first, to pay deferred interest to the extent of Eligible Proceeds raised pursuant to Section 2.1(i), second, to pay current interest to the extent not paid from other sources and, third, to repay the principal
of CENts; provided that if the Company is obligated to sell Qualifying Capital Securities and make payments of principal on any outstanding Parity Securities in addition to the CENts in respect thereof then on any date and for any period,
such payments shall be applied first to the Parity Securities having an earlier scheduled maturity date than the CENts and then to the CENts and the Parity Securities having the same scheduled maturity date as the CENts pro rata in accordance
with their respective outstanding principal amounts, and no such payment will be made on any other Parity Securities having a later scheduled maturity date until the principal of the CENts has been paid in full except to the extent permitted under
Section 2.1(g) and clause (4) of Section 2.1(i), or on such other basis as the Federal Reserve may approve. If the Applicable Percentage of net cash proceeds that the Company has raised from the sale of Qualifying Capital Securities
during the relevant 180-day or 90-day period, as the case may be, pursuant to clause (v) of this Section 2.1(d), is less than $5 million, the Company will not be required to repay any CENts on the Scheduled Maturity Date or the next
Interest Payment Date, as applicable. On the next Interest Payment Date as of which the Applicable Percentage of the net cash proceeds the Company has raised pursuant to clause (v) of this Section 2.1(d) is at least $5 million during the
180-day period preceding the applicable notice date (or, if shorter, the period since the Company last repaid any principal amount of CENts), the Company will be required to repay a principal amount of the CENts equal to the Applicable Percentage of
the entire net cash proceeds raised from the sale of Qualifying Capital Securities pursuant to clause (v) of this Section 2.1(d) during such 180-day (or shorter) period. 
 (e) Rate of Interest. The CENts shall bear interest on their principal amount from and including the date they are issued to but excluding
December 12, 2037 at the annual rate of 9.375%, payable quarterly in arrears on March 12, June 12, September 12 and December 12 of each year, beginning on March 12, 2008. The CENts shall bear interest from and
including December 12, 2037 to but 

  

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excluding the Final Repayment Date at an annual rate of interest equal to three-month LIBOR plus 5.455%, payable quarterly in arrears on
March 12, June 12, September 12 and December 12 of each year (each such date, including the dates in the prior sentence, an “Interest Payment Date”). In the event that any Interest Payment Date on or prior to
December 12, 2037 would otherwise fall on a day that is not a Business Day, the payment of interest shall be postponed to the next day that is a Business Day and no interest shall accrue as a result of that postponement. In the event that any
Interest Payment Date in respect of an interest period commencing on or after December 12, 2037 would otherwise fall on a day that is not a Business Day, the Interest Payment Date shall be postponed to the next day that is a Business Day,
except that if the postponement would cause the day to fall in the next calendar month, the Interest Payment Date shall instead be brought forward to the immediately preceding Business Day. Interest in respect of any interest period commencing on or
after December 12, 2037 shall accrue to but excluding the date that interest is actually paid. Any installment of interest (or portion thereof) deferred in accordance with Section 2.1(g) or otherwise unpaid shall bear interest, to the
extent permitted by law, at the rate of interest then in effect on the CENts, from the relevant Interest Payment Date, compounded on each subsequent Interest Payment Date, until paid in accordance with Section 2.1(h). 
 (f) To Whom Interest Payable. Subject to Section 2.1(p), interest shall be payable to the Person in whose name the CENts are registered at
the close of business on the Regular Record Date next preceding the Interest Payment Date, except that (i) interest payable on any CENts pursuant to their repayment in full in accordance with Article III and (ii) interest payable on
the Final Repayment Date shall be paid to the Person to whom principal is paid. 
 (g) Option to Defer Interest Payments. (i) The
Company shall have the right, at any time and from time to time prior to the Final Repayment Date, to defer the payment of interest on the CENts for one or more consecutive Interest Periods that do not exceed 10 years; provided that no
Deferral Period shall extend beyond the Final Repayment Date or the earlier repayment or redemption in full of the CENts. 
 If an Event of
Default has occurred and is continuing or the Company has given notice of its election to defer interest payments but the Deferral Period has not yet commenced or a Deferral Period is continuing or the Company is in default regarding its payment of
any obligation under the Guarantee, the Company shall not, and shall not permit any Subsidiary, to: (A) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the
Company’s Capital Stock, (B) make any payment of principal of, or interest or premium, if any, on, nor repay, purchase or redeem any Parity Securities or other debt securities of the Company that rank junior upon the liquidation of the
Company to the CENts, or (C) make any guarantee payments with respect to any guarantee by the Company if such guarantee ranks junior to the CENts. Notwithstanding the foregoing, at any time, including during a Deferral Period, the Company may:
(a) make dividends or distributions payable in its Capital Stock or rights to acquire its Capital Stock and any cash payments in lieu of fractional shares issued in connection therewith; (b) make payments under the Guarantee; (c) make
any declaration of a dividend in connection with the implementation of a shareholders’ rights plan, or redeem or purchase any rights under any such plan; (d) purchase Capital Stock related to (1) the issuance of Capital Stock or
rights under any benefit plans for directors, officers or employees of the Company; (2) the issuance of Capital Stock or rights under a dividend reinvestment and stock purchase plan; (3) the issuance of Capital Stock, or securities
convertible into 

  

 11 

 
Capital Stock, as consideration in an acquisition transaction that was entered into before the beginning of the Deferral Period; (e) exchange or convert
(1) any class or series of the Company’s Capital Stock for any other class or series of its Capital Stock or (2) any class or series of the Company’s indebtedness for any class or series of its Capital Stock; (f) purchase
fractional interests in shares of the Company’s Capital Stock pursuant to conversion or exchange provisions of such Capital Stock or the security being converted or exchanged; (g) make payments of current or deferred interest in respect of
Parity Securities that are made pro rata in respect of the amounts due on such Parity Securities and the CENts or in accordance with clause (4) of Section 2.1(i) to the extent it applies, and make payments of deferred interest on
any Parity Securities that were issued prior to the date the CENts are initially issued (“Existing Parity Securities”) that, if not made, would cause the Company to breach the terms of the instrument governing such Existing Parity
Securities; or (h) make payments of principal in respect of Parity Securities having an earlier scheduled maturity date than the CENts, as required under a provision of such Parity Securities that is substantially the same as described under
Section 2.1(d), and make payments of principal in respect of Parity Securities having the same scheduled maturity date as the CENts that are made on a pro rata basis among such Parity Securities and the CENts. 
 (ii) Except as otherwise provided in Section 2.1(p), at the end of any Deferral Period, the Company shall pay all deferred interest on the CENts
(together with Additional Interest thereon, if any, at the rate specified for the CENts) to the extent permitted by applicable law, to the Persons in whose names that Securities are registered at the close of business on the Regular Record Date with
respect to the Interest Payment Date at the end of such Deferral Period. 
 (iii) Subject to Section 2.1(p) and the exceptions set forth
in clause (i) above, in the case of any Deferral Period that does not terminate on or prior to the first anniversary of the commencement of such Deferral Period, the Company shall not, nor shall permit any of its Subsidiaries to, prior to the
first anniversary of the date on which all deferred interest has been paid, purchase or acquire any securities ranking junior to or pari passu with any Qualifying APM Securities the proceeds of which were used to pay deferred interest
pursuant to the Alternative Payment Mechanism during the relevant Deferral Period. 
 (iv) Upon termination of any Deferral Period and upon
the payment of all deferred interest and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Deferral Period pursuant to clause (i) of this Section 2.1(g). 
 (v) The Company may elect to pay interest on any Interest Payment Date during any Deferral Period to the extent permitted by Section 2.1(h).

 (vi) The Company shall give written notice of its election to begin or extend any Deferral Period (i) if the Property Trustee is not
the sole holder or a holder of the CENts, to the Holders of the CENts and the Trustee at least one Business Day prior to the next succeeding Interest Payment Date or (ii) if the Property Trustee is the sole holder of the CENts, to the Property
Trustee and the Trustee at least one Business Day prior to the earlier of (a) the next Distribution Date or (b) the date the Administrative Trustees are required to give notice to any securities exchange or other applicable self-regulatory
organization or to holders of the Capital Securities of the record date for such Distribution Date or of such Distribution Date. 
  

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 (h) Payment of Deferred Interest. The Company shall not pay deferred interest (including
Additional Interest thereon) on the CENts on any Interest Payment Date during any Deferral Period prior to the Final Repayment Date from any source other than Eligible Proceeds. Notwithstanding the foregoing, (i) the Company may pay current
interest during a Deferral Period from any available funds; (ii) the Company may pay deferred interest from any available funds at any time an Event of Default has occurred and is continuing and (iii) if the Federal Reserve disapproves of
the Company’s sale of Qualifying APM Securities, the Company may pay deferred interest on the CENts with cash from any source and if the Federal Reserve disapproves of the use of proceeds of the Company’s sale of Qualifying APM Securities
to pay deferred interest on the CENts, the Company may use the proceeds for other purposes and continue to defer interest on the CENts. If the Company has outstanding Parity Securities under which it is obligated to sell Qualifying APM Securities
and apply the net proceeds to the payment of deferred interest or Distributions, then on any date and for any period the amount of net proceeds received by the Company from those sales and available for payment of the deferred interest and
Distributions will be applied to the CENts and those other Parity Securities on a pro rata basis up to the Common Equity Issuance Cap, the Preferred Stock Issuance Cap and the Share Cap Amount (or comparable provisions in the instruments
governing those Parity Securities) for each series of Parity Securities, as the case may be, in proportion to the total amounts of accrued and unpaid interest or Distributions that are due on the CENts and such Parity Securities at such time, or on
such other basis as the Federal Reserve may approve. 
 (i) Alternative Payment Mechanism. Immediately following any APM Commencement
Date and until the termination of the related Deferral Period, the Company shall, after notice to the Federal Reserve and except to the extent that the Federal Reserve shall have disapproved, issue Qualifying APM Securities until the Company has
raised an amount of Eligible Proceeds at least equal to the aggregate and unpaid amount of deferred interest on the CENts (including Additional Interest thereon) and applied such Eligible Proceeds on the next Interest Payment Date to the payment of
deferred interest (including Additional Interest thereon) in accordance with Section 2.1(h); provided that: 
 (1)
the Company shall not be required to issue Common Stock or Qualifying Warrants prior to the fifth anniversary of the commencement of a Deferral Period if the net proceeds of any issuance of Common Stock or Qualifying Warrants applied during that
Deferral Period to pay interest on the CENts pursuant to this Section 2.1(i), together with the net proceeds of all prior issuances of Common Stock and Qualifying Warrants so applied during that Deferral Period would exceed an amount equal to
2% of the product of the average of the Current Stock Market Prices of the Common Stock on the 10 consecutive trading days ending on the second trading day immediately preceding the date of issuance multiplied by the total number of issued and
outstanding shares of Common Stock as of the date of the Company’s then most recent publicly available consolidated financial statements (the “Common Equity Issuance Cap”); provided that the Common Equity Issuance Cap will
cease to apply after the fifth anniversary of the commencement of any Deferral Period, at which point the Company must pay any deferred interest, to the extent not disapproved by the Federal Reserve after notice, regardless of the time at which it
was deferred, using the 

  

 13 

 
Alternative Payment Mechanism, subject to any Market Disruption Event and the Share Cap; and provided, further, that if the Common Equity
Issuance Cap is reached during a Deferral Period and the Company subsequently pays all deferred interest, the Common Equity Issuance Cap will cease to apply at the termination of that Deferral Period and will not apply again unless and until the
Company starts a new Deferral Period. The Company shall use commercially reasonable efforts, subject to the Common Equity Issuance Cap (as defined in clause (5) below, to set the terms of any Qualifying Warrants so as to raise sufficient
proceeds from their issuance to pay all deferred interest in accordance with the Alternative Payment Mechanism. For the avoidance of doubt, once the Company reaches the Common Equity Issuance Cap, the Company shall not be required to issue more
Common Stock or Qualifying Warrants prior to the fifth anniversary of the commencement of any Deferral Period pursuant to this Section 2.1(i) even if the amount referred to in clause (1) of this Section 2.1(i) subsequently increases
because of a subsequent increase in the Current Stock Market Price of Common Stock or in the number of outstanding shares of Common Stock; 
 (2) the Company shall not be permitted to issue Qualifying Preferred Stock and Mandatorily Convertible Preferred Stock if the net proceeds of any issuance of Qualifying Preferred Stock or Mandatorily Convertible
Preferred Stock is applied to pay interest on the CENts pursuant to the Alternative Payment Mechanism, together with the net proceeds of all prior issuances of Qualifying Preferred Stock and still-outstanding Mandatorily Convertible Preferred Stock
so applied during the current and all prior Deferral Periods, would exceed 25% of the aggregate principal amount of the CENts issued under the Indenture (the “Preferred Stock Issuance Cap”); 
 (3) the foregoing obligations shall not apply in respect of any Interest Payment Date if the Company shall have provided to the Trustee
(and to the Property Trustee of the Trust to the extent it is the Holder of the CENts) no more than 15 and no less than 10 Business Days prior to such Interest Payment Date an Officers’ Certificate stating that (i) a Market Disruption
Event was existing after the immediately preceding Interest Payment Date and (ii) either (A) the Market Disruption Event continued for the entire period from the Business Day immediately following the preceding Interest Payment Date to the
Business Day immediately preceding the date on which such Officers’ Certificate is provided or (B) the Market Disruption Event continued for only part of such period but the Company was unable to raise sufficient Eligible Proceeds during
the rest of that period to pay all accrued and unpaid interest due on the Interest Payment Date with respect to which such Officers’ Certificate is being delivered; 
 (4) to the extent that the Company has raised some but not all Eligible Proceeds necessary to pay all deferred interest (including
Additional Interest thereon) on any Interest Payment Date pursuant to this Section 2.1(i) and subject to the Common Equity Issuance Cap, the Preferred Stock Issuance Cap and the Share Cap, such Eligible Proceeds shall be applied in accordance
with Section 2.1(h); and 
  

 14 

 (5) so long as the CENts remain outstanding, the Company shall not issue Common Stock,
Qualifying Warrants or Mandatorily Convertible Preferred Stock such that the Common Stock to be issued (or which would be issuable upon exercise or conversion thereof), together with all Common Stock previously issued, or issuable under Qualifying
Warrants and Mandatorily Convertible Preferred Stock previously issued, in each case pursuant to the Alternative Payment Mechanism for purposes of paying deferred interest on the CENts, exceeds 50 million shares of Common Stock (the “Share
Cap”); provided that (i) if additional Capital Securities are issued, the Share Cap will be increased proportionately to the number of such additional Capital Securities, and (ii) if the issued and outstanding shares of Common Stock
are changed into a different number of shares or a different class by reason of any stock split, reverse stock split, stock dividend, reclassification, recapitalization, split-up, combination, exchange of shares or other similar transaction, the
Share Cap shall be correspondingly adjusted. The Share Cap limitation shall apply so long as any CENts remain outstanding, but if the Share Cap has been reached and it is not sufficient to allow the Company to raise sufficient proceeds to pay
deferred interest in full, the Company shall use commercially reasonable efforts to increase the Share Cap amount (i) only to the extent that it can do so and simultaneously satisfy its future fixed or contingent obligations under other
securities and derivative instruments that provide for settlement or payment in shares of its Common Stock or (ii) if the Company cannot increase the Share Cap as contemplated in the preceding clause, by requesting the Company’s board of
directors to adopt a resolution for stockholder vote at the next occurring annual stockholders’ meeting to increase the number of shares of authorized Common Stock for purposes of satisfying the Company’s obligations to pay deferred
interest pursuant to the Alternative Payment Mechanism. 
 (j) Events of Default. Solely for purposes of the CENts, in addition to
clauses (i) and (ii) of Section 7.01 of the Indenture, the following clauses (1) and (2) shall constitute Events of Default; and the reference to Section 7.01 in Section 7.07 of the Indenture shall be deemed to
refer to clauses (1) and (2) below: 
 (1) default in the payment of any interest, including Additional Interest, in
full on any CENt for a period of 30 days after the conclusion of a ten-year period following the commencement of any Deferral Period if at such time such Deferral Period has not ended; 
 (2) default in the payment of the principal of the CENts when due whether on the Final Repayment Date, upon redemption or otherwise,
subject to Section 2.1(d). 
 For the avoidance of doubt, and without prejudice to any other remedies that may be available to the
Trustee, the Holders of the CENts or the holders of the Capital Securities under the Indenture, no breach by the Company of any other covenant or obligation under the Indenture or the terms of the CENts shall be an Event of Default with respect to
the CENts. 
 Solely for purposes of the CENts, the first paragraph of Section 7.02 of the Indenture is replaced in its entirety by the
following: 
 “If an Event of Default pursuant to this Section 2.1(j)(1) occurs and is continuing, then, and in every such case,
the Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding CENts may declare the principal amount of and accrued interest (including Additional Interest) on the CENts to be immediately due and payable or
deliverable, by a notice in writing 

  

 15 

 
to the Company (and to the Trustee if given by Holders); provided that, if, upon an Event of Default, the Trustee or the Holders of not less than 25%
in principal amount of the Outstanding CENts fail to declare the principal amount of all the CENts to be immediately due and payable, the holders of at least 25% in aggregate liquidation amount of the corresponding series of Preferred Securities
then outstanding shall have such right by a notice in writing to the Company and the Trustee, and upon any such declaration the same shall become immediately due and payable or deliverable. If an Event of Default pursuant to clause (i) or
(ii) of Section 7.01 of the Indenture occurs, the principal amount of and accrued interest (including Additional Interest) on the CENts shall automatically, and without any declaration or other action on the part of the Trustee or any
Holder, become immediately due and payable. 
 (k) Redemption. The CENts are redeemable at the Company’s option, subject to the
approval of the Federal Reserve (if the redemption occurs prior to the Scheduled Maturity Date): 
 (i) in whole or in part,
at any time on or after December 12, 2012 at a redemption price equal to 100% of their principal amount plus accrued and unpaid interest to the Redemption Date; 
 (ii) in whole but not in part, any time prior to December 12, 2012 at a redemption price equal to 100% of their principal amount plus
accrued and unpaid interest to the Redemption Date, within 90 days after the occurrence of a Capital Treatment Event or a Tax Event; and 
 (iii) in whole but not in part, any time prior to December 12, 2012, within 90 days after the occurrence of a Rating Agency Event at a redemption price equal to the greater of (x) 100% of the principal
amount of the CENts being redeemed and (y) the Make-Whole Amount, in each case plus any accrued and unpaid interest to the Redemption Date. 
 For purposes of this Section 2.1(k), the following terms have the following meanings: 
 “Capital Treatment Event”
means the reasonable determination by the Company that, as a result of any: 
 (i) amendment to, or change in, the laws or
regulations of the United States or any political subdivision of or in the United States that is enacted or becomes effective after December 5, 2007; 
 (ii) proposed change in those laws or regulations that is announced after December 5, 2007; or 
 (iii) official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after December 5, 2007; 
 there is more than an insubstantial risk that the Company will not be entitled to treat an amount equal to the liquidation amount of the capital securities as “Tier
1 capital” (or its equivalent) for purposes of the capital adequacy guidelines of the Federal Reserve applicable to bank holding companies, as then in effect. 
  

 16 

 “Tax Event” means that the Company has requested and received an opinion of counsel experienced
in such matters to the effect that, as a result of any: 
 (i) amendment to or change in the laws or regulations of the United
States or any political subdivision or taxing authority of or in the United States that is enacted or issued or becomes effective after December 5, 2007; 
 (ii) proposed change in those laws or regulations that is announced after December 5, 2007; 
 (iii) official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or
applying those laws or regulations that is announced after December 5, 2007; or 
 (iv) threatened challenge asserted in
writing in connection with an audit of the Company, its subsidiaries or the Trust, or a threatened challenge asserted in writing against any other taxpayer that has raised capital through the issuance of securities that are substantially similar to
the CENts or the Capital Securities; 
 there is more than an insubstantial risk that: 
 (i) the Trust is, or will be, subject to United States federal income tax with respect to income received or accrued on the CENts;

 (ii) interest payable by the Company on the CENts is not, or will not be, deductible by the Company, in whole or in part,
for United States federal income tax purposes; or 
 (iii) the Trust is, or will be, subject to more than a de minimis amount
of other taxes, duties or other governmental charges. 
 “Rating Agency Event” means that any nationally recognized statistical
rating organization within the meaning of Section 3(a)(62) under the Securities Exchange Act of 1934 that then publishes a rating for us (a “Rating Agency”) amends, clarifies or changes the criteria it uses to assign equity credit to
securities such as the CENts, which amendment, clarification or change results in: 
 (i) the shortening of the length of time
the CENts are assigned a particular level of equity credit by that Rating Agency as compared to the length of time they would have been assigned that level of equity credit by that rating agency or its predecessor on the issue date of the Capital
Securities, or 
 (ii) the lowering of the equity credit (including up to a lesser amount) assigned to the CENts by that
Rating Agency as compared to the equity credit assigned by that Rating Agency or its predecessor on the issue date of the Capital Securities. 
  

 17 

 “Make-Whole Amount” equals the sum of the present values of the remaining scheduled payments of
principal (discounted from December 12, 2012) and interest that would have been payable to and including December 12, 2012 (discounted from their respective Interest Payment Dates) on the CENts being redeemed (not including any portion of
such payments of interest accrued to the Redemption Date) to the Redemption Date on a quarterly basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 0.50%. 
 “Treasury Rate” means the semi-annual equivalent yield to maturity of the “Treasury Security” that corresponds to the “Treasury
Price” (calculated in accordance with standard market practice and computed as of the second trading day preceding the Redemption Date). 
 “Treasury Security” means the United States Treasury security that the “Treasury Dealer” determines would be appropriate to use, at the time of determination and in accordance with standard market practice, in pricing
the CENts being redeemed in a tender offer based on a spread to United States Treasury yields. 
 “Treasury Price” means the
bid-side price for the Treasury Security as of the third trading day preceding the Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Wall Street Journal in the table entitled “Treasury
Bonds, Notes, and Bills,” as determined by the Treasury Dealer, except that: (i) if that release (or any successor release) is not published or does not contain that price information on that trading day; or (ii) if the Treasury
Dealer determines that the price information is not reasonably reflective of the actual bid-side price of the Treasury Security prevailing at 3:30 P.M., New York City time, on that trading day, then Treasury Price will instead mean the bid-side
price for the Treasury Security at or around 3:30 P.M., New York City time, on that trading day (expressed on a next trading day settlement basis) as determined by the Treasury Dealer through such alternative means as the Treasury Dealer considers
to be appropriate under the circumstances. 
 “Treasury Dealer” means Morgan Stanley & Co. Incorporated (or its
successors) or, if Morgan Stanley & Co. Incorporated (or its successors) refuses to act as Treasury Dealer for this purpose or ceases to be a primary U.S. Government securities dealer, another nationally recognized investment banking firm
that is a primary U.S. Government securities dealer specified by the Company for these purposes. 
 (l) Amendment of Replacement Capital
Covenant. The Company shall not amend the Replacement Capital Covenant to (i) impose additional restrictions on the type or amount of Qualifying Capital Securities for purposes of determining the extent to which repayment, redemption or
purchase of the CENts or Capital Securities is permitted or (ii) amend the definition of “Applicable Percentage” or “Qualifying Preferred Stock” in a manner that is adverse to the Holders of the CENts, except with the
consent of the holders of a majority in liquidation amount of the Capital Securities or, if the CENts have been distributed by the Trust, the Holders of at least a majority in principal amount of the CENts. Except as aforesaid, the Company may amend
or supplement the Replacement Capital Covenant in accordance with its terms without the consent of the Holders of the Capital Securities or the CENts. 
  

 18 

 (m) Limitation on Claims in the Event of Bankruptcy, Insolvency or Receivership. Each Holder, by
such Holder’s acceptance of the CENts, agrees that if a Bankruptcy Event shall occur prior to the redemption or repayment of such CENts, such Holder shall have no claim for, and thus no right to receive, any interest optionally deferred
pursuant to Section 2.1(g) and unpaid (including Additional Interest thereon) that has not been settled through the application of the Alternative Payment Mechanism to the extent the amount of such interest exceeds the sum of (x) interest
that relates to the earliest two years of the portion of the Deferral Period for which interest has not been paid and (y) an amount equal to the pro rata share of the excess, if any, of the Preferred Stock Issuance Cap over the aggregate
amount of net proceeds from the sale of Qualifying Preferred Stock and any still-outstanding Mandatorily Convertible Preferred Stock that the Company has applied to pay such deferred interest on the CENts pursuant to the Alternative Payment
Mechanism; provided that each Holder of CENts is deemed to agree that, to the extent the claim for deferred interest exceeds the amount set forth in clause (x), the amount the Holders of the CENts will receive in respect of such excess shall
not exceed the amount they would have received had the claim for such excess ranked pari passu with the interest of the holders, if any, of Qualifying Preferred Stock. 
 (n) Sinking Fund. The CENts shall not be subject to any sinking fund or similar provisions. 
 (o) Forms. The CENts shall be substantially in the form of Annex A attached hereto, with such modifications thereto as may be approved by the
authorized officer executing the same. 
 (p) Business Combinations. If the Company engages in any transaction that is subject to
Section 10.01 of the Indenture, where immediately after the consummation of such transaction more than 50% of the voting stock of the Person formed by such transaction, or the Person that is the surviving entity of such transaction, or the
Person to whom such properties and assets are conveyed, transferred or leased in such transaction, is owned by the shareholders of the other party to such transaction, then Section 2.1(h) and clause (iii) of Section 2.1(g), shall not
apply to any Deferral Period that is terminated on the next Interest Payment Date following the date of consummation of such transaction (or, if later, at any time within 90 days following the date of consummation of the business combination). The
settlement of all deferred interest, whether it occurs on an Interest Payment Date or another date, shall immediately terminate the Deferral Period. The Company shall establish a special record date for the payment of any deferred interest pursuant
to this Section 2.1(p) on a date other than an Interest Payment Date, which record date shall also be a special record date for the payment of the corresponding Distribution on the Capital Securities. 
 (q) Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by Holders of Capital Securities. Solely for the
purposes of the CENts, Section 7.08 of the Indenture shall not apply. Notwithstanding any other provision in the Indenture, each Holder of the CENts shall have the right, which is absolute and unconditional, to receive payment of the principal
of (and premium, if any) and (subject to Section 3.07 of the Indenture) interest (including any Additional Interest) on the CENts on the Final Repayment Date, and to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder. So long as any CENts are held by or on behalf of the Trust, any holder of the Capital Securities issued by the Trust shall have the right, upon (i) the breach by the Company of its obligations
under Section 2.1(d) to issue Qualifying Capital Securities or Section 2.1(i) to issue Qualifying APM Securities or (ii) the occurrence of an Event of Default described in 

  

 19 

 
Section 2.1(j), to institute a suit directly against the Company (a) in the case of (i) above, to enforce such obligations or for such other
remedies as may be available and (b) in the case of (ii) above, for enforcement of payment to such Holder of principal of (premium, if any) and (subject to Section 3.07 of the Indenture) interest (including any Additional Interest) on
the CENts having a principal amount equal to the aggregate liquidation amount of such Capital Securities. 
 (r) Right of Set-Off.
With respect to the CENts of a series issued to the Trust, notwithstanding anything to the contrary in the Indenture, the Company shall have the right to set off any payment it is otherwise required to make thereunder in respect of any such CENt to
the extent the Company has theretofore made, or is concurrently on the date of such payment making, a payment under any guarantee relating to such CENt or under Section 7.08 of the Indenture. 
 ARTICLE III 
 REPAYMENT OF THE CENTS

 3.1. Repayment. The Company shall, not more than 15 nor less than 10 days prior to each Repayment Date (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of the principal amount of CENts to be repaid on such date pursuant to Section 2.1(d).  
 3.2. Selection of Securities to be Repaid. (a) If less than all the CENts are to be repaid on any Repayment Date (unless such repayment
affects only a single CENt), the particular CENts to be repaid shall be selected not more than 15 days prior to such Repayment Date by the Trustee, from the Outstanding CENts not previously repaid or called for redemption, by lot or such other
method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any CENt; provided that the portion of the principal amount of any CENt not repaid shall be
in an authorized denomination (which shall not be less than the minimum authorized denomination) for such CENt. 
 (b) The Trustee shall
promptly notify the Company in writing of the CENts selected for partial repayment and the principal amount thereof to be repaid. For all purposes hereof, unless the context otherwise requires, all provisions relating to the repayment of CENts shall
relate, in the case of any CENt repaid or to be repaid only in part, to the portion of the principal amount of such CENt which has been or is to be repaid. If the Company shall so direct, CENts registered in the name of the Company, any Affiliate or
any Subsidiary thereof shall not be included in the CENts selected for repayment. 
 3.3. Notice of Repayment. (a) Notice of
repayment shall be given by first-class mail, postage prepaid, mailed not later than the 15th day, and not earlier than the 10th day, prior to the Repayment Date, to each Holder of Securities to be repaid, at the address of such Holder as
it appears in the Securities Register. 
 (b) Each notice of repayment shall identify the CENts to be repaid (including CUSIP number, if a
CUSIP number has been assigned to the CENts) and shall state: 
 (1) the Repayment Date; 
  

 20 

 (2) if less than all Outstanding CENts are to be repaid, the identification (and, in the
case of partial repayment, the respective principal amounts) of the particular CENts to be repaid; 
 (3) that on the
Repayment Date, the principal amount of the CENts to be repaid will become due and payable upon each such CENt or portion thereof, and that interest thereon, if any, shall cease to accrue on and after said date; and 
 (4) the place or places where such CENts are to be surrendered for payment of the principal amount thereof. 
 (c) Notice of repayment shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company and
shall be irrevocable. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the
notice to the Holder of any CENt designated for repayment as a whole or in part shall not affect the validity of the proceedings for the repayment of any other CENt. 
 3.4. Deposit of Repayment Amount. Prior to 10:00 a.m. New York City time on the Repayment Date specified in the notice of repayment given as provided in Section 3.3, the Company will deposit with
the Trustee or with one or more Paying Agents (or if the Company is acting as its own Paying Agent, the Company will segregate and hold in trust as provided in Section 5.03 of the Indenture) an amount of money sufficient to pay the principal
amount of, and any accrued interest (including Additional Interest) on, all the CENts which are to be repaid on that date. 
 3.5. Payment
of CENts Subject to Repayment. (a) If any notice of repayment has been given as provided in Section 3.3, the CENts or portion of the CENts with respect to which such notice has been given shall become due and payable on the date and at
the place or places stated in such notice. On presentation and surrender of such CENts at a Place of Payment in said notice specified, the said securities or the specified portions thereof shall be paid by the Company at their principal amount,
together with accrued interest (including any Additional Interest) to the Repayment Date; provided that installments of interest whose Stated Maturity is on or prior to the Repayment Date will be payable to the Holders of such CENts, or one
or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 3.07 of the Indenture. 
 (b) Upon presentation of any CENt repaid in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to
the Holder thereof, at the expense of the Company, a new CENt or CENts, of authorized denominations, in aggregate principal amount equal to the portion of the CENt not repaid and so presented and having the same Original Issue Date, Stated Maturity
and terms. If a Global Security is so surrendered, such new Security will also be a new Global Security. 
  

 21 

 (c) If any CENt called for repayment shall not be so paid upon surrender thereof, the principal of such
CENt shall, until paid, bear interest from the Repayment Date at the rate prescribed therefore in the CENt. 
 ARTICLE IV 

MISCELLANEOUS 
 4.1. If any
provision of this Supplemental Indenture limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939 through operation of Section 318(c) thereof, such imposed duties
shall control. 
 4.2. The Article headings herein are for convenience only and shall not affect the construction hereof. 
 4.3. All covenants and agreements in this Supplemental Indenture by the Company shall bind its successors and assigns, whether so expressed or not.

 4.4. In case any provision of this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 
 4.5. Nothing in this Supplemental
Indenture is intended to or shall provide any rights to any parties other than those expressly contemplated by this Supplemental Indenture. 
 4.6. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 
 4.7. The Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture. The recitals and statements herein are deemed to be those of the Company and not of the Trustee. 
 4.8. Notwithstanding anything to the contrary contained in the Indenture or this Supplemental Indenture, the consent of the Holders of the CENts shall
not be required to effect any amendment required in order to make this Supplemental Indenture consistent with the description of the Supplemental Indenture or the form of the CENts contained in the Prospectus, dated November 6, 2007, as
supplemented by the Prospectus Supplement, dated December 5, 2007, relating to the Capital Securities. 
 [Signature page follows.]

  

 22 

 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed
to be an original, but all such counterparts shall together constitute but one and the same instrument. 
 IN WITNESS WHEREOF, the parties
hereto have caused this Supplemental Indenture to be duly executed, all as of the day and year first above written. 
  

			
	SUSQUEHANNA BANCSHARES, INC.
		
	By: 	 	 
		 	Name:
		 	Title:

  

			
	THE BANK OF NEW YORK,
	as Trustee
		
	By:	 	 
		 	Name:
		 	Title:

 Annex A – Form of CENt 
 SUSQUEHANNA BANCSHARES, INC. 
 9.375% Capital Efficient Note, Series I 

 No. T-1 
 $110,010,000 
 SUSQUEHANNA BANCSHARES, INC., a corporation organized and existing under the laws of the State of Pennsylvania (hereinafter called the
“Company,” which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to The Bank of New York, as Property Trustee of Susquehanna Capital I, a statutory
trust formed under the laws of the State of Delaware, or registered assigns, the principal sum of one hundred ten million ten thousand dollars ($110,010,000) on the Final Repayment Date (as hereinafter defined). The Final Repayment Date shall
initially be December 12, 2067, but the Company may elect to extend the Final Repayment Date up to two times in 10-year increments on either or both of December 12, 2017 and December 12, 2027 and, as a result, the Final Repayment Date
may be extended to December 12, 2077 or December 12, 2087, provided that certain extension criteria set forth in the Supplemental Indenture hereinafter referred to are satisfied. If the Final Repayment Date falls on a day that is not a
Business Day (as hereinafter defined), the Final Repayment Date shall be the following business day. The full principal amount of, and all accrued and unpaid interest on, this Security shall be payable in full on December 12, 2057, or if such
day is not a Business Day, the following Business Day (the “Scheduled Maturity Date”) or any subsequent Interest Payment Date (as hereinafter defined) to the extent set forth in the Supplemental Indenture hereinafter referred to.
The Company further promises to pay interest on said principal sum from December 12, 2007 or from the most recent Interest Payment Date for which interest has been paid or duly provided. This Security shall bear interest from and including
December 12, 2007 to but excluding December 12, 2037 at the annual rate of 9.375%, payable quarterly in arrears on March 12, June 12, September 12 and December 12 of each year, beginning on March 12,
2008. This Security shall bear interest from and including December 12, 2037 to but excluding the Final Repayment Date at an annual rate of interest equal to three-month LIBOR plus 5.455%, payable quarterly in arrears on
March 12, June 12, September 12, and December 12 of each year (each such date, including the dates in the preceding sentence, an “Interest Payment Date”). In the event that any Interest Payment Date on
or prior to December 12, 2037 would otherwise fall on a day that is not a Business Day, the payment of interest shall be postponed to the next day that is a Business Day and no interest shall accrue as a result of that postponement. In the
event that any Interest Payment Date in respect of an interest period commencing on or after December 12, 2037 would otherwise fall on a day that is not a Business Day, the Interest Payment Date shall be postponed to the next day that is a
Business Day, except that if the postponement would cause 

 the day to fall in the next calendar month, the Interest Payment Date shall instead be brought forward to the immediately
preceding Business Day. Interest in respect of any interest period commencing on or after December 12, 2037 shall accrue to but excluding the date that interest is actually paid. Any installment of interest (or portion thereof) deferred in
accordance with the Supplemental Indenture or otherwise unpaid on the relevant Interest Payment Date shall bear interest, to the extent permitted by law, at the rate of interest then in effect on this Security, from the relevant Interest Payment
Date, compounded on each subsequent Interest Payment Date, until paid in accordance with the Supplemental Indenture. 
 The amount of
interest payable on this Security for any interest period ending on or prior to December 12, 2037 shall be computed on the basis of a 360-day year of twelve 30-day months. The amount of interest payable on this Security for any interest period
commencing on or after December 12, 2037 shall be computed on the basis of a 360-day year and the actual number of days elapsed during the relevant interest period. 
 A “Business Day” shall mean any day other than (i) a Saturday or Sunday or other day on which banking institutions in the city of New York or in Pittsburgh, Pennsylvania, are authorized or
required by law or executive order to remain closed, (ii) a day on which the Corporate Trust Office of the Property Trustee or the Debenture Trustee is closed for business or (iii) during any Interest Period for which interest is based on
LIBOR, a day that is not a day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. 
 The
interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest installment, which shall be (i) the Business Day next preceding such Interest Payment Date if this Security is issued in the form of a Global Security and the Capital Securities
are issued in the form of a global security, or (ii) the fifteenth day (whether or not a Business Day) of the month preceding the month in which such Interest Payment Date occurs if this Security is not issued in the form of a Global Security
and the Capital Securities are not issued in the form of a global security, except that (i) interest payable on this Security pursuant to its repayment in full in accordance with Article III of the Supplemental Indenture and
(ii) interest payable on the Final Repayment Date shall be paid to the Person to whom principal is paid. Any such interest installment not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be mailed, first-class, postage prepaid, to each Holder of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange or automated quotation system on which the Securities of this series may be listed or traded, and upon such notice as may be required by such exchange or self-regulatory organization, all as more fully
provided in said Indenture. 
 The Company shall have the right, at any time and from time to time prior to the Final Repayment Date, to
defer the payment of interest on this Security for one or more consecutive Interest Periods that do not exceed 10 years; provided, however, that no Deferral Period (as hereinafter defined) shall extend beyond the Final Repayment Date or the
earlier repayment or redemption in full of this Security. 
  

 A-2 

 If an Event of Default has occurred and is continuing or the Company has given notice of its election to
defer interest payments but the Deferral Period has not yet commenced or a Deferral Period is continuing or the Company is in default regarding its payment of any obligation under the Guarantee (and, except as provided in the Supplemental Indenture
with respect to certain transactions, in the case of any Deferral Period that does not terminate on or prior to the first anniversary of the commencement of such Deferral Period), the Company shall not, and shall not permit any Subsidiary to:
(A) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company’s Capital Stock, (B) make any payment of principal of, or interest or premium, if
any, on, nor repay, purchase or redeem any Parity Securities or other debt securities of the Company that rank junior upon the liquidation of the Company to this Security, or (C) make any guarantee payments with respect to any guarantee by the
Company if such guarantee ranks junior to this Security. Notwithstanding the foregoing, at any time, including during a Deferral Period, the Company may: (a) make dividends or distributions payable in its Capital Stock or rights to acquire its
Capital Stock and any cash payments in lieu of fractional shares issued in connection therewith; (b) make payments under the Guarantee; (c) make any declaration of a dividend in connection with the implementation of a shareholders’
rights plan, or redeem or purchase any rights under any such plan; (d) purchase Capital Stock related to (1) the issuance of Capital Stock or rights under any benefit plans for directors, officers or employees of the Company; (2) the
issuance of Capital Stock or rights under a dividend reinvestment and stock purchase plan; (3) the issuance of Capital Stock, or securities convertible into Capital Stock, as consideration in an acquisition transaction that was entered into
before the beginning of the Deferral Period; (e) exchange or convert (1) any class or series of the Company’s Capital Stock for any other class or series of its Capital Stock or (2) any class or series of the Company’s
indebtedness for any class or series of its Capital Stock; (f) purchase fractional interests in shares of the Company’s Capital Stock pursuant to conversion or exchange provisions of such Capital Stock or the security being converted or
exchanged; (g) make payments of current or deferred interest in respect of Parity Securities that are made pro rata in respect of the amounts due on such Parity Securities and this Security or in accordance with clause (viii) of
Section 2.1(d) of the Supplemental Indenture to the extent it applies, and make payments of deferred interest on any Parity Securities that were issued prior to the date the CENts are initially issued (“Existing Parity
Securities”) that, if not made, would cause the Company to breach the terms of the instrument governing such Existing Parity Securities; or (h) make payments of principal in respect of Parity Securities having an earlier scheduled
maturity date than this Security, as required under a provision of such Parity Securities that is substantially the same as described under Section 2.1(d) of the Supplemental Indenture, and make payments of principal in respect of Parity
Securities having the same scheduled maturity date as this Security that are made on a pro rata basis among such Parity Securities and this Security. Each period beginning on the Interest Payment Date with respect to which the Company elects
to defer all or part of any interest payment and ending, subject to Section 2.1(m) of the Supplemental Indenture, on the earlier of (i) the Interest Payment Date falling on or about the tenth anniversary of such Interest Payment Date and
(ii) the next Interest Payment Date on which the Company has paid the deferred amount, all deferred amounts with respect to any subsequent Deferral Period and all other accrued and unpaid interest on this Security is referred to as a
“Deferral Period”. At the end of any such Deferral Period, the Company shall pay all interest then accrued and unpaid 
  

 A-3 

 on this Security (together with Additional Interest thereon, if any, to the extent permitted by applicable law) to the
Person in whose name this Security is registered at the close of business on the Regular Record Date with respect to the Interest Payment Date at the end of such Deferral Period. Upon termination of any Deferral Period and upon the payment of all
deferred interest and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Deferral Period. The Company may elect to pay current interest on any Interest Payment Date during any Deferral Period to the
extent permitted, and shall pay deferred interest (including Additional Interest thereon) pursuant to the Alternative Payment Mechanism to the extent required, by the Supplemental Indenture. 
 The Company shall give written notice of its election to begin or extend any Deferral Period (i) if the Property Trustee is not the sole holder or a
holder of the Securities, to the Holders of the Securities and the Trustee at least one Business Day prior to the next succeeding Interest Payment Date or (ii) if the Property Trustee is the sole holder of the Securities, to the Property
Trustee and the Trustee at least one Business Day prior to the earlier of (a) the next Distribution Date or (b) the date the Administrative Trustees are required to give notice to any securities exchange or other applicable self-regulatory
organization or to holders of such Capital Securities of the Record Date or the date such Distributions are payable, but in any event not less than one Business Day prior to such record date. 
 Payment of principal of (and premium, if any) and interest on this Security shall be made at the office or agency of the Company maintained for that
purpose in the United States, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of
interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer in immediately available funds at such place and to such account as may
be designated in writing at least 15 days before the relevant Interest Payment Date by the Person entitled thereto as specified in the Securities Register. 
 The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such
actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof, by his acceptance hereof, waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. 
 Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have
the same effect as if set forth at this place. 
  

 A-4 

 Unless the certificate of authentication hereon has been executed by the Trustee referred to on the
reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 
  

 A-5 

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

  

			
	SUSQUEHANNA BANCSHARES, INC.
		
	By:	 	  

	Name:	 	
	Title:	 	

  

	
	Attest:
	
	  

	
	Dated: December     , 2007

 This is one of the Securities referred to in the mentioned Indenture. 
  

			
	THE BANK OF NEW YORK,
    as Trustee
		
	By:	 	  

	Name:	 	
	Title:	 	

 Dated: 

 REVERSE OF SECURITY 
 This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under an Indenture, dated as of
November 5, 2007, as supplemented by the supplemental indenture thereto, dated as of December 12, 2007 (herein called the “Indenture”, and such supplemental indenture dated as of December 12, 2007, herein called the
“Supplemental Indenture”), between the Company and The Bank of New York, as Trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Trustee, the Company and the Holders of the Securities, and of the terms upon which the Securities
are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, which series is unlimited in aggregate principal amount. 
 All terms used in this Security that are defined in the Supplemental Indenture, in the Indenture or in the Amended and Restated Trust Agreement, dated as
of December 12, 2007 (the “Trust Agreement”), for Susquehanna Capital I, among Susquehanna Bancshares, Inc., as Depositor, and the Trustees named therein, shall have the meanings assigned to them in the Supplemental Indenture,
the Indenture or the Trust Agreement, as the case may be. 
 The Company may, at its option and subject to the terms and conditions of the
Supplemental Indenture and Article IV of the Indenture, redeem this Security, subject to the approval of the Federal Reserve (if the redemption occurs prior to the Scheduled Maturity Date): 
 (i) in whole or in part, at any time on or after December 12, 2012 at a redemption price equal to 100% of their principal amount plus
accrued and unpaid interest to the Redemption Date; 
 (ii) in whole but not in part, any time prior to December 12, 2012
at a redemption price equal to 100% of their principal amount plus accrued and unpaid interest to the Redemption Date, within 90 days after the occurrence of a Capital Treatment Event or a Tax Event; and 
 (iii) in whole but not in part, any time prior to December 12, 2012, within 90 days after the occurrence of a Rating Agency Event at
a redemption price equal to the greater of (x) 100% of the principal amount of the CENts being redeemed and (y) the Make-Whole Amount, in each case plus any accrued and unpaid interest to the Redemption Date. 
 In the event of redemption or repayment of this Security in part only, a new Security or Securities of this series for the unredeemed portion hereof
shall be issued in the name of the Holder hereof upon the cancellation hereof. 
 The Indenture contains provisions for satisfaction and
discharge of the entire indebtedness of this Security upon compliance by the Company with certain conditions set forth in the Indenture. 

 The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any
time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of each series to be affected by such supplemental indenture. The Indenture also contains provisions permitting Holders of a majority in aggregate principal amount of the securities of each
series issued under the Indenture at the time Outstanding, on behalf of the Holders of all securities of such series, to waive compliance by the Company with certain provisions of the Indenture and any past defaults in the performance of any of the
covenants contained in the Indenture, or established pursuant to the Indenture with respect to such series, and its consequences, except a default in the payment of the principal of or premium, if any, or interest on any of the securities of such
series. Any such consent or waiver by the registered Holders of this Security (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon
the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. 
 As provided in and subject to the provisions of the Indenture, if an Event of Default arising from a default in the payment of interest (including Additional Interest) in full for a period of 30 days after the
conclusion of a 10-year period following the commencement of any Deferral Period with respect to the Securities at the time Outstanding occurs and is continuing, then the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal amount of, and accrued interest (including Additional Interest) on, all the Securities of this series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if
given by Holders), provided that if, upon such an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities fail to declare the principal amount of all the Securities to be immediately
due and payable, the holders of at least 25% in aggregate liquidation amount of the Capital Securities then outstanding shall have such right by a notice in writing to the Company and the Trustee. Upon any such declaration such principal amount (or
specified portion thereof) of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable. If an Event of Default arising from a Bankruptcy Event or insolvency or reorganization
involving the Company occurs, the principal amount of, and accrued interest (including Additional Interest) on, the Securities shall automatically, and without any declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable. Any other Event of Default shall not result in the acceleration of the payments of principal or accrued interest on the Securities. In any case, the payment of principal and interest (including any Additional Interest)
on such Securities shall remain subordinated to the extent provided in Article XIV of the Indenture. 
 Each Holder, by such Holder’s
acceptance hereof, agrees that if a Bankruptcy Event shall occur prior to the redemption or repayment of this Security, such Holder shall have no claim for, and thus no right to receive, any interest optionally deferred pursuant to the Supplemental
Indenture and unpaid (including Additional Interest thereon) that has not been settled through the application of the Alternative Payment Mechanism set forth in the Supplemental Indenture to the extent the amount of such interest exceeds the sum of
(x) interest that relates to the earliest two years of the portion of the Deferral Period for which interest has not been paid and (y) an 

 amount equal to the pro rata share of the excess, if any, of the Preferred Stock Issuance Cap over the aggregate
amount of net proceeds from the sale of Qualifying Preferred Stock and any still-outstanding Mandatory Convertible Preferred Stock that the Company has applied to pay such deferred interest on the Securities of this series pursuant to the
Alternative Payment Mechanism; provided that the Holder of this Security agrees that, to the extent the claim for deferred interest exceeds the amount set forth in clause (x), the amount the Holder of this Security shall receive in respect of
such excess shall not exceed the amount such Holder would have received had the claim for such excess ranked pari passu with the interest of the holders, if any, of Qualifying Preferred Stock. 
 No reference herein to the Indenture or the Supplemental Indenture and no provision of this Security or of the Indenture or the Supplemental Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, places and rate, and in the coin or currency, herein prescribed.

 As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the
Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained under Section 5.02 of the Indenture duly endorsed by, or accompanied by written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series, of authorized denominations and for the same aggregate
principal amount, shall be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. 
 Prior to due presentment of this Security for registration of transfer, the Company,
the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary. 
 The Securities of this series are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same. 
 The Company and, by its acceptance of this Security or a
beneficial interest therein, the Holder of, and any Person that acquires beneficial interest in, this Security agree that, for United States federal, state and local tax purposes, it is intended that this Security constitute indebtedness.

 THE INDENTURE, THE SUPPLEMENTAL INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.Preferred Stock Purchase Agreement

 PREFERRED STOCK PURCHASE AGREEMENT 
 Dated December 5, 2007 
 by and between 
 AVANTAIR, INC. 
 and 
 INVESTORS SET FORTH HEREIN 

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page
	 ARTICLE I DEFINITIONS
	  	
			
	 1.1
	  	Definitions	  	1
			
	 1.2
	  	Knowledge	  	3
			
	 1.3
	  	Interpretation	  	3
		
	 ARTICLE II CLOSING; PURCHASE AND SALE
	  	
			
	 2.1
	  	The Closing	  	4
			
	 2.2
	  	Escrow	  	4
			
	 2.3
	  	Return of Funds	  	4
			
	 2.4
	  	Issuance and Delivery of the Purchase Shares	  	5
			
	 2.5
	  	The Purchase Price	  	5
			
	 2.6
	  	Delivery of Purchase Price	  	5
		
	 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	  	
			
	 3.1
	  	Organization; Good Standing	  	5
			
	 3.2
	  	Subsidiaries	  	5
			
	 3.3
	  	Authority; Execution and Delivery; Enforceability	  	5
			
	 3.4
	  	Non-Contravention	  	6
			
	 3.5
	  	Corporate Documents	  	6
			
	 3.6
	  	Capitalization; Options	  	6
			
	 3.7
	  	Consents and Approvals	  	7
			
	 3.8
	  	SEC Reports and Financial Statements	  	8
			
	 3.9
	  	Litigation and Claims	  	8
			
	 3.10
	  	No Finder	  	8
			
	 3.11
	  	Exempt Offering	  	9
			
	 3.12
	  	Agreements; Action	  	9
			
	 3.13
	  	Related-Party Transactions	  	9
			
	 3.14
	  	Title to Property and Assets	  	9
			
	 3.15
	  	Employee Benefit Plans	  	9
			
	 3.16
	  	Tax Returns, Payments and Elections	  	10
			
	 3.17
	  	Insurance	  	10
			
	 3.18
	  	Disclosure	  	10
		
	 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYERS
	  	
			
	 4.1
	  	Organization and Good Standing	  	10
			
	 4.2
	  	Corporate Authority; Execution and Delivery; Enforceability	  	10
			
	 4.3
	  	Non-Contravention	  	11
			
	 4.4
	  	Consents and Approvals	  	11
			
	 4.5
	  	Litigation and Claims	  	11

					
			
	 4.6
	  	No Finder	  	11
			
	 4.7
	  	Investment Representations	  	11
			
	 4.8
	  	Accredited Investor	  	12
		
	 ARTICLE V COVENANTS
	  	
			
	 5.1
	  	Restrictive Legends	  	12
			
	 5.2
	  	Change in Condition	  	12
			
	 5.3
	  	Subordination	  	12
			
	 5.4
	  	Limitation on Affiliate Transactions	  	12
		
	 ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARTIES
	  	
			
	 6.1
	  	Conditions to obligations of the Buyers	  	13
			
	 6.2
	  	Conditions to obligations of the Company.	  	14
		
	 ARTICLE VII MISCELLANEOUS
	  	
			
	 7.1
	  	Survival; Certain Other Matters	  	14
			
	 7.2
	  	Further Assurances	  	15
			
	 7.3
	  	Expenses of the Transaction	  	15
			
	 7.4
	  	Notices	  	15
			
	 7.5
	  	No Modification Except in Writing	  	16
			
	 7.6
	  	Entire Agreement	  	16
			
	 7.7
	  	Severability	  	16
			
	 7.8
	  	Assignment	  	16
			
	 7.9
	  	Governing Law; Jurisdiction	  	17
			
	 7.10
	  	Captions	  	17
			
	 7.11
	  	Counterparts	  	17
			
	 7.12
	  	Delays or Omissions	  	17

			
		
	 Annex I
	 	Company Disclosure Schedule
	 Annex II
	 	Allocation among Buyers
		
	 Exhibit A
	 	Certificate of Designations
	 Exhibit B
	 	Registration Rights Agreement
	 Exhibit C
	 	Form of legal opinion

  

 ii 

 PREFERRED STOCK PURCHASE AGREEMENT 
 PREFERRED STOCK PURCHASE AGREEMENT (“Agreement”), made and entered into this 5th day of December, 2007, by and between those
investors set forth on Annex II attached hereto (each, a “Buyer” and collectively, “Buyers”), and Avantair, Inc., a Delaware corporation (the “Company”). 
 WITNESSETH: 
 WHEREAS, the
Buyers desire to purchase and acquire from the Company, and the Company desires to issue and deliver to the Buyers, an aggregate of 40,000 shares (the “Purchase Shares”) of the Company’s Series A Convertible Preferred Stock,
par value $0.0001 (“Series A Preferred Stock”), free and clear of all claims, liens, options, charges and encumbrances of any kind other than restrictions on transfer as provided under applicable securities laws
(“Liens”), on the terms and subject to the conditions hereinafter set forth and as allocated among Buyers as set forth on Annex II to this Agreement; and 
 WHEREAS, unless the context otherwise requires, capitalized terms used in this Agreement shall have the meanings ascribed to such terms in Article I of this Agreement. 
 NOW, THEREFORE, in consideration of the foregoing premises and of the mutual covenants hereinafter contained, the parties hereto hereby agree as
follows: 
 ARTICLE I 
 DEFINITIONS 
 1.1 Definitions. As used herein, the following terms shall have the respective meanings ascribed to
them below: 
 “Action” has the meaning ascribed to such term in Section 3.9. 
 “Affiliate” means, with respect to any specified Person: (i) any other Person 50% or more of whose outstanding voting securities
are directly or indirectly owned, controlled or held with the power to vote by such specified Person; or (ii) any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such specified
Person. For purposes of this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person by virtue of ownership of voting securities,
by contract or otherwise. 
 “Agreement” has the meaning ascribed to such term in the Preamble. 
 “Business Day” means any day (other than Saturday or Sunday) on which banking institutions in the State of New York are not authorized
or obligated by law to close. 
 “Buyer” or “Buyers” has the meaning ascribed to such term in the Preamble.

 “Certificate of Designations” shall mean the Certificate of Designations of the
Preferred Stock, attached hereto as Exhibit A. 
 “Closing” has the meaning ascribed to such term in Section 2.1.

 “Closing Date” has the meaning ascribed to such term in Section 2.1. 
 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor statute thereto. 
 “Common Stock” has the meaning ascribed to such term in Section 3.6. 
 “Company” has the meaning ascribed to such term in the Preamble. 
 “Company Disclosure Schedule” shall mean that certain schedule attached hereto as Annex I qualifying the representations and warranties
contained in Article III. 
 “Company Material Adverse Effect” shall mean any event, condition or contingency that has had,
or is reasonably likely to have, a material adverse effect on the business, assets, liabilities, results of operations, prospects or financial condition of the Company and its Subsidiaries, taken as a whole, provided, however, that a
Company Material Adverse Effect shall not include any such effect resulting from or arising in connection with (a) changes or conditions generally affecting the industries or segments in which the Company operates; or (b) changes in
general economic, market or political condition. 
 “Conversion Shares” has the meaning ascribed to such term in
Section 3.6(b). 
 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, and all
regulations promulgated thereunder. 
 “Financial Statements” has the meaning ascribed to such term in Section 3.8.

 “GAAP” shall mean United States generally accepted accounting principles, consistently applied. 
 “Governmental Authority” shall mean any federal, state, municipal or other governmental authority, department, commission, board, agency
or other instrumentality. 
 “Governmental Rules” shall mean all laws, statutes, rules, regulations, codes, ordinances,
writs, orders or decrees of any Governmental Authority. 
 “Lien” has the meaning ascribed to such term in the Preamble.

 “Person” shall mean any individual, corporation, partnership, limited liability company, 

  

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limited liability partnership, joint venture, estate, trust, cooperative, foundation, union, syndicate, league, consortium, coalition, committee, society,
firm, company or other enterprise, association, organization or other entity or Governmental Authority. 
 “Preferred Stock”
has the meaning ascribed to such term in the Recitals. 
 “Purchase Price” has the meaning ascribed to such term in
Section 2.3. 
 “Purchase Shares” has the meaning ascribed to such term in the Recitals. 
 “Registration Rights Agreement” shall mean the Registration Rights Agreement, by and between the Company and the Buyers, in the form of
Exhibit B hereto. 
 “SEC” shall mean the Securities and Exchange Commission. 
 “SEC Reports” has the meaning ascribed to such term in Section 3.8. 
 “Section 203” has the meaning ascribed to such term in Section 5.14. 
 “Securities Act” shall mean the Securities Act of 1933, as amended from time to time, and all regulations promulgated thereunder.

 “Subsidiary” shall mean, when used with respect to any Person, any other Person, whether incorporated or unincorporated,
of which (i) more than fifty percent of the securities or other ownership interests or (ii) securities or other interests having by their terms ordinary voting power to elect more than fifty percent of the board of directors or others
performing similar functions with respect to such corporation or other organization, is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries. 
 “Survival Period” has the meaning ascribed to such term in Section 7.1. 
 “Transaction Documents” shall mean (i) the Registration Rights Agreement and the Certificate of Designations and (ii) those
other agreements, certificates and documents entered into or delivered between the Buyers and the Company related to, ancillary to, or in connection with this Agreement, the Registration Rights Agreement or the Certificate of Designations.

 1.2 Knowledge As used in the Agreement, “to the Company’s knowledge” or “to the knowledge of the Company”
or words of similar import shall mean the actual knowledge of Steve Santo, the Chief Executive Officer of the Company. 
 1.3
Interpretation When a reference is made in this Agreement to a section, article, paragraph, clause, annex or exhibit, such reference shall be to a reference to this Agreement unless otherwise clearly indicated to the contrary. The descriptive
article and section headings herein are intended for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. Whenever the words “include,”, “includes” or
“including” are used in this Agreement they shall be deemed to be followed by the 

  

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words “without limitation.” The words “hereof,” “herein” and “herewith” and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement. The meaning assigned to each term used in this Agreement shall be equally applicable to both the singular and the plural
forms of such term, and words denoting either gender shall include both genders. Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning. 
 The parties have participated jointly in the negotiation and drafting of this Agreement and the Transaction Documents. Consequently, in the event an
ambiguity or question of intent or interpretation arises, this Agreement and each of the Transaction Documents shall be construed as if drafted jointly by the parties thereto, and no presumption or burden of proof shall arise favoring or disfavoring
either party by virtue of the authorship of any provision of this Agreement or of any of the Transaction Documents. 
 ARTICLE II 

CLOSING; PURCHASE AND SALE 
 2.1
The Closing Subject to the terms and conditions of this Agreement, the closing (the “Closing”) of the transactions set forth in this Article II shall take place upon the satisfaction of the closing conditions set forth
herein, or at such other time or such other date as Buyers and the Company may agree, at the offices of DLA Piper US LLP, 1251 Avenue of the Americas, New York, New York (such date upon which the Closing occurs is referred to as the “Closing
Date”). 
 2.2 Escrow. 
 Pending the Closing, all funds paid hereunder shall be deposited by Purchasers in a separate account maintained by Wells Fargo Bank, National Association (the “Escrow Agent”) for the benefit of Purchasers (the
“Escrow Account”). The Escrow Account shall be maintained in accordance with Rule 15c2-4 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be interest bearing. If the Company
accepts subscriptions for the Shares at or prior to the Closing Date, then all subscription proceeds received for subscriptions accepted by the Company shall be paid over to the Company at the Closing, net of offering fees and expenses, which shall
be paid to the appropriate parties at such Closing. If the Company shall not have received and accepted a Purchaser’s subscription, then that subscription shall be void and all funds paid hereunder by Purchaser, without deduction therefrom or
interest thereon, shall be promptly returned to Purchaser. 
 2.3. Return of Funds. 
 In the event the Escrow Agent is authorized to return any funds from the Escrow Account pursuant to Section 3.2 above, Purchaser hereby authorizes
and directs the Escrow Agent to return or direct the return of any funds from the Escrow Account, without deduction therefrom or interest thereon, to the same account from which the funds were originally drawn. 
  

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 2.4 Issuance and Delivery of the Purchase Shares At the Closing, the Company shall issue and
deliver to each Buyer certificates for the number of Purchase Shares set forth on Annex II hereto and each Buyer shall purchase such Purchase Shares from the Company. 
 2.5 The Purchase Price 
 At the Closing, the Buyers shall purchase the Purchase Shares for a purchase price equal to
One Hundred Dollars ($100) per Purchase Share (the “Purchase Price”), which shall be paid to the Company by each Buyer in the amounts set forth on Annex II hereto. 
 2.6 Delivery of Purchase Price At the Closing, the aggregate Purchase Price shall be paid by the Buyers to the Company by wire transfer pursuant
to the release of the funds held in the Escrow Account to an account designated in writing by the Company prior to the Closing. 
 ARTICLE III

 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 
 The Company represents and warrants to the Buyers as of the date hereof and as of the Closing Date as follows: 
 3.1 Organization; Good Standing The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the corporate power and authority to conduct its business as
now being conducted and is duly licensed or qualified to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of the business conducted by it, and/or the character of the assets owned or leased by it,
makes such qualification or licensure necessary, except for those jurisdictions in which the failure to be so qualified or licensed or to be in good standing would not, individually or in the aggregate, limit the Company’s ability to consummate
the transactions hereby contemplated or have a Company Material Adverse Effect. 
 3.2 Subsidiaries All of the outstanding shares of
the capital stock of each Subsidiary of the Company are owned by the Company free and clear of all Liens. Each of the Company’s Subsidiaries is set forth on Section 3.2 of the Company Disclosure Schedule and is a corporation or other legal
entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Each of the Company’s Subsidiaries has the power and authority to conduct its business as now being conducted and is duly licensed
or qualified to do business and is in good standing as a foreign corporation or other legal entity in all jurisdictions in which the nature of the business conducted by it, and/or the character of the assets owned or leased by it, makes such
qualification or licensure necessary, except for those jurisdictions in which the failure to be so qualified or licensed or to be in good standing would not, individually or in the aggregate, limit the Company’s ability to consummate the
transactions hereby contemplated or have a Company Material Adverse Effect. 
 3.3 Authority; Execution and Delivery; Enforceability
The Company has the corporate power and authority to execute and deliver this Agreement and the Transaction 

  

 5 

 
Documents and to consummate the transactions hereby and thereby contemplated. The execution and delivery by the Company of this Agreement and the Transaction
Documents and the consummation by the Company of the transactions hereby and thereby contemplated have been authorized by all necessary corporate action of the Company. The Company has duly executed and delivered this Agreement and the Transaction
Documents, and, assuming the due execution and delivery of this Agreement and the Transaction Documents by each party thereto (other than the Company), this Agreement and the Transaction Documents constitute valid and binding obligations of the
Company and are enforceable against the Company in accordance with its and their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws
relating to or affecting creditors’ rights generally or general equitable principles (whether considered in a proceeding at equity or in law). 
 3.4 Non-Contravention Except as set forth on Schedule 3.4, neither the execution and delivery of this Agreement and the Transaction Documents by the Company, nor the consummation of the transactions hereby and thereby contemplated by
the Company, will: 
 (i) constitute any violation or breach of the certificate of incorporation or the by-laws (or comparable
organizational documents in the case of Subsidiaries) of the Company or any of its Subsidiaries; 
 (ii) constitute a default
under or a violation or breach of, or result in the acceleration of any obligation under, any provision of any Contract to which the Company or any of its Subsidiaries is a party or by which any of the assets of the Company or any of its
Subsidiaries or the Purchase Shares may be affected; 
 (iii) assuming the consents and approvals described in
Section 3.7 have been received, violate any Governmental Rules affecting the Company or any of its Subsidiaries; or 
 (iv) result in the creation of any Lien on any of the assets of the Company or any of its Subsidiaries. 
 other than, in the case of foregoing
clauses (ii), (iii), and (iv), those defaults, violations, breaches, accelerations and Liens which, individually or in the aggregate, would not have a Company Material Adverse Effect. 
 3.5 Corporate Documents The Company has provided true and complete copies of the Certificate of Incorporation, as amended, and By-Laws of the
Company. 
 3.6 Capitalization; Options. (a) The Company is authorized to issue 75,000,000 shares of Common Stock, 15,220,817 of
which are issued and outstanding as of the date hereof, (“Common Stock”) and 1,000,000 shares of Preferred Stock, none of which are issued and outstanding as of the date hereof (prior to giving effect to the transactions contemplated by
this Agreement and the Company’s Preferred Stock Purchase Agreement dated November 14, 2007). 
 (b) All of the Purchase Shares
when issued to Buyers in accordance with the terms of 

  

 6 

 
this Agreement shall be legally and validly issued, fully paid and non-assessable, free and clear of all Liens. The shares of Common Stock issuable upon
conversion of the Purchase Shares (the “Conversion Shares”) have been duly and validly reserved on the books and records of the Company and, when issued upon conversion of the Purchase Shares in accordance with the terms of the
Certificate of Designations and applicable Governmental Rules, shall be legally and validly issued, fully paid and nonassessable, free and clear of all Liens. 
 (c) Other than the Common Stock and the Preferred Stock, there are no other series or classes of capital stock of the Company authorized or issued and outstanding. Except as set forth on Section 3.6(c) of the
Company Disclosure Schedule, there are no outstanding warrants, options, contracts, rights (preemptive or otherwise), calls, commitments or other instruments convertible into or exchangeable for shares of capital stock of the Company or any of the
Company’s Subsidiaries, in each such case, to which the Company or any of Company’s Subsidiaries is a party and which relates to the sale or issuance of shares of capital stock of the Company or of any of Company’s Subsidiaries
(collectively, the “Company Instruments”) As of the date hereof, there are (i) 14,146,000 shares of Common Stock reserved on the Company’s books and records for issuance upon exercise of redeemable warrants and an option
held by the underwriter of the Company’s initial public offering, (ii) 150,000 shares of Common Stock reserved on the Company’s books and records for issuance upon the exercise of stock options issued to members of the Company’s
board of directors and (iii) there are 214,000 shares of restricted common stock, issued pursuant to the Company’s 2006 Long-Term Incentive Plan, issued and outstanding in the name of Company officers and employees. Except as set forth on
Section 3.6(c) of the Company Disclosure Schedule or as contemplated by this Agreement and the Transaction Documents: (i) the Company has not agreed to register any shares of its capital stock under the Securities Act or granted
registration rights with respect to shares of its capital stock to any Person and (ii) there are no voting trusts, stockholders agreements, proxies or other agreements or understandings in effect to which the Company is a party with respect to
the voting or transfer of any shares of Common Stock. Except as disclosed in the SEC Reports or any exhibit thereto, to the extent any such Company Instruments are outstanding as of the date hereof, neither the issuance and sale of the Purchase
Shares nor the issuance of the Conversion Shares in accordance with its terms will result in an adjustment of the exercise or conversion price of, or number of shares issuable upon the exercise or conversion of any such, Company Instruments.

 (d) The outstanding shares of Common Stock are all duly and validly authorized and issued, fully paid and nonassessable. All outstanding
Common Stock, options and other securities of the Company were issued in accordance with the registration or qualification provisions of the Securities Act and any relevant state securities laws (including, without limitation, anti-fraud provisions)
or, subject in part to the truth and accuracy of each purchaser’s representations to the Company at the time of the purchase thereof, pursuant to valid exemptions therefrom. 
 3.7 Consents and Approvals Except as set forth in Section 3.7 of the Company Disclosure Schedule, no consent, approval or authorization of,
or declaration, filing or registration with, any Governmental Authority or any other Person is required on behalf of the Company or any of its Subsidiaries in connection with the execution, delivery or performance of this Agreement and the
Transaction Documents or the consummation of the transactions 

  

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contemplated hereby and thereby, other than such consents, approvals and authorizations of, and declarations, filings and registrations the failure of which
to obtain, make or otherwise effect which would not, individually or in the aggregate, result in a Company Material Adverse Effect. 
 3.8
SEC Reports and Financial Statements. 
 (a) The Company has filed all forms, reports and documents required to be filed by it with the
SEC since March 2, 2005 (collectively, the “SEC Reports”). The SEC Reports (i) were prepared in all material respects in accordance with the requirements of the Securities Act or the Exchange Act, as the case may be; and
(ii) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. None of the Company’s Subsidiaries is required to file any form, report or other document with the SEC. 
 (b) Each of the financial statements (including, in each case, any notes thereto) contained in the SEC Reports (the “Financial Statements”) (i) was prepared from the books of account and other
financial records of the Company, (ii) was prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and (iii) presented fairly in all material
respects the financial position of the Company as at the respective dates thereof and the results of its operations and its cash flows for the respective periods indicated therein except as otherwise noted therein (subject, in the case of unaudited
statements, to the omission of footnotes and normal and recurring year-end adjustments which were not and are not expected, individually or in the aggregate, to have a Company Material Adverse Effect). 
 (c) Except for liabilities and obligations reflected on the June 30, 2007 balance sheet of the Company included in the SEC Reports (including the
notes thereto), liabilities and obligations disclosed in the SEC Reports (including exhibits thereto) filed prior to the date of this Agreement and other liabilities and obligations incurred in the ordinary course of business since June 30,
2007, neither the Company nor any of the Company’s Subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) of a nature required to be disclosed on a balance sheet prepared in accordance
with GAAP which, individually or in the aggregate, would cause a Company Material Adverse Effect. 
 3.9 Litigation and Claims There
is no action, suit, claim, proceeding, arbitration or investigation (each, an “Action”) pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries or, to the best of the
Company’s knowledge, against any officer, director or employee of the Company in connection with such officer’s, director’s or employee’s relationship with, or actions taken on behalf of, the Company or that questions the
validity of this Agreement, or the right of the Company to enter into such agreements, or to consummate the transactions contemplated hereby or thereby. Neither the Company nor any of its Subsidiaries is subject to or in default under any judgment,
order, writ, agreement, injunction or decree of any court or Governmental Authority. 
 3.10 No Finder Except as set forth in
Section 3.10 of the Company Disclosure Schedule, neither the Company, nor any of its Subsidiaries, nor any party acting on their behalf, has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on
account of the transactions contemplated hereby. 
  

 8 

 3.11 Exempt Offering Subject in part to the truth and accuracy of each Buyer’s
representations set forth in Article IV of this Agreement, the offer, sale and issuance of the Purchase Shares and the Conversion Shares, as contemplated by and in conformity with this Agreement are exempt from the registration requirements of
Section 5 of the Securities Act by virtue of Regulation D thereunder, and from the registration or qualification requirements of any other applicable federal or state securities laws, and the issuance of the Conversion Shares in accordance with
the Company’s Certificate of Incorporation and the Certificate of Designations will be exempt from such registration and qualification requirements, and neither the Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption. 
 3.12 Agreements; Action Other than as attached as an exhibit to the
Company’s public filings with the Securities and Exchange Commission, the Company is not a party to, and none of its properties, rights or assets are bound by, any material contract, agreement, lease, power of attorney, guaranty, surety
arrangement, or other commitment, whether written or oral. 
 3.13 Related-Party Transactions No employee, officer or director of the
Company or member of his or her immediate family is indebted to the Company, nor is the Company indebted (or committed to make loans or extend or guarantee credit) to any of them. Except as set forth in the Company’s SEC filings, none of such
persons and no “affiliate” or “associate” (as those terms are defined in Rule 405 promulgated under the 1933 Act) of any such person has had any direct or indirect ownership interest in, or other material interest in the Company,
or any firm or corporation (i) with which the Company is affiliated, (ii) with which the Company has a business relationship, (iii) that competes with the Company, (iv) which purchases from or sells, licenses or furnishes to the
Company any goods, property or services; or (v) which is a party to any contract or agreement to which the Company is a party or by which it may be bound or affected; provided, however that no representation or warranty is made with respect to
stock in publicly traded companies that may compete with the Company owned by employees, officers or directors of the Company and members of their immediate families. 
 3.14 Title to Property and Assets Company has good and marketable title to all of its properties and assets, in each case, except as set forth in the SEC filings and except for liens arising from current taxes
not yet due and payable, free and clear of any mortgages, pledges, liens, encumbrances, security interests or charges of any kind (collectively, “Encumbrances”). 
 3.15 Employee Benefit Plans Except as set forth on Schedule 3.15 attached hereto, neither the Company, nor any member of a controlled group
(within the meaning of Sections 414(b), (c), (m) and (o) of the Code)) of employers that include the Company (collectively, the “Company Group”), maintains any “employee benefit plan” within the meaning of
section 3(1) of the Employee Retirement Income Security Act of 1974, as amended) nor any other severance, bonus, incentive stock option, stock appreciation, stock purchase, retirement, insurance, profit sharing, deferred compensation welfare or
fringe benefit plan, agreement or arrangement, whether written or unwritten, providing benefits for employees or former employees of the Company or members of the Company Group (including such arrangements contained within the provisions of an
individual employment or consulting agreement). 
  

 9 

 3.16 Tax Returns, Payments and Elections The Company has filed all tax returns and reports
(including information returns and reports) as required by law. These returns and reports are true and correct in all material respects. The Company has paid all taxes and other assessments due, except those contested by it in good faith that are
listed in Section 3.16 of the Company Disclosure Schedule. The provision for taxes of the Company as shown in the Financial Statements is adequate for taxes due or accrued as of the date thereof. The Company has not elected to be treated as a
Subchapter S corporation pursuant to Section 1362(a) of the Code, nor has it made any other elections pursuant to the Code (other than elections that relate solely to methods of accounting, depreciation or amortization) that would have a
material effect on the Company, its financial condition, its business as presently conducted or proposed to be conducted or any of its properties or material assets. The Company has never had any tax deficiency proposed or assessed against it and
has not executed any waiver of any statute of limitations on the assessment or collection of any tax or governmental charge. None of the Company’s federal income tax returns and none of its state income or franchise tax or sales or use tax
returns has ever been audited by governmental authorities, and no such audits are pending or, to the Company’s knowledge, threatened. Since the date of the Financial Statements, the Company has not incurred any taxes, assessments or
governmental charges other than in the ordinary course of business. The Company has withheld or collected from each payment made to each of its employees, the amount of all taxes (including, but not limited to, federal income taxes, Federal
Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be withheld or collected therefrom, and has paid the same to the proper tax receiving officers or authorized depositories. 
 3.17 Insurance All insurance policies maintained by the Company are in full force and effect and the Company is not in default of any provision
thereof. The Company has not received notice from any issuer of any such insurance policies of its intention to cancel or refusal to renew any policy issued by it. 
 3.18 Disclosure None of this Agreement or any other statements or certificates made or delivered in connection herewith or therewith contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated therein or necessary to make the statements herein or therein, in light of the circumstances in which they are made, not misleading. 
 ARTICLE IV 
 REPRESENTATIONS AND WARRANTIES OF THE BUYERS 
 Each Buyer, severally and not jointly, represents and warrants to the Company as of the date hereof and the Closing Date as follows: 
 4.1 Organization and Good Standing Such Buyer (if not an individual) is duly organized, validly existing and in good standing under the laws of its
jurisdiction of formation. 
 4.2 Corporate Authority; Execution and Delivery; Enforceability Such Buyer has the 

  

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requisite power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party and to consummate the transactions
hereby and thereby contemplated. The execution and delivery by such Buyer of this Agreement and the Transaction Documents to which it is a party and the consummation by such Buyer of the transactions hereby and thereby contemplated have been
authorized by all necessary action (corporate or otherwise). Such Buyer has duly executed and delivered this Agreement and the Transaction Documents to which it is a party, and, assuming the due execution and delivery of this Agreement and the
Transaction Documents by each party thereto (other than such Buyer), this Agreement and the Transaction Documents to which it is a party constitute valid and binding obligations of such Buyer and are enforceable against such Buyer in accordance with
its and their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or general
equitable principles (whether considered in a proceeding at equity or in law). 
 4.3 Non-Contravention Neither the execution and
delivery of this Agreement or the Transaction Documents to which it is a party by such Buyer, nor the consummation of the transactions hereby or thereby contemplated by such Buyer, will: 
 (i) constitute any violation or breach of the organizational documents of such Buyer (if not an individual); or 
 (ii) violate any Government Rule affecting such Buyer, other than any such violations which, individually or in the aggregate, would not
prevent such Buyer from consummating the transactions contemplated by this Agreement and the Transaction Documents. 
 4.4 Consents and
Approvals No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Authority or third party is required on behalf of such Buyer in connection with the execution, delivery or performance of this
Agreement or the Transaction Documents to which it is a party and all documents contemplated hereby or thereby or the transactions contemplated hereby and thereby, other than such consents, approvals and authorizations of, and declarations, filings
and registrations with, third parties the failure of which to obtain, make or otherwise effect which would not, individually or in the aggregate, prevent such Buyer from consummating the transactions contemplated by this Agreement and the
Transaction Documents. 
 4.5 Litigation and Claims There is no action, suit, claim, proceeding, arbitration or investigation pending
or, to the knowledge of such Buyer, threatened against or affecting such Buyer with respect to the propriety or validity of the transactions contemplated hereby. 
 4.6 No Finder Neither such Buyer nor any party acting on such Buyer’s behalf has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the
transactions contemplated hereby. 
 4.7 Investment Representations Such Buyer hereby acknowledges and agrees that the Purchase
Shares, and, if and when issued, the Conversion Shares, will not be registered under 

  

 11 

 
the Securities Act or any state securities laws and may not be offered or sold except pursuant to registration or an exemption from the registration
requirements of the Securities Act and all applicable state securities laws. In this connection, such Buyer understands Rule 144 promulgated under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act. 
 4.8 Accredited Investor Such Buyer represents that: (i) such Buyer is an “accredited
investor” (as such term is defined in Regulation D under the Securities Act) and is acquiring the Purchase Shares for its own account, for investment purposes only, and not with a view to the resale or offer for sale thereof or with any present
intention of distributing or selling or offering for sale any of such securities; and (ii) such Buyer is capable of bearing the economic risk of such investment, including a complete loss of the investment in the Purchase Shares. 
 ARTICLE V 
 COVENANTS 
 5.1 Restrictive Legends. None of the Purchase Shares or the Conversion Shares may be transferred without registration under the Securities Act and
applicable state securities laws unless counsel to each transferring Buyer shall advise the Company in writing that such transfer may be effected without such registration. Each certificate representing any of the foregoing shall bear legends in
substantially the following form: 
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES UNDER THE ACT, OR (II) UPON RECEIPT BY ISSUER
OF AN OPINION OF LEGAL COUNSEL REASONABLY SATISFACTORY TO ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED. 
 The Company shall remove or cause
its registrar and transfer agent to remove such legend at the time such Purchase Shares or Conversion Shares are transferred pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144 under the Securities Act.

 5.2 Change in Condition Prior to the Closing, the Company shall promptly advise each Buyer in writing of any material change in the
condition (financial or otherwise), operations or properties or businesses of the Company or any of its respective Subsidiaries. 
 5.3
Subordination The Company and each Buyer hereby agree that the form of subordinated promissory note attached as Exhibit A to the Certificate of Designations shall be amended to expressly subordinate the indebtedness represented thereby, and
the rights of the holder thereunder, to the senior indebtedness of the Company on the Closing Date, all to the reasonable satisfaction of the holders of such senior indebtedness. 
 5.4 Limitation on Affiliate Transactions Notwithstanding the inapplicability of 

  

 12 

 
Section 203 of the Delaware General Corporation Law (“Section 203”) to the Company, the Buyers and the transactions contemplated
hereby, each Buyer hereby agrees that, from and after the Closing and until the eighteen month anniversary thereof, the Company shall be prohibited from engaging in any “business combination” (as defined in
Section 203) with such Buyer unless such business combination is approved by the holders of a majority of Common Stock of the Company, other than Buyers, entitled to vote at a meeting in respect thereof. 
 ARTICLE VI 
 CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE PARTIES 
 The obligation of the parties to consummate the transactions contemplated under this Agreement are subject
to the fulfillment of each of the following conditions, any or all of which may be waived in whole or in part by the party whose obligation is subject to such conditions, in their sole discretion; provided, however, that a waiver by a
Buyer of a condition to the obligations of any such Buyer will not be effective unless such condition is also waived by each other Buyer with respect to each such other Buyer’s obligations. 
 6.1 Conditions to obligations of the Buyers. 
 (a) There shall not be in effect any injunction or restraining order issued by a court of competent jurisdiction in an Action against the consummation of the transactions contemplated hereby or by any Transaction Document. 
 (b) The Company shall have executed and delivered the Registration Rights Agreement, dated as of the Closing Date. 
 (c) The Company shall have filed the Certificate of Designations with the Secretary of State of the State of Delaware. 
 (d) The Buyers shall have received a short-form good standing certificate relating to the Company, dated within ten Business Days of the Closing Date
(with a bring down certificate dated as of the Closing), issued by the Secretary of State of the State of Delaware. 
 (e) The
representations and warranties of the Company contained in Article III that are qualified as to materiality shall be true and correct and those not so qualified shall be true and correct in all material respects on and as of the Closing with the
same effect as though such representations and warranties had been made on and as of the date of such Closing. 
 (f) The Company shall have
performed and complied in all material respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing. 
 (g) The Chief Executive Officer of the Company shall deliver to each Buyer at the Closing a certificate stating that the conditions specified in Sections
6.1(e), 6.1(f), and 6.1(g) have been fulfilled and stating that there shall have been no event which has resulted in a Company Material Adverse Effect since the date of the Financial Statements. 
  

 13 

 (h) All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of
the United States or of any state that are required in connection with the lawful issuance and sale of the Securities pursuant to this Agreement shall be duly obtained and effective as of the Closing. 
 (i) All corporate and other proceedings in connection with the transactions contemplated hereby at the Closing and all documents incident thereto shall
be reasonably satisfactory in form and substance to Buyers’ counsel, and they shall have received all such counterpart original and certified or other copies of such documents as they may reasonably request. This may include, without
limitation, good standing certificates and certification by the Company’s Secretary regarding the Company’s Certificate of Incorporation, the Certificate of Designations and By-laws and Board of Director and stockholder resolutions, if
any, relating to this Agreement and the transactions contemplated hereby. 
 (j) The Buyers shall have received from DLA Piper US LLP,
counsel for the Company, an opinion, dated as of the Closing, in the form attached hereto as Exhibit C. 
 6.2 Conditions to obligations
of the Company. 
 (a) There shall not be in effect any injunction or restraining order issued by a court of competent jurisdiction in an
Action against the consummation of the transactions contemplated hereby or by any Transaction Document. 
 (b) The Buyers shall have provided
evidence reasonably satisfactory to the Company that issuance of the Purchase Shares to the Buyers will not result in the failure of the Company to be in continuous compliance with the U.S. citizenship requirements of any applicable laws and any
provisions of the certificate of incorporation or by-laws of the Company adopted from time to time to ensure such compliance. 
 ARTICLE VII

 MISCELLANEOUS 
 7.1
Survival; Certain Other Matters. 
 (a) The representations and warranties of the parties contained in this Agreement shall survive the
Closing and shall continue in full force and effect until the second anniversary of the date hereof, after which time such representations and warranties shall terminate and have no further force or effect. The period during which any such
representation or warranty survives is the “Survival Period” for such representation or warranty. Notwithstanding the foregoing, any representation or warranty that would otherwise terminate shall survive with respect to, and only
with respect to, any matter of which notice is given to Company or Buyers, as the case may be, in writing pursuant to this Agreement prior to the end of the applicable Survival Period until such matter is resolved, after which time such
representation and warranty shall terminate and have no further force or effect. The representations, warranties and covenants of the Company contained in or made pursuant to this Agreement shall in no way be affected by any investigation of the
subject matter thereof made by or on behalf of any Buyer or the Company. 
  

 14 

 (b) The covenants and agreements of the parties contained in this Agreement shall survive the Closing as
to each Buyer until such Buyer no longer owns any Purchase Shares or Conversion Shares. 
 (c) Each party hereto may assert a claim or cause
of action under this Agreement with respect to (i) any breach of one or more of the representations and warranties contained in Articles III and IV hereof, as the case may be, provided that such claim or cause of action is asserted within the
applicable time period specified in Section 7.1(a) hereof and (ii) subject to Section 7.1(b) hereof, a breach of any one or more of the covenants or agreements contained in this Agreement. Except as provided for in the immediately
preceding sentence, the parties to this Agreement agree that no claims or causes of action on any basis (including in contract or tort, under federal or state securities laws or otherwise), other than for fraud, may be brought against the Company or
any Buyer or any of their respective directors, officers, employees, Affiliates, shareholders, successors, permitted assigns, agents, or representatives based upon, directly or indirectly, any of the representations or warranties contained in
Articles III and IV of this Agreement or any misstatement or failure to state any fact made by Company in connection with such Buyer’s purchase of the Purchase Shares or the Conversion Shares. 
 7.2 Further Assurances From and after the Closing Date, each party shall, at any time and from time to time, make, execute and deliver, or cause
to be made, executed and delivered, such instruments and agreements, and take or cause to be taken all such actions as counsel for the other party may reasonably request for the effectual consummation of this Agreement and the transactions hereby
contemplated. 
 7.3 Expenses of the Transaction The Company shall pay its own fees and expenses in connection with this Agreement and
the transactions hereby contemplated and the reasonable fees and expenses of the Buyers incurred in connection with this Agreement and the transactions hereby contemplated, including, without limitation, reasonable legal and accounting fees and
expenses, in each case of one such professional services firm; provided, however, that the Company’s obligations under this Section 7.3 to pay Buyers’ reasonable fees and expenses shall not exceed $25,000 in the
aggregate unless the Closing shall have occurred. 
 7.4 Notices All notices or other communications required or permitted hereunder
shall be in writing and shall be deemed given or delivered (i) when delivered personally or by private courier, (ii) when actually delivered by registered or certified United States mail, return receipt requested, or (iii) when sent
by telecopy (provided that it is confirmed by a means specified in clause (i) or (ii)), addressed as follows: 
 If to the Buyers, to the
addresses set forth on Annex II hereto. 
 With a copy to: 
 Earlybird Capital, Inc. 
 275 Madison Ave., 27th Floor 
 New York, NY 10016 
 Attention: Steven Levine,
Chief Executive Officer 
 Telecopy: (212)661-4936 
 Telephone: (212)661-0200 
  

 15 

 If to the Company to: 
 Avantair, Inc. 
 4311 General Howard Drive 
 Clearwater, FL 33762 
 Telecopy: 

Telephone: (727)539-0071 
 With a copy to:

 DLA Piper US LLP 
 1251 Avenue
of the Americas 
 New York, New York 10019 
 Attention: William N. Haddad, Esq. 
 Telecopy: (212) 835-6001 and (212)884-8498 
 Telephone: (212) 335-4998 
 or to such other address as
such party may indicate by a notice delivered to the other parties hereto. 
 7.5 No Modification Except in Writing This Agreement
shall not be changed, modified, or amended except by a writing signed by the party to be affected by such change, modification or amendment, and this Agreement may not be discharged except by performance in accordance with its terms or by a writing
signed by the party to which performance is to be rendered. 
 7.6 Entire Agreement This Agreement, together with any Schedules and
Exhibits hereto, sets forth the entire agreement and understanding among the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of every kind and nature among them. 
 7.7 Severability If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, the
remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected unless the provision held invalid shall substantially impair the benefits of the remaining portions of this Agreement.

 7.8 Assignment This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and permitted assigns. This Agreement may not be assigned by the Company or a Buyer without the prior written consent of the other party; provided, however, that, prior to Closing, each Buyer may
assign its rights under this Agreement to any Affiliate of such Buyer that agrees in favor of the Company in writing to the assumption of the assigning Buyer’s obligations under this Agreement. No such assignment and assumption shall relieve
the assigning Buyer of its obligations under this Agreement. 
  

 16 

 7.9 Governing Law; Jurisdiction. 
 (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be
performed wholly within said State, without giving effect to the conflict of laws principles thereof. 
 (b) Each of the parties hereto
irrevocably and unconditionally submits to the exclusive jurisdiction of the United States District Court for the Southern District of New York or, if such court will not accept jurisdiction, the Supreme Court of the State of New York, New York
County or any court of competent civil jurisdiction sitting in New York County, New York. In any action, suit or other proceeding, each of the parties hereto irrevocably and unconditionally waives and agrees not to assert by way of motion, as a
defense or otherwise any claims that it is not subject to the jurisdiction of the above courts, that such action or suit is brought in an inconvenient forum or that the venue of such action, suit or other proceeding is improper. Each of the parties
hereto also agrees that any final and unappealable judgment against a party hereto in connection with any action, suit or other proceeding shall be conclusive and binding on such party and that such award or judgment may be enforced in any court of
competent jurisdiction, either within or outside of the United States. A certified or exemplified copy of such award or judgment shall be conclusive evidence of the fact and amount of such award or judgment. 
 (c) EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT OR THE
ENFORCEMENT OF ANY PROVISION OF THIS AGREEMENT. 
 7.10 Captions The captions appearing in this Agreement are inserted only as a
matter of convenience and for reference and in no way define, limit or describe the scope and intent of this Agreement or any of the provisions hereof. 
 7.11 Counterparts This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute a single agreement. 
 7.12 Delays or Omissions No delay or omission to exercise any right, power or remedy accruing to the Company or to any Buyer, upon any breach or
default of any party hereto under this Agreement, shall impair any such right, power or remedy of the Company or any Buyer nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach
of default thereafter occurring; nor shall any waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of the Company or any Buyer of any breach of
default under this Agreement, or any waiver on the part of the Company or any Buyer of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies,
either under this Agreement, or by law or otherwise afforded to the Company or any Buyer, shall be cumulative and not alternative. 
  

 17 

 [Signature page follows] 
  

 18 

 IN WITNESS WHEREOF, each of the parties hereto has executed this Preferred Stock Purchase
Agreement on the day and year first above written. 
  

			
	AVANTAIR, INC.
		
	By:	 	  

	Name:	 	
	Title:	 	
	
	INVESTOR:
	
	  

		
	By:	 	  

	Name:	 	
	Title:	 	

  

			
	Investor Address:
	  

	  

	  

	
	Number of Shares to be purchased by Investor:
	  

		
	Amount of investment:	 	  

			
		
	Investor Tax ID:	 	  

 ANNEX I 
 SCHEDULES 

 ANNEX II 
 ALLOCATION AMONG BUYERS 
  

							
	 Buyer
	  	 Address
	  	 Investment Amount
	  	 Number of Series
 A Shares Purchased

		  		  	$	  	
		  		  	$	  	
		  		  	$	  	
		  		  	$

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