Document:

Exhibit 4.6

 

TETRALOGIC PHARMACEUTICALS CORPORATION

 

as the Company

 

and

 

U.S. BANK NATIONAL ASSOCIATION

 

as Trustee

 

INDENTURE

 

Dated as of             ,

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE 1   DEFINITIONS AND INCORPORATION BY REFERENCE
    	
1
    
	
Section 1.1.
    	
Definitions
    	
1
    
	
Section 1.2.
    	
Other Definitions
    	
5
    
	
Section 1.3.
    	
Incorporation by   Reference of Trust Indenture Act
    	
5
    
	
Section 1.4.
    	
Rules of   Construction
    	
5
    
	
 
    	
 
    
	
ARTICLE 2   THE SECURITIES
    	
6
    
	
Section 2.1.
    	
Issuable in Series
    	
6
    
	
Section 2.2.
    	
Establishment of Terms   of Series of Securities
    	
6
    
	
Section 2.3.
    	
Form and Dating
    	
8
    
	
Section 2.4.
    	
Execution and   Authentication
    	
9
    
	
Section 2.5.
    	
Registrar and Paying   Agent
    	
10
    
	
Section 2.6.
    	
Paying Agent to Hold   Money in Trust
    	
10
    
	
Section 2.7.
    	
Holder Lists
    	
10
    
	
Section 2.8.
    	
Transfer and Exchange
    	
11
    
	
Section 2.9.
    	
Replacement Securities
    	
15
    
	
Section 2.10.
    	
 
    	
Outstanding Securities
    	
16
    
	
Section 2.11.
    	
 
    	
Treasury Securities
    	
16
    
	
Section 2.12.
    	
 
    	
Temporary Securities
    	
16
    
	
Section 2.13.
    	
 
    	
Cancellation
    	
16
    
	
Section 2.14.
    	
 
    	
Defaulted Interest
    	
17
    
	
Section 2.15.
    	
 
    	
CUSIP Number
    	
17
    
	
 
    	
 
    
	
ARTICLE 3   REDEMPTION AND PREPAYMENT
    	
17
    
	
Section 3.1.
    	
Notices to the Trustee
    	
17
    
	
Section 3.2.
    	
Selection of Securities   to Be Redeemed or Purchased
    	
17
    
	
Section 3.3.
    	
Notice of Redemption
    	
18
    
	
Section 3.4.
    	
Effect of Notice of   Redemption
    	
19
    
	
Section 3.5.
    	
Deposit of Redemption   or Purchase Price
    	
19
    
	
Section 3.6.
    	
Securities Redeemed or   Purchased in Part
    	
19
    
	
 
    	
 
    
	
ARTICLE 4   COVENANTS
    	
20
    
	
Section 4.1.
    	
Payment of Securities
    	
20
    
	
Section 4.2.
    	
Maintenance of Office   or Agency
    	
20
    
	
Section 4.3.
    	
Reports to Holders
    	
20
    
	
Section 4.4.
    	
Compliance Certificate
    	
21
    
	
Section 4.5.
    	
Taxes
    	
22
    
	
Section 4.6.
    	
Stay, Extension and   Usury Laws
    	
22
    
	
 
    	
 
    
	
ARTICLE 5   SUCCESSORS
    	
22
    
	
Section 5.1.
    	
Merger, Consolidation,   or Sale of Assets
    	
22
    
	
Section 5.2.
    	
Successor Corporation   Substituted
    	
23
    

 

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ARTICLE 6   DEFAULTS AND REMEDIES
    	
23
    
	
Section 6.1.
    	
Events of Default
    	
23
    
	
Section 6.2.
    	
Acceleration
    	
24
    
	
Section 6.3.
    	
Other Remedies
    	
25
    
	
Section 6.4.
    	
Waiver of Past Defaults
    	
25
    
	
Section 6.5.
    	
Control by Majority
    	
26
    
	
Section 6.6.
    	
Limitation on Suits
    	
26
    
	
Section 6.7.
    	
Rights of Holders of   Securities to Receive Payment
    	
26
    
	
Section 6.8.
    	
Collection Suit by   Trustee
    	
27
    
	
Section 6.9.
    	
Trustee May File   Proofs of Claim
    	
27
    
	
Section 6.10.
    	
 
    	
Priorities
    	
27
    
	
Section 6.11.
    	
 
    	
Undertaking for Costs
    	
28
    
	
 
    	
 
    
	
ARTICLE 7   TRUSTEE
    	
28
    
	
Section 7.1.
    	
Duties of Trustee
    	
28
    
	
Section 7.2.
    	
Rights of Trustee
    	
29
    
	
Section 7.3.
    	
Individual Rights of   Trustee
    	
31
    
	
Section 7.4.
    	
Trustee’s Disclaimer
    	
31
    
	
Section 7.5.
    	
Notice of Defaults
    	
31
    
	
Section 7.6.
    	
Reports by Trustee to   Holders of the Securities
    	
31
    
	
Section 7.7.
    	
Compensation and   Indemnity
    	
32
    
	
Section 7.8.
    	
Replacement of Trustee
    	
32
    
	
Section 7.9.
    	
Successor Trustee by   Merger, etc.
    	
33
    
	
Section 7.10.
    	
 
    	
Eligibility;   Disqualification
    	
34
    
	
Section 7.11.
    	
 
    	
Preferential Collection   of Claims Against the Company
    	
34
    
	
 
    	
 
    
	
ARTICLE 8   LEGAL DEFEASANCE AND COVENANT DEFEASANCE
    	
34
    
	
Section 8.1.
    	
Option to Effect Legal   Defeasance or Covenant Defeasance
    	
34
    
	
Section 8.2.
    	
Legal Defeasance and   Discharge
    	
34
    
	
Section 8.3.
    	
Covenant Defeasance
    	
35
    
	
Section 8.4.
    	
Conditions to Legal or   Covenant Defeasance
    	
35
    
	
Section 8.5.
    	
Deposited Money and Government   Securities to be Held in Trust; Other Miscellaneous Provisions
    	
37
    
	
Section 8.6.
    	
Repayment to the   Company
    	
37
    
	
Section 8.7.
    	
Reinstatement
    	
38
    
	
 
    	
 
    
	
ARTICLE 9   AMENDMENT, SUPPLEMENT AND WAIVER
    	
38
    
	
Section 9.1.
    	
Without Consent of   Holders of Securities
    	
38
    
	
Section 9.2.
    	
With Consent of Holders   of Securities
    	
39
    
	
Section 9.3.
    	
Compliance with Trust   Indenture Act
    	
40
    
	
Section 9.4.
    	
Revocation and Effect   of Consents
    	
40
    
	
Section 9.5.
    	
Notation on or Exchange   of Securities
    	
41
    
	
Section 9.6.
    	
Trustee to Sign Amendments,   Etc.
    	
41
    
	
 
    	
 
    
	
ARTICLE 10   SATISFACTION AND DISCHARGE
    	
41
    
	
Section 10.1.
    	
Satisfaction and   Discharge
    	
41
    
	
Section 10.2.
    	
Application of Trust   Money
    	
42
    
					

 

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ARTICLE 11   MISCELLANEOUS
    	
42
    
	
Section 11.1.
    	
Trust Indenture Act   Controls
    	
42
    
	
Section 11.2.
    	
Notices
    	
42
    
	
Section 11.3.
    	
Communication by   Holders of Securities with Other Holders of Securities
    	
44
    
	
Section 11.4.
    	
Certificate and Opinion   as to Conditions Precedent
    	
44
    
	
Section 11.5.
    	
Statements Required in   Certificate or Opinion
    	
44
    
	
Section 11.6.
    	
Rules by Trustee   and Agents
    	
45
    
	
Section 11.7.
    	
No Personal Liability   of Directors, Officers, Employees and Stockholder Members
    	
45
    
	
Section 11.8.
    	
Governing Law
    	
45
    
	
Section 11.9.
    	
No Adverse   Interpretation of Other Agreements
    	
45
    
	
Section 11.10.
    	
Successors
    	
45
    
	
Section 11.11.
    	
Severability
    	
45
    
	
Section 11.12.
    	
Counterpart Originals
    	
45
    
	
Section 11.13.
    	
Table of Contents,   Headings, etc.
    	
45
    
	
Section 11.14.
    	
Waiver of Trial by Jury
    	
46
    
	
Section 11.15.
    	
Calculations
    	
46
    
	
Section 11.16.
    	
Force Majeure
    	
46
    

 

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This Indenture, dated as of             ,     , is by and between TETRALOGIC PHARMACEUTICALS CORPORATION, a Delaware corporation (the “Company”) and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (the “Trustee”).

 

The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Securities issued under this Indenture.

 

ARTICLE 1
 DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.1.                                 Definitions.

 

“Affiliate” means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative of the foregoing.

 

“Agent” means any Registrar, co-registrar, Paying Agent or additional paying agent.

 

“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Security, the rules and procedures of the Depositary that apply to such transfer or exchange.

 

“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.

 

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns,” “Beneficially Owned” and “Beneficial Ownership,” have a corresponding meaning.

 

“Board of Directors” means, as to any Person, the board of directors (or similar governing body) of such Person or any duly authorized committee thereof.

 

“Board Resolution” means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.

 

“Business Day” means any day other than a Legal Holiday.

 

“Capital Stock” means:

 

 

(1) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person, and all options, warrants or other rights to purchase or acquire any of the foregoing; and

 

(2) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person, and all options, warrants or other rights to purchase or acquire any of the foregoing.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person’s common stock and includes, without limitation, all series and classes of such common stock.

 

“Company Order” means a written order signed in the name of the Company by an Officer.

 

“Corporate Trust Office of the Trustee” will be at the address of the Trustee specified in Section 11.2 hereof or such other address as to which the Trustee may give notice to the Company.

 

“Custodian” means the Trustee, as custodian with respect to the Securities in global form, or any successor entity thereto.

 

“Default” means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default.

 

“Definitive Security” means a certificated Security in definitive, fully registered form without interest coupons in the name of the Holder thereof and issued in accordance with Section 2.4 hereof.

 

“Depositary” means, with respect to the Securities issuable or issued in whole or in part in global form, the Person specified in Section 2.5 hereof as the Depositary with respect to the Securities, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

 

“GAAP” means generally accepted accounting principles in the United States at the date of any computation.

 

“Global Security Legend” means the legend set forth in Section 2.8(f) hereof, which is required to be placed on all Global Securities issued under this Indenture.

 

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“Global Securities” means a Security or Securities, as the case may be, in the form established pursuant to Section 2.3 hereof evidencing all or part of a Series of Securities, issued to the Depositary for such Series or its nominee, and registered in the name of such Depositary or nominee.

 

“Government Securities” means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States of America pledges its full faith and credit.

 

“Holder” means the registered holder of any Security with respect to registered securities and the bearer of any unregistered Security or any coupon appertaining to it, as the case may be.

 

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):

 

(1)                                 the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money; and

 

(2)                                 the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments.

 

For avoidance of doubt, (a) obligations in respect of hedging transactions and cash management obligations, (b) accrued payables and trade credit and (c) obligations in respect of taxes shall not be Indebtedness.

 

“Indenture” means this Indenture, as amended, supplemented or restated from time to time in accordance with the terms hereof and shall include the form and terms of particular Series of Securities established as contemplated hereunder.

 

“Indirect Participant” means a Person who holds a beneficial interest in a Global Security through a Participant.

 

“Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in the State of New York or the Corporate Trust Office of the Trustee are authorized or required by law to close. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected.

 

“Lien” means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest).

 

“Officer” means the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or Secretary of the Company.

 

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“Officers’ Certificate” means a certificate signed by two Officers, at least one of whom shall be the principal executive officer or principal financial officer of the Company.

 

“Opinion of Counsel” means an opinion from legal counsel who is reasonably acceptable to the Trustee.  The counsel may be an employee of or counsel to the Company or any Subsidiary of the Company.

 

“Participant” means, with respect to the Depositary, a Person who has an account with the Depositary.

 

“Person” means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof.

 

“Preferred Stock” of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation.

 

“Responsible Officer” means, when used with respect to the Trustee, an officer assigned to the Corporate Trust Office of the Trustee, including any vice president, assistant vice president, assistant treasurer, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and having direct responsibility for the administration of this Indenture, and also, with respect to this Indenture, any other officer to whom such matter with respect to this Indenture is referred because of such Officers’ knowledge of and familiarity with the particular subject.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.

 

“Security” or “Securities” means the debentures, notes or other debt instruments of the Company created pursuant to Section 2.1 and Section 2.2 hereof.

 

“Series” or “Series of Securities” means each series of debentures, notes or other debt instruments of the Company created pursuant to Section 2.1 and Section 2.2 hereof.

 

“Stated Maturity” means, with respect to any installment of interest or principal on any Series of Securities, the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Series of Securities, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

 

“Subsidiary” with respect to any Person, means:

 

(1) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person; or

 

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(2) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person.

 

“TIA” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb).

 

“Trustee” means U.S. Bank National Association until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

 

Section 1.2.                                 Other Definitions.

 

	
Term
    	
 
    	
Defined in
   Section
    	
 
    
	
Authentication   Order
    	
 
    	
2.4
    	
 
    
	
Covenant   Defeasance
    	
 
    	
8.3
    	
 
    
	
DTC
    	
 
    	
2.5
    	
 
    
	
Event of Default
    	
 
    	
6.1
    	
 
    
	
Legal Defeasance
    	
 
    	
8.2
    	
 
    
	
Paying Agent
    	
 
    	
2.5
    	
 
    
	
Registrar
    	
 
    	
2.5
    	
 
    
	
Surviving Entity
    	
 
    	
5.1
    	
 
    

 

Section 1.3.                                 Incorporation by Reference of Trust Indenture Act.  Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.

 

The following TIA terms used in this Indenture have the following meanings:

 

“indenture securities” means the Securities;

 

“indenture security Holder” means a Holder;

 

“indenture to be qualified” means this Indenture;

 

“indenture trustee” or “institutional trustee” means the Trustee; and

 

“obligor” on the Securities means the Company and any successor obligor upon the Securities.

 

All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule under the TIA have the meanings so assigned to them.

 

Section 1.4.                                 Rules of Construction.  Unless the context otherwise requires:

 

(1)                                 a term has the meaning assigned to it;

 

5

 

(2)                                 an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

 

(3)                                 “or” is not exclusive;

 

(4)                                 words in the singular include the plural, and in the plural include the singular;

 

(5)                                 “will” shall be interpreted to express a command;

 

(6)                                 provisions apply to successive events and transactions;

 

(7)                                 references to sections of or rules under the Securities Act will be deemed to include substitute, replacement of successor sections or rules adopted by the Commission from time to time;

 

(8)                                 “including” means including without limitation; and

 

(9)                                 Section references are to Sections of this Indenture unless the context otherwise requires.

 

ARTICLE 2
 THE SECURITIES

 

Section 2.1.                                 Issuable in Series.  The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more Series. All Securities of a Series shall be identical except as may be set forth or determined in the manner provided in a Board Resolution, supplemental indenture hereto or Officers’ Certificate detailing the adoption of the terms thereof pursuant to authority granted under a Board Resolution. In the case of Securities of a Series to be issued from time to time, the Board Resolution, Officers’ Certificate or supplemental indenture hereto detailing the adoption of the terms thereof pursuant to authority granted under a Board Resolution may provide for the method by which specified terms (such as interest rate, maturity date, record date or date from which interest shall accrue) are to be determined. Securities may differ between Series in respect of any matters, provided that all Series of Securities shall be equally and ratably entitled to the benefits of the Indenture.

 

Section 2.2.                                 Establishment of Terms of Series of Securities.  At or prior to the issuance of any Securities within a Series, the following shall be established (as to the Series generally, in the case of Section 2.2(1) and either as to such Securities within the Series or as to the Series generally in the case of Section 2.2(2) through Section 2.2(17)) by or pursuant to a Board Resolution, and set forth or determined in the manner provided in a Board Resolution, supplemental indenture hereto or Officers’ Certificate:

 

(a)                                 the title (which shall distinguish the Securities of that particular Series from the Securities of any other Series) and ranking (including the terms of any subordination provisions) of the Series;

 

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(b)                                 whether the Securities are entitled to the benefit of any guarantee by any guarantor;

 

(c)                                  any limit upon the aggregate principal amount of the Securities of the Series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the Series);

 

(d)                                 the date or dates on which the principal of the Securities of the Series is payable;

 

(e)                                  the rate or rates (which may be fixed or variable) per annum or, if applicable, the method used to determine such rate or rates (including, but not limited to, any commodity, commodity index, stock exchange index or financial index) at which the Securities of the Series shall bear interest, if any, the date or dates from which such interest, if any, shall accrue, the date or dates on which such interest, if any, shall commence and be payable and any regular record date for the interest payable on any interest payment date;

 

(f)                                   the right, if any, to extend the interest payment periods or defer the payment of interest and the duration of such extension or deferral;

 

(g)                                  the place or places where the principal of and interest, if any, on the Securities of the Series shall be payable, where the Securities of such Series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of such Series and this Indenture may be delivered, and the method of such payment, if by wire transfer, mail or other means;

 

(h)                                 the dates, if any, on which and the price or prices at which the Securities of the Series will be repurchased by the Company at the option of the Holders thereof and other detailed terms and provisions of such repurchase obligations;

 

(i)                                     the obligation, if any, of the Company to redeem or purchase the Securities of the Series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the Series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;

 

(j)                                    if applicable, the period or periods within which, the price or prices at which and the terms and conditions upon which the Securities of the Series may be redeemed, in whole or in part, at the option of the Company;

 

(k)                                 if other than minimum denominations of $1,000 and any integral multiple in excess thereof, the minimum denominations in which the Securities of the Series shall be issuable;

 

(l)                                     if other than the principal amount thereof, the portion of the principal amount of the Securities of the Series that shall be payable upon declaration of acceleration of the maturity thereof;

 

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(m)                             any addition to, deletion of or change in the covenants which apply to the Securities of the Series;

 

(n)                                 any special tax implications of the Securities;

 

(o)                                 any trustees, authenticating agents or paying agents with respect to such series, if different from those set forth in, or designated pursuant to, this Indenture;

 

(p)                                 the provisions, if any, relating to conversion or exchange of any Securities of such Series, including if applicable, the conversion or exchange price, the conversion or exchange period, provisions as to whether conversion or exchange will be mandatory, at the option of the Holders thereof or at the option of the Company, the events requiring an adjustment of the conversion price or exchange price and provisions affecting conversion or exchange if such Series of Securities are redeemed; and

 

(q)                                 any other terms of the Series (which may amend, supplement, modify or delete any provision of this Indenture insofar as it applies to such Series), including any terms that may be required under applicable law or regulations or advisable in connection with the marketing of Securities of that Series.

 

All Securities of any one Series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to the Board Resolution, supplemental indenture hereto or Officers’ Certificate referred to above.

 

Section 2.3.                                 Form and Dating.

 

(a)                                 General.  The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Security will be dated the date of its authentication. Unless otherwise provided by Board Resolution, Officers’ Certificate or supplemental indenture hereto for a particular Series, the Securities will be in minimum denominations of $2,000 with integral multiples of $1,000 in excess thereof.

 

The terms and provisions contained in the Securities will constitute, and are hereby expressly made, a part of this Indenture, and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.

 

(b)                                 Global Securities.  A Board Resolution, a supplemental indenture hereto or an Officers’ Certificate shall establish whether the Securities of a Series shall be issued in whole or in part in the form of one or more Global Securities and the Depositary for such Global Security or Securities. Any Global Security issued hereunder shall bear the Global Security Legend. Each Global Security will represent such of the outstanding Securities of any Series as will be specified therein and each will provide that it will represent the aggregate principal amount of outstanding Securities of any Series from time to time endorsed thereon and that the aggregate principal amount of outstanding Securities of any Series represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Security to reflect the amount of any increase or decrease in the

 

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aggregate principal amount of outstanding Securities of any Series represented thereby will be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.8 hereof.

 

Section 2.4.                                 Execution and Authentication.  At least one Officer must sign the Securities for the Company by manual or facsimile signature.

 

If an Officer whose signature is on a Security no longer holds that office at the time a Security is authenticated, the Security will nevertheless be valid.

 

A Security will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. The signature will be conclusive evidence that the Security has been authenticated under this Indenture.

 

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities (an “Authentication Order”), and the Trustee in accordance with the Authentication Order will authenticate and deliver such Securities. In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall receive, and (subject to Section 7.1) will be fully protected in conclusively relying upon, (a) the Board Resolution, supplemental indenture hereto or Officers’ Certificate establishing the form of the Securities of that Series or of Securities within that Series and the terms of the Securities of that Series or of Securities within that Series, (b) an Officers’ Certificate complying with Section 11.4 and 11.5 and (c) an Opinion of Counsel stating:

 

(a)                                 that such form of the Securities has been established in conformity with the provisions of this Indenture;

 

(b)                                 that such terms of the Securities have been established in conformity with the provisions of this Indenture;

 

(c)                                  that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company enforceable in accordance with their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or affecting creditors’ rights and by general principles of equity; and

 

(d)                                 that all conditions precedent and covenants to the issuance of the Securities have been satisfied.

 

The aggregate principal amount of Securities of any Series outstanding at any time may not exceed any limit upon the maximum principal amount for such Series set forth in the Board Resolution, supplemental indenture hereto or Officers’ Certificate delivered pursuant to Section 2.2, except as provided in Section 2.9.

 

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The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company.

 

Section 2.5.                                 Registrar and Paying Agent.  The Company will maintain, with respect to each Series of Securities, an office or agency where Securities may be presented for registration of transfer or for exchange (“Registrar”) and an office or agency where such Securities may be presented for payment (“Paying Agent”). The Registrar will keep a register with respect to each Series of Securities and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company will notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.

 

The Company initially appoints The Depository Trust Company (“DTC”) to act as Depositary with respect to the Global Securities. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to each Series of Securities.

 

Section 2.6.                                 Paying Agent to Hold Money in Trust.  The Company will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust, for the benefit of Holders of any Series of Securities, or the Trustee, all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Series of Securities, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) will have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of Holders of any Series of Securities all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee will automatically become the Paying Agent for the Securities.

 

Section 2.7.                                 Holder Lists.  The Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, the Company will furnish to the Trustee at least two Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of each Series of Securities and the Company shall otherwise comply with TIA § 312(a).

 

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Section 2.8.                                 Transfer and Exchange.

 

(a)                                 Transfer and Exchange of Global Securities.  A Global Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Securities will be exchanged by the Company for Definitive Securities if:

 

(1)                                 the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary;

 

(2)                                 the Company in its sole discretion determines that the Global Securities (in whole but not in part) should be exchanged for Definitive Securities and delivers a written notice to such effect to the Trustee; or

 

(3)                                 there has occurred and is continuing a Default or Event of Default with respect to the Securities of which an officer of the Trustee has received actual notice and the Registrar has received a request from any beneficial owner of an interest in the Global Securities to issue such Definitive Securities.

 

Upon the occurrence of either of the events in (1) or (2) above, Definitive Securities shall be issued in such names as the Depositary shall instruct the Trustee. Global Securities also may be exchanged or replaced, in whole or in part, as provided in Section 2.9 and Section 2.12 hereof. Every Security authenticated and delivered in exchange for, or in lieu of, a Global Security or any portion thereof, pursuant to this Section 2.8 or Section 2.9 or Section 2.12 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Security. A Global Security may not be exchanged for another Security other than as provided in this (a) hereof, provided, however, that beneficial interests in a Global Security may be transferred and exchanged as provided in (b) or (c) hereof.

 

(b)                                 Transfer and Exchange of Beneficial Interests in the Global Securities. The transfer and exchange of beneficial interests in the Global Securities will be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Transfers of beneficial interests in the Global Securities will require compliance with paragraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

 

(c)                                  Transfer of Beneficial Interests in the Same Global Security. Beneficial interests in any Global Security may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Global Security. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.8(b)(1).

 

(d)                                 All Other Transfers and Exchange of Beneficial Interests in Global Securities. In connection with all transfers or exchanges of beneficial interests in Global

 

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Securities that are not subject to Section 2.8(b)(1) above, the transferor of such beneficial interest must deliver to the Registrar either:

 

(A)                               both:

 

(i)                                     a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Security in an amount equal to the beneficial interest to be transferred or exchanged; and

 

(ii)                                  instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase; or

 

(B)                               both:

 

(i)                                     a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Security in an amount equal to the beneficial interest to be transferred or exchanged; and

 

(ii)                                  instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Security shall be registered to effect the transfer or exchange referred to in Section 2.8(b)(2)(B)(i) above.

 

Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Securities contained in this Indenture and the Securities or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Securities pursuant to (g) hereof.

 

(e)                                  Transfer or Exchange of Beneficial Interests in Global Securities for Definitive Securities. If any holder of a beneficial interest in an Global Security proposes to exchange such beneficial interest for a Definitive Security or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Security, then, upon satisfaction of the conditions set forth in Section 2.8(b)(2) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Security to be reduced accordingly pursuant to (g) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Security in the appropriate principal amount. Any Definitive Security issued in exchange for a beneficial interest pursuant to this (c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Securities to the Persons in whose names such Securities are so registered.

 

(f)                                   Transfer and Exchange of Definitive Securities for Beneficial Interests. A Holder of a Definitive Security may exchange such Security for a beneficial interest in a Global Security or transfer such Definitive Securities to a Person who takes delivery thereof in the form of a beneficial interest in a Global Security at any time. Upon receipt of a request for such an

 

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exchange or transfer, the Trustee will cancel the applicable Definitive Security and increase or cause to be increased the aggregate principal amount of one of the Global Securities pursuant to (g) hereof.

 

If any such exchange or transfer from a Definitive Security to a beneficial interest is effected pursuant to the previous paragraph at a time when a Global Security has not yet been issued, the Company will issue and, upon receipt of the Company Order, the Trustee will authenticate one or more Global Securities in an aggregate principal amount equal to the principal amount of Definitive Securities so transferred.

 

A Holder of Definitive Securities may transfer such Securities to a Person who takes delivery thereof in the form of a Definitive Security.

 

(g)                                  Transfer and Exchange of Definitive Securities for Definitive Securities. Upon request by a Holder of Definitive Securities and such Holder’s compliance with the provisions of this (e), the Registrar will register the transfer or exchange of Definitive Securities. Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Securities duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. A Holder of Definitive Securities may transfer such Securities to a Person who takes delivery thereof in the form of a Definitive Security. Upon receipt of a request to register such a transfer, the Registrar shall register the Definitive Securities pursuant to the instructions from the Holder thereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Security in the appropriate principal amount.

 

(h)                                 Global Securities Legends. The following legends will appear on the face of all Global Securities issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture:

 

“THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.8 OF THE INDENTURE, (2) THIS GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.8(a) OF THE INDENTURE, (3) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.13 OF THE INDENTURE AND (4) THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE

 

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TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS GLOBAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY GLOBAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

 

(i)                                     Cancellation and/or Adjustment of Global Securities. At such time as all beneficial interests in a particular Global Security have been exchanged for Definitive Securities or a particular Global Security has been redeemed, repurchased or canceled in whole and not in part, each such Global Security will be returned to or retained and canceled by the Trustee in accordance with Section 2.13 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for or transferred to a Person who will take delivery thereof in the form of Definitive Securities, the principal amount of Securities represented by such Global Security will be reduced accordingly and an endorsement will be made on such Global Security by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Security, such other Global Security will be increased accordingly and an endorsement will be made on such Global Security by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

 

(j)                                    General Provisions Relating to Transfers and Exchanges.

 

(1)                                 To permit registrations of transfers and exchanges, the Company will execute and the Trustee will authenticate Global Securities and Definitive Securities upon receipt of an Authentication Order in accordance with Section 2.4 hereof or at the Registrar’s request.

 

(2)                                 No service charge will be made to a Holder of a beneficial interest in a Global Security or to a Holder of a Definitive Security for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Section 2.12, Section 3.6 and Section 9.5 hereof).

 

(3)                                 Neither the Registrar nor the Company will be required to register the transfer of or exchange of any Securities selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.

 

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(4)                                 All Global Securities and Definitive Securities issued upon any registration of transfer or exchange of Global Securities or Definitive Securities will be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Securities or Definitive Securities surrendered upon such registration of transfer or exchange.

 

(5)                                 Neither the Registrar nor the Company will be required:

 

(A)                               to issue, to register the transfer of or to exchange any Securities during a period beginning at the opening of business 15 days before the day of any selection of Securities for redemption under Section 3.2 hereof and ending at the close of business on the day of selection;

 

(B)                               to register the transfer of or to exchange any Security selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part; or

 

(C)                               to register the transfer of or to exchange a Security between a record date and the next succeeding interest payment date for the Security.

 

(k)                                 Prior to due presentment for the registration of a transfer of any Security, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Securities and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.

 

(l)                                     The Trustee will authenticate Global Securities and Definitive Securities in accordance with the provisions of Section 2.4 hereof.

 

(m)                             All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.8 to effect a registration of transfer or exchange may be submitted by facsimile.

 

Section 2.9.                                 Replacement Securities.  If any mutilated Security is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the ownership and destruction, loss or theft of any Security, the Company will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Security if the Trustee’s requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Security is replaced. The Company may charge for its expenses in replacing a Security.

 

Every replacement Security is an additional obligation of the Company and will be entitled to all of the benefits of this Indenture equally and proportionately with all other Securities duly issued hereunder.

 

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Section 2.10.                          Outstanding Securities.  The Securities outstanding at any time are all the Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Security effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.10 as not outstanding. Except as set forth in Section 2.11 hereof, a Security does not cease to be outstanding because the Company or an Affiliate of the Company holds such Security.

 

If a Security is replaced pursuant to Section 2.9 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a protected purchaser.

 

If the principal amount of any Security is considered paid under Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.

 

If the Paying Agent (other than the Company or an Affiliate thereof) holds, on a redemption date or maturity date, money sufficient to pay Securities payable on that date, then on and after that date such Securities will be deemed to be no longer outstanding and will cease to accrue interest.

 

Section 2.11.                          Treasury Securities.

 

In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, will be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, waiver or consent, only Securities that the Trustee knows are so owned will be so disregarded.

 

Section 2.12.                          Temporary Securities.  Until certificates representing Securities are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, will authenticate temporary Securities. Temporary Securities will be substantially in the form of certificated Securities but may have variations that the Company considers appropriate for temporary Securities and as may be reasonably acceptable to the Trustee. Without unreasonable delay, the Company will prepare and the Trustee will authenticate definitive Securities in exchange for temporary Securities.

 

Holders of temporary Securities will be entitled to all of the benefits of this Indenture.

 

Section 2.13.                          Cancellation.  The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and Paying Agent will forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else will cancel all Securities surrendered for registration of transfer, exchange, payment, replacement or cancellation and will dispose of all canceled Securities in accordance with its customary procedures (subject to the record retention requirement of the Exchange Act). Upon written request of the Company, certification of the disposition of all canceled Securities will be delivered to the Company. The Company may not issue new Securities to replace Securities that it has paid or that have been delivered to the Trustee for cancellation.

 

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Section 2.14.                          Defaulted Interest.  If the Company defaults in a payment of interest on the Securities, it will pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Securities and in Section 4.1 hereof. The Company will notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Security and the date of the proposed payment. The Company will fix or cause to be fixed each such special record date and payment date; provided that no such special record date may be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) will deliver or cause to be delivered to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid.

 

Section 2.15.                          CUSIP Number.  The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or the omission of such numbers. The Company shall promptly notify the Trustee in writing of any change in the CUSIP numbers.

 

ARTICLE 3
 REDEMPTION AND PREPAYMENT

 

Section 3.1.                                 Notices to the Trustee.  The Company may, with respect to any Series of Securities, reserve the right to redeem and pay the Series of Securities or may covenant to redeem and pay the Series of Securities or any part thereof prior to the Stated Maturity thereof at such time and on such terms as provided for in such Securities. If a Series of Securities is redeemable and the Company wants or is obligated to redeem prior to the Stated Maturity thereof all or part of the Series of Securities pursuant to the terms of such Securities, it must furnish to the Trustee, at least 35 days but not more than 60 days before a redemption date, an Officers’ Certificate setting forth:

 

(a)                                 the clause of this Indenture pursuant to which the redemption shall occur;

 

(b)                                 the redemption date;

 

(c)                                  the principal amount of the Securities of such series to be redeemed; and

 

(d)                                 the redemption price.

 

Section 3.2.                                 Selection of Securities to Be Redeemed or Purchased.  If less than all of the Securities are to be redeemed or purchased in an offer to purchase at any time, the Trustee will select Securities for redemption or purchase on a pro rata basis or to the extent that selection on a pro rata basis is not practicable, by lot or by such method as the Trustee shall deem fair and appropriate; unless otherwise required by law or applicable stock exchange requirements, subject in each case to the applicable procedures of the Depositary. In the event of such partial

 

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redemption or purchase, the particular Securities to be redeemed or purchased will be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption or purchase date by the Trustee from the outstanding Securities not previously called for redemption or purchase.

 

The Trustee will promptly notify the Company in writing of the Securities selected for redemption or purchase and, in the case of any Securities selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased. Securities and portions of Securities selected will be in multiples of $1,000; provided that if all of the Securities of a Holder are to be redeemed or purchased, the entire outstanding amount of Securities held by such Holder, even if not a multiple of $1,000, shall be redeemed or purchased; and provided further that any unredeemed portion of a Security shall be equal to $2,000 or a multiple of $1,000 in excess thereof. Except as provided in the preceding sentence, provisions of this Indenture that apply to Securities called for redemption or purchase also apply to portions of Securities called for redemption or purchase.

 

Section 3.3.                                 Notice of Redemption.  Unless otherwise indicated for a particular Series by Board Resolution, a supplemental indenture hereto or an Officers’ Certificate, at least 30 days but not more than 60 days before a redemption date, the Company will deliver a notice of redemption to each Holder whose Securities are to be redeemed at its registered address, except that redemption notices may be delivered more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Securities or a satisfaction and discharge of this Indenture pursuant to Articles 8 or 10 hereof.

 

The notice will identify the Securities to be redeemed and will state:

 

(a)                                 the redemption date;

 

(b)                                 the redemption price;

 

(c)                                  if any Security is being redeemed in part, the portion of the principal amount of such Security to be redeemed and that, after the redemption date upon surrender of such Security, a new Security or Securities in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Security;

 

(d)                                 the name and address of the Paying Agent;

 

(e)                                  that Securities of the Series called for redemption must be surrendered to the Paying Agent to collect the redemption price;

 

(f)                                   that, unless the Company defaults in making such redemption payment, interest on Securities of the Series called for redemption ceases to accrue on and after the redemption date;

 

(g)                                  the paragraph of the Securities and/or Section of this Indenture pursuant to which the Securities called for redemption are being redeemed;

 

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(h)                                 that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Securities; and

 

(i)                                     any condition to such redemption.

 

At the Company’s request, the Trustee will give the notice of redemption in the Company’s name and at its expense; provided, however, that the Company has delivered to the Trustee, at least two Business Days before notice of redemption is required to be delivered to Holders pursuant to this Section 3.3 (unless a shorter notice shall be agreed to by the Trustee), an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.

 

Section 3.4.                                 Effect of Notice of Redemption.  Once notice of redemption is delivered in accordance with Section 3.3 hereof, Securities of the Series called for redemption become irrevocably due and payable on the redemption date at the redemption price. Any redemption and notice of redemption may, at the Company’s option and discretion, be subject to one or more conditions precedent. The notice, if delivered in a manner provided herein, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.

 

Section 3.5.                                 Deposit of Redemption or Purchase Price.  Prior to 10:00 a.m. Eastern Time on the redemption or purchase date, the Company will deposit with the Trustee or with the Paying Agent money in immediately available funds sufficient to pay the redemption or purchase price of and accrued and unpaid interest on all Securities of a Series to be redeemed or purchased on that date. The Trustee or the Paying Agent will promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption or purchase price of, and accrued and unpaid interest on, all Securities of a Series to be redeemed or purchased.

 

If the Company complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest will cease to accrue on the Securities or the portions of Securities called for redemption or purchase. If a Security is redeemed or purchased on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest to the redemption or purchase date shall be paid to the Person in whose name such Security was registered at the close of business on such record date. If any Security called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Securities and in Section 4.1 hereof.

 

Section 3.6.                                 Securities Redeemed or Purchased in Part.  Upon surrender of a Security that is redeemed or purchased in part, the Company will issue and, upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the expense of the Company a new Security equal in principal amount to the unredeemed or unpurchased portion of the

 

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Security surrendered; provided that such unredeemed or unpurchased portion is equal to $2,000 or a multiple of $1,000 in excess thereof. Notwithstanding any other provision in this Indenture to the contrary, neither an Opinion of Counsel nor an Officers’ Certificate is required for the Trustee to authenticate such new Security.

 

ARTICLE 4
 COVENANTS

 

Section 4.1.                                 Payment of Securities.  The Company will, for the benefit of the Holders of each Series of Securities, pay or cause to be paid the principal of, premium, if any, and interest on, the Securities of that Series on the dates and in the manner provided in the Securities. Principal, premium, if any, and interest will be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary, holds as of noon Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.

 

Section 4.2.                                 Maintenance of Office or Agency.  For so long as any Securities of a Series are outstanding, the Company will maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Securities may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. Notwithstanding anything else contained herein to the contrary, no service of legal process on the Company may be made at any office of the Trustee.

 

The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

 

With respect to each Series of Securities, the Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.5 hereof.

 

Section 4.3.                                 Reports to Holders.  Whether or not the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company must provide the Trustee and, upon request, to any Holder of the Securities within fifteen (15) Business Days after filing, or in the event no such filing is required, within fifteen (15) Business Days after the end of the time periods specified in those sections with:

 

(a)                                 all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such forms, including a “Management’s Discussion and Analysis of Financial

 

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Condition and Results of Operations” and, with respect to the annual financial statements only, a report thereon by the Company’s certified independent accountants, and

 

(b)                                 all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports;

 

provided that the foregoing delivery requirements shall be deemed satisfied if the foregoing materials are available on the Commission’s EDGAR system or on the Company’s website within the applicable time period.

 

In addition, whether or not required by the Commission, the Company will, if the Commission will accept the filing, file a copy of all of the information and reports referred to in clauses (1) and (2) with the Commission for public availability within the time periods specified in the Commission’s rules and regulations. In addition, the Company will make the information and reports available to securities analysts and prospective investors upon request.

 

Notwithstanding anything herein to the contrary, the Company will not be deemed to have failed to comply with any of its obligations under this Section 4.3 for purposes of Section 6.1(c) hereof until 90 days after the date any report under this Section 4.3 is due to be delivered to the Trustee.

 

Delivery of the reports and documents described in subsection (1) above to the Trustee is for informational purposes only, and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to conclusively rely on an Officers’ Certificate).

 

Section 4.4.                                 Compliance Certificate.

 

(a)                                 For so long as any Securities of a Series are outstanding, the Company and each guarantor of any Series of Securities (to the extent that such guarantor is so required under the TIA) shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officer with a view to determining whether each has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to such Officer signing such certificate, that to the best of his or her knowledge, each entity has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto).

 

(b)                                 So long as any of the Securities of a Series are outstanding, the Company will deliver to the Trustee, within five Business Days of any Officer becoming aware of any Default or Event of Default, an Officers’ Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.

 

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Section 4.5.                                 Taxes.  For so long as any Securities of a Series are outstanding, the Company will pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies, except such as are contested in good faith and by appropriate negotiations or proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Securities of a Series.

 

Section 4.6.                                 Stay, Extension and Usury Laws.  The Company covenants (to the extent that it may lawfully do so) that it will not, and each guarantor of any Series of Securities will not, at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of such guarantors (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant that they will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.

 

ARTICLE 5
 SUCCESSORS

 

Section 5.1.                                 Merger, Consolidation, or Sale of Assets.

 

(a)                                 The Company will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the Company’s assets whether as an entirety or substantially as an entirety to any Person unless:

 

(1)                                 either:

 

(A)                               the Company shall be the surviving or continuing corporation; or

 

(B)                               the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company substantially as an entirety (the “Surviving Entity”):

 

(i)                                     shall be an entity organized and validly existing under the laws of the United States or any State thereof or the District of Columbia; provided that in the case where the Surviving Entity is not a corporation, a co-obligor of the notes is a corporation; and

 

(ii)                                  shall expressly assume, by supplemental indenture (in form and substance satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, interest on all of the Securities and the performance of every covenant of the Securities and this Indenture on the part of the Company to be performed or observed; and

 

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(2)                                 the Trustee shall have received an Officers’ Certificate and an Opinion of Counsel, each stating that (x) such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, complies with the applicable provisions of this Indenture, (y) after giving effect to such transaction no Default will have occurred and be continuing under the Indenture and (z) that all conditions precedent in this Indenture relating to such transaction have been satisfied.

 

Section 5.2.                                 Successor Corporation Substituted.  Upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with the provisions of Section 5.1 hereof in which the Company is not the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture and the Securities with the same effect as if such surviving entity had been named as such, and all financial information and reports required by this Indenture shall be provided by and for such surviving entity.

 

ARTICLE 6
 DEFAULTS AND REMEDIES

 

Section 6.1.                                 Events of Default.  “Event of Default,” wherever used herein with respect to Securities of any Series, means, unless otherwise provided by Board Resolution, Officers’ Certificate or supplemental indenture hereto for a particular Series,:

 

(a)                                 the failure to pay interest on any Security of that Series when the same becomes due and payable and the default continues for a period of 30 days;

 

(b)                                 the failure to pay the principal on any Security of that Series, when such principal becomes due and payable, at maturity, upon redemption or otherwise on the date specified for such payment in the applicable offer to purchase;

 

(c)                                  a default in the observance or performance of any other covenant or agreement contained in this Indenture (other than defaults in Section 6.1(a) and (b) above or pursuant to a covenant or warranty that has been included in this Indenture solely for the benefit of Series of Securities other than that Series) which default continues for a period of 60 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders (with a copy to the Trustee) of at least 25% of the outstanding principal amount of the Securities of that Series;

 

(d)                                 the Company:

 

(1)                                 commences a voluntary case in bankruptcy,

 

(2)                                 consents to the entry of an order for relief against it in an involuntary bankruptcy case,

 

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(3)                                 consents to the appointment of a custodian for it or for all or substantially all of its property,

 

(4)                                 makes a general assignment for the benefit of its creditors, or

 

(5)                                 makes an admission by the Company in writing of its inability to pay its debts as they become due; or

 

(e)                                  a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(1)                                 is for relief against the Company;

 

(2)                                 appoints a custodian of the Company for all or substantially all of the property of the Company; or

 

(3)                                 orders the liquidation of the Company;

 

and the order or decree remains unstayed and in effect for 90 consecutive days.

 

(f)                                   any other Event of Default provided with respect to Securities of that Series, which is specified in a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate, in accordance with Section 2.2.

 

Section 6.2.                                 Acceleration.  If an Event of Default (other than an Event of Default specified in clause (d) or (e) of Section 6.1 hereof) shall occur with respect to the Securities of any Series at the time outstanding and be continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Securities of that Series may declare the principal of, and accrued and unpaid interest on all the Securities of that Series to be due and payable by notice in writing to the Company (and to the Trustee if given by Holders) specifying the respective Event of Default and that it is a “notice of acceleration”, and the same shall become immediately due and payable. Upon declaration of acceleration, the aggregate principal of, and accrued and unpaid interest on the outstanding Securities of that Series shall immediately become due and payable.

 

If an Event of Default specified in clause (d) or (e) of Section 6.1 hereof occurs and is continuing, then all unpaid principal of, and premium, if any, and accrued and unpaid interest on all of the outstanding Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

 

At any time after a declaration of acceleration with respect to the Securities of any Series as described in this Section 6.2 hereof, the Holders of a majority in principal amount of the Securities of such Series then outstanding by written notice to the Trustee may, on behalf of all of the Holders of such Series, rescind and cancel such acceleration or waive any existing Default or Event of Default (except a default in the payment of the principal of or interest) and its consequences:

 

(a)                                 if the rescission would not conflict with any judgment or decree;

 

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(b)                                 if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration;

 

(c)                                  to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal which has become due otherwise than by such declaration of acceleration, has been paid;

 

(d)                                 if the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances; and

 

(e)                                  in the event of the cure or waiver of an Event of Default of the type described in clause (d) or (e) of Section 6.1 hereof with respect to the Company, the Trustee shall have received an Officers’ Certificate and an Opinion of Counsel, each stating that such Event of Default has been cured or waived.

 

No such rescission shall affect any subsequent Default or impair any right consequent thereto.

 

No Holder of any Security will have any right to institute any proceeding with respect to this Indenture or for any remedy hereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default and unless also the Holders of at least 25% in aggregate principal amount of the outstanding Securities of that Series shall have made written request, and offered indemnity satisfactory to the Trustee, to the Trustee to institute such proceeding as Trustee, and the Trustee shall not have received from the Holders of a majority in aggregate principal amount the outstanding Securities of that Series a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days. Such limitations do not apply, however, to a suit instituted by a Holder of Securities for enforcement of payment of principal of and accrued and unpaid interest on such Securities on or after the respective due dates expressed in such Securities.

 

Section 6.3.                                 Other Remedies.  If an Event of Default with respect to the Securities of any Series at the time outstanding occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on such Securities or to enforce the performance of any provision of such Securities or this Indenture.

 

The Trustee may maintain a proceeding even if it does not possess any of the Securities of a Series or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.

 

Section 6.4.                                 Waiver of Past Defaults.  Holders of not less than a majority in aggregate principal amount of the then outstanding Securities of any Series by written notice to the Trustee may on behalf of the Holders of all the Securities of such Series waive any existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium, if any, and interest on the Securities of such Series (including in connection with an offer to purchase); provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Securities of any Series may

 

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rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

 

Section 6.5.                                 Control by Majority.  Holders of a majority in aggregate principal amount of the then outstanding Securities of any Series may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, (i) the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines may be unduly prejudicial to the rights of other Holders of Securities or that may involve the Trustee in personal liability, and (ii) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Notwithstanding any provision to the contrary in this Indenture, the Trustee is under no obligation to exercise any of its rights or powers under this Indenture at the direction or request of any Holder, unless such Holder shall offer to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

 

Section 6.6.                                 Limitation on Suits.  A Holder of any Security of any Series may pursue any remedy with respect to this Indenture or its Securities only if:

 

(a)                                 such Holder gives to the Trustee written notice that an Event of Default with respect to Securities of that Series is continuing or the Trustee receives such notice from the Company;

 

(b)                                 Holders of at least 25% in aggregate principal amount of the then outstanding Securities of that Series make a written request to the Trustee to pursue the remedy;

 

(c)                                  such Holder or Holders offer and, if requested, provide to the Trustee security or indemnity reasonably satisfactory to the Trustee against any loss, liability or expense;

 

(d)                                 the Trustee does not comply with the request within 60 days after receipt of the request and the offer of such security or indemnity; and

 

(e)                                  during such 60-day period, Holders of a majority in aggregate principal amount of the then outstanding Securities of that Series do not give the Trustee a direction inconsistent with such request.

 

A Holder may not use this Indenture to affect, disturb or prejudice the rights of another Holder or to obtain or seek to obtain a preference or priority over another Holder (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to any Holders).

 

Section 6.7.                                 Rights of Holders of Securities to Receive Payment.  Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal, premium, if any, and interest on the Security, on or after the respective due dates expressed in the Security (including in connection with an offer to purchase), or to bring suit for the enforcement

 

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of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

 

Section 6.8.                                 Collection Suit by Trustee.  If an Event of Default specified in Section 6.1(a) or (b) hereof occurs and is continuing with respect to the Securities of any Series at the time outstanding, the Trustee is authorized to recover judgment in its own name and as Trustee of an express trust against the Company for the whole amount of principal of, premium, if any, and interest remaining unpaid on, such Securities and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

 

Section 6.9.                                 Trustee May File Proofs of Claim.  The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Securities of such Series allowed in any judicial proceedings relative to the Company (or any other obligor upon the Series), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other securities or property payable or deliverable upon the exchange of the Securities of such Series or on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

 

Section 6.10.                          Priorities.  If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money and property in the following order:

 

First: to the Trustee, its agents (including, without limitation, the Agents) and attorneys for amounts due under Section 7.7 hereof, including payment of all reasonable compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

 

Second: to Holders of Securities of any Series for amounts due and unpaid on such Securities for principal, premium, if any, and interest, ratably, without preference or priority

 

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of any kind, according to the amounts due and payable on such Securities for principal, premium, if any and interest, respectively; and

 

Third: to the Company or to such party as a court of competent jurisdiction shall direct.

 

The Trustee may fix a record date and payment date for any payment to Holders of Securities pursuant to this Section 6.10.

 

Section 6.11.                          Undertaking for Costs.  In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Security pursuant to Section 6.7 hereof, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Securities of any Series.

 

ARTICLE 7
 TRUSTEE

 

Section 7.1.                                 Duties of Trustee.

 

(a)                                 If an Event of Default has occurred and is continuing, and subject to any direction received by the requisite Holders, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

 

(b)                                 Except during the continuance of an Event of Default:

 

(1)                                 the duties of the Trustee shall be determined solely by the express provisions of this Indenture or the TIA and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

 

(2)                                 In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon Officers’ Certificates or Opinions of Counsel furnished to the Trustee and conforming to the requirements of this Indenture.

 

However, the Trustee will examine the Officers’ Certificates and Opinions of Counsel to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy or any mathematical calculation or other facts, opinions or conclusions stated therein).

 

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(c)                                  The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

 

(1)                                 this paragraph does not limit the effect of paragraph (b) of this Section 7.1;

 

(2)                                 the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

 

(3)                                 the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5 hereof.

 

(d)                                 Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.1.

 

(e)                                  No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability if it shall have reasonable grounds for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured to it. The Trustee will be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder has offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

 

(f)                                   The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

 

(g)                                  The Paying Agent, the Registrar and any authenticating agent shall be entitled to the protections, immunities and standard of care as are set forth in paragraphs (a), (b), (c) and (e) of this Section 7.1 with respect to the Trustee.

 

Section 7.2.                                 Rights of Trustee.

 

(a)                                 The Trustee may conclusively rely upon and shall be protected in acting or refraining from acting any document (whether in its original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.

 

(b)                                 Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

 

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(c)                                  The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. No Depository shall be deemed an agent of the Trustee and the Trustee shall not be responsible for any act or omission by any Depository.

 

(d)                                 The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.

 

(e)                                  Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company.

 

(f)                                   The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security satisfactory to the Trustee against the losses, liabilities and expenses that might be incurred by it in compliance with such request or direction.

 

(g)                                  The Trustee shall not be deemed to have notice of a Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default or Event of Default is received by a Responsible Officer of the Trustee at the Corporate Trust Office specified in Section 11.2 hereof.

 

(h)                                 The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.

 

(i)                                     The Trustee shall not be required to provide any bond or surety with respect to the execution of these trusts and powers.

 

(j)                                    In no event shall the Trustee be liable to any person for special, punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Trustee has been advised of the likelihood of such loss or damage.

 

(k)                                 The permissive right of the Trustee to take the actions permitted by this Indenture shall not be construed as an obligation or duty to do so.

 

(l)                                     The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

 

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(m)                             The Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of Officers authorized at such time to take specified actions pursuant to this Indenture.

 

Section 7.3.                                 Individual Rights of Trustee.  The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue as Trustee (if this Indenture has been qualified under the TIA) or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Section 7.10 and Section 7.11 hereof.

 

Section 7.4.                                 Trustee’s Disclaimer.  The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or any Securities, it shall not be accountable for the Company’s use of the proceeds from any Securities or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein or any statement in any Securities or any other document in connection with the sale of any Securities or pursuant to this Indenture other than its certificate of authentication.

 

Section 7.5.                                 Notice of Defaults.  If a Default or Event of Default occurs and is continuing with respect to the Securities of any Series and if it is actually known to a Responsible Officer of the Trustee, the Trustee will deliver to Holders of Securities of that Series a notice of the Default or Event of Default within 90 days after it occurs, or, if later, after a Responsible Officer of the Trustee has knowledge of such Default or Event of Default. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Security of any Series, the Trustee may withhold the notice from the Holders of such Securities if and so long as the Trustee in good faith determines that withholding the notice is in the interests of the Holders of such Securities.

 

Section 7.6.                                 Reports by Trustee to Holders of the Securities.

 

(a)                                 Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Securities remain outstanding, the Trustee will deliver to the Holders of the Securities of any Series a brief report dated as of such reporting date that complies with TIA § 313(a) (but if no event described in TIA § 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also will comply with TIA § 313(b)(2). The Trustee will also deliver all reports as required by TIA § 313(c).

 

(b)                                 A copy of each report at the time of its mailing to the Holders of Securities of any Series will be mailed by the Trustee to the Company and filed by the Trustee with the Commission and each stock exchange on which the Securities of any Series are listed in accordance with TIA § 313(d). The Company will promptly notify the Trustee when the Securities of any Series are listed on any stock exchange.

 

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Section 7.7.                                 Compensation and Indemnity.

 

(a)                                 The Company will pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder as the parties shall agree in writing from time to time. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

 

(b)                                 The Company will indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.7), and defending itself against any claim (whether asserted by the Company, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence, willful misconduct or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee will cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent will not be unreasonably withheld. This indemnification shall apply to officers, directors, employees, shareholders and agents of the Trustee.

 

(c)                                  The obligations of the Company under this Section 7.7 shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.

 

(d)                                 To secure the Company’s payment obligations in this Section 7.7, the Trustee shall have a Lien prior to the Securities of any Series on all money or property held or collected by the Trustee. Such Lien shall survive the satisfaction and discharge of this Indenture.

 

(e)                                  When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(d) or Section 6.1(e) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

 

(f)                                   The Trustee shall comply with the provisions of TIA § 313(b)(2) to the extent applicable.

 

Section 7.8.                                 Replacement of Trustee.

 

(a)                                 A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.8.

 

(b)                                 The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in aggregate

 

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principal amount of the then outstanding Securities of any Series may remove the Trustee with respect to that Series by so notifying the Trustee and the Company in writing. The Company may remove the Trustee with respect to Securities of one or more Series if:

 

(1)                                 the Trustee fails to comply with Section 7.10 hereof;

 

(2)                                 the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

 

(3)                                 a custodian or public officer takes charge of the Trustee or its property; or

 

(4)                                 the Trustee becomes incapable of acting.

 

(c)                                  If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company will promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then outstanding Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company.

 

(d)                                 If a successor Trustee with respect to the Securities of any one or more Series does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in aggregate principal amount of the then outstanding Securities of the applicable Series may petition any court of competent jurisdiction for the appointment of a successor Trustee.

 

(e)                                  If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

(f)                                   A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall deliver a notice of its succession to Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Company’s obligations under Section 7.7 hereof shall continue for the benefit of the retiring Trustee.

 

Section 7.9.                                 Successor Trustee by Merger, etc.  If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act will be the successor Trustee.

 

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Section 7.10.                          Eligibility; Disqualification.

 

(a)                                 There will at all times be a Trustee hereunder that is a national banking association or other corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100.0 million as set forth in its most recent published annual report of condition.

 

(b)                                 This Indenture shall always have a Trustee who satisfies the requirements of TIA § 310(a)(1), (2) and (5). The Trustee is subject to TIA § 310(b).

 

Section 7.11.                          Preferential Collection of Claims Against the Company.

 

The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.

 

ARTICLE 8
 LEGAL DEFEASANCE AND COVENANT DEFEASANCE

 

Section 8.1.                                 Option to Effect Legal Defeasance or Covenant Defeasance.  The Company may, at its option and at any time, elect to have either Section 8.2 or Section 8.3 hereof be applied to all outstanding Securities upon compliance with the conditions set forth below in this Article 8.

 

Section 8.2.                                 Legal Defeasance and Discharge.  Upon the Company’s exercise under Section 8.1 hereof of the option applicable to this Section 8.2, the Company will, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Securities (including the related guarantees, if any) on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”). For this purpose, Legal Defeasance means that the Company will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Securities (including the related guarantees, if any), which will thereafter be deemed to be “outstanding” only for the purposes of Section 8.5 hereof and the other Sections of this Indenture referred to in clauses (a) and (b) below, and to have satisfied all its other obligations under such Securities, such guarantees, if any, and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which will survive until otherwise terminated or discharged hereunder:

 

(a)                                 the rights of Holders of outstanding Securities of such Series to receive payments in respect of the principal of, premium, if any, and interest on, such Securities of such Series when such payments are due from the trust referred to in Section 8.4 hereof;

 

(b)                                 the Company’s obligations with respect to such Securities of such Series under Article 2 and Sections 4.1 and 4.2 hereof;

 

(c)                                  the rights, powers, trusts, duties and immunities of the Trustee and the Company’s obligations in connection therewith; and

 

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(d)                                 this Article 8.

 

Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.2 notwithstanding the prior exercise of its option under Section 8.3 hereof.

 

Section 8.3.                                 Covenant Defeasance.  Upon the Company’s exercise under Section 8.1 hereof of the option applicable to this Section 8.3, the Company and each of the guarantors, if any, shall, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, be released from their obligations under the covenants contained in Section 4.3, 4.5 and Section 5.1 hereof as well as any additional covenants specified in a supplemental indenture for such Series of Securities or a Board Resolution or an Officers’ Certificate delivered pursuant to Section 2.2 with respect to the outstanding Securities of any Series on and after the date the conditions set forth in Section 8.4 hereof are satisfied (hereinafter, “Covenant Defeasance”), and the outstanding Securities of such Series will thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Securities shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Securities of such Series, the Company or any of its Subsidiaries may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.1 hereof with respect to such Series of Securities, but, except as specified above, the remainder of this Indenture and such Securities will be unaffected thereby. In addition, upon the Company’s exercise under Section 8.1 hereof of the option applicable to this Section 8.3, subject to the satisfaction of the conditions set forth in Section 8.4 hereof, Section 6.1(c) hereof will not constitute an Event of Default with respect to such Securities.

 

Section 8.4.                                 Conditions to Legal or Covenant Defeasance.  The following shall be the conditions to the applicability of either Section 8.2 or 8.3 hereof to the outstanding Securities:

 

(a)                                 the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Securities on the stated date for payment thereof or on the applicable redemption date, as the case may be;

 

(b)                                 in the case of an election under Section 8.2 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that:

 

(1)                                 the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or

 

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(2)                                 since the date of this Indenture, there has been a change in the applicable federal income tax law,

 

in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Securities of such Series will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

 

(c)                                  in the case of an election under Section 8.3 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Securities of such Series will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

 

(d)                                 no Default or Event of Default with respect to the outstanding Securities of such Series shall have occurred and be continuing on the date of such deposit (other than a Default or an Event of Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowings);

 

(e)                                  such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under this Indenture (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposits and the grant of any Lien securing such borrowings) or any other material agreement or instrument to which the Company is a party or by which the Company is bound;

 

(f)                                   the Company shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others;

 

(g)                                  the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel (which opinion may be subject to customary assumptions and exclusions), each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and

 

(h)                                 the Company shall have delivered to the Trustee an Opinion of Counsel, stating that assuming no intervening bankruptcy of the Company between the date of deposit and the 124th day following the date of deposit and that no Holder is an insider of the Company, after the 124th day following the date of deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally.

 

Notwithstanding the foregoing, the Opinion of Counsel required by clause Section 8.4(b) above with respect to a Legal Defeasance need not be delivered if all outstanding Securities of such Series not theretofore delivered to the Trustee for cancellation (x) have

 

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become due and payable or (y) will become due and payable on the maturity date or a redemption date within one year under arrangements reasonably satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company.

 

Section 8.5.                                 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.  Subject to Section 8.6 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.5, the “Trustee”) pursuant to Section 8.4 hereof in respect of the outstanding Securities of any Series shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company or any Subsidiary acting as Paying Agent) as the Trustee may determine, to the Holders of such Securities of all sums due and to become due thereon in respect of principal, premium, if any, and interest but such money need not be segregated from other funds except to the extent required by law.

 

The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.4 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Securities of any Series.

 

Notwithstanding anything in this Article 8 to the contrary, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.4 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.4(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

 

Section 8.6.                                 Repayment to the Company.  Subject to applicable abandoned property law, any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Security and remaining unclaimed for two years after such principal, premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter be permitted to look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, will thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.

 

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Section 8.7.                                 Reinstatement.  If the Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable Government Securities with respect to Securities of any Series in accordance with Section 8.2 or Section 8.3 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then, with respect to such Securities, the Company’s and any applicable guarantors’ obligations under this Indenture and the applicable Securities and guarantees will be revived and reinstated as though no deposit had occurred pursuant to Section 8.2 or Section 8.3 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.2 or Section 8.3 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any such Securities following the reinstatement of its obligations, the Company will be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent.

 

ARTICLE 9
 AMENDMENT, SUPPLEMENT AND WAIVER

 

Section 9.1.                                 Without Consent of Holders of Securities.  Notwithstanding Section 9.2 of this Indenture, the Company and the Trustee may amend or supplement this Indenture or the Securities of one or more Series without the consent of any Holder of Securities of any Series in order to:

 

(a)                                 cure any ambiguity, defect or inconsistency;

 

(b)                                 provide for the assumption by a Surviving Entity of the obligations of the Company under this Indenture;

 

(c)                                  provide for uncertificated Securities in addition to or in place of certificated Securities (provided that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code);

 

(d)                                 add guarantees with respect to the Securities of any Series or confirm and evidence the release, termination or discharge of any security or guarantee when such release, termination or discharge is permitted by this Indenture;

 

(e)                                  secure the Securities of any Series, add to the covenants of the Company for the benefit of the holders of the Securities of any Series or surrender any right or power conferred upon the Company;

 

(f)                                   make any change that does not adversely affect the rights of any Holder of the Securities;

 

(g)                                  comply with any requirement of the Commission in connection with the qualification of this Indenture under the TIA;

 

(h)                                 evidence and provide for the acceptance of appointment by a successor Trustee;

 

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(i)                                     conform the text of this Indenture or the Securities to any provision of the “Description of Notes” of any prospectus, prospectus supplement, offering memorandum, offering circular or any other document pursuant to which the Securities of such Series were offered; or

 

(j)                                    make any amendment to the provisions of this Indenture relating to the transfer and legending of the Securities as permitted by this Indenture, including, without limitation to facilitate the issuance and administration of the Securities; provided that (i) compliance with this Indenture as so amended would not result in the Securities being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer the Securities.

 

Upon the request of the Company accompanied by a Board Resolution authorizing the execution of any such amended or supplemental indenture, and upon receipt by the Trustee of the documents described in Section 7.2 hereof, the Trustee will join with the Company in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee will not be obligated to enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise.

 

Section 9.2.                                 With Consent of Holders of Securities.

 

(a)                                 The Company and the Trustee may enter into a supplemental indenture with the written consent of the Holders of not less than a majority of the aggregate principal amount of the outstanding Securities of each Series affected by such supplemental indenture (voting as one class) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or Officers’ Certificate or of modifying in any manner the rights of the Holders of each such Series, and the Company’s compliance with any provision of this Indenture with respect to the Securities of any Series may be waived by written notice to the Trustee by the Holders of a majority of the aggregate principal amount of the outstanding Securities of such Series affected by the waiver (voting as one class). However, no modification, amendment or waiver under this Section 9.2 may, without the consent of the Holder of the outstanding Securities affected:

 

(1)                                 reduce the principal amount, or extend the fixed maturity, of the Securities, alter or waive the redemption provisions of the Securities;

 

(2)                                 change the currency in which principal, any premium or interest is paid;

 

(3)                                 reduce the percentage in principal amount outstanding of the Securities which must consent to an amendment, supplement or waiver or consent to take any action;

 

(4)                                 impair the right to institute suit for the enforcement of any payment on the Securities;

 

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(5)                                 waive a payment default with respect to the Securities or any guarantor;

 

(6)                                 reduce the interest rate or extend the time for payment of interest on the Securities; or

 

(7)                                 adversely affect the ranking of the Securities.

 

It shall not be necessary for the consent of the Holders of Securities of any Series under this Section 9.2 to approve the particular form of any proposed supplemental indenture or waiver, but it shall be sufficient if such consent approves the substance thereof. Upon the request of the Company accompanied by a Board Resolution authorizing the execution of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Securities of any Series as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.2 hereof, the Trustee will join with the Company in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amended or supplemental Indenture.

 

After a supplemental indenture or waiver under this section becomes effective, the Company shall promptly mail to the Holders of Securities of any Series affected thereby a notice briefly describing the supplemental indenture or waiver. Any failure by the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver.

 

Section 9.3.                                 Compliance with Trust Indenture Act.  Every amendment or supplement to this Indenture or the Securities of any Series will be set forth in an amended or supplemental indenture that complies with the TIA as then in effect.

 

Section 9.4.                                 Revocation and Effect of Consents.

 

(a)                                 Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Security is a continuing consent by the Holder of a Security and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent is not made on any Security. However, any such Holder of a Security or subsequent Holder of a Security may revoke the consent as to its Security if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

 

(b)                                 Any amendment or waiver once effective shall bind every Holder of each Series affected by such amendment or waiver unless it is of the type described in any of clauses (1) through (7) of Section 9.2. In that case, the amendment or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security.

 

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Section 9.5.                                 Notation on or Exchange of Securities.  The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Security of any Series thereafter authenticated. The Company in exchange for all Securities of that Series may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Securities of that Series that reflect the amendment, supplement or waiver.

 

Failure to make the appropriate notation or issue a new Security will not affect the validity and effect of such amendment, supplement or waiver.

 

Section 9.6.                                 Trustee to Sign Amendments, Etc.  The Trustee will sign any amended or supplemental indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amended or supplemental indenture until its Board of Directors approves it. In executing any amended or supplemental indenture or Securities, the Trustee will be entitled to receive and (subject to Section 7.1 hereof) will be fully protected in relying upon, in addition to the documents required by Section 11.4 hereof, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture or Securities is authorized or permitted by this Indenture.

 

ARTICLE 10
 SATISFACTION AND DISCHARGE

 

Section 10.1.                          Satisfaction and Discharge.  This Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of Securities of any Series, as expressly provided for in this Indenture) as to all outstanding Securities issued hereunder, when:

 

(a)                                 either:

 

(1)                                 all such Securities theretofore authenticated and delivered (except lost, stolen or destroyed Securities that have been replaced or paid and Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation; or

 

(2)                                 all such Securities not theretofore delivered to the Trustee for cancellation (A) have become due and payable or (B) will become due and payable within one year, or are to be called for redemption within one year, under arrangements reasonably satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on such Securities not theretofore delivered to the Trustee for cancellation for principal of, premium, if any, and interest on such Securities to the date of maturity or redemption, as the case may be, together with irrevocable instructions from the Company

 

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directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

 

(b)                                 the Company or any guarantor of such Securities has paid or caused to be paid all sums payable by it under this Indenture; and

 

(c)                                  the Company has delivered an Officers’ Certificate and an Opinion of Counsel to the Trustee (which opinion may be subject to customary assumptions and exclusions), each stating that all conditions precedent under this Indenture relating to the satisfaction and discharge of this Indenture have been complied with.

 

Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant to subclause (2) of clause (a) of this Section 10.1, the provisions of Section 10.2 and Section 8.6 hereof will survive. In addition, nothing in this Section 10.1 will be deemed to discharge those provisions of Section 7.7 hereof, that, by their terms, survive the satisfaction and discharge of this Indenture.

 

Section 10.2.                          Application of Trust Money.  Subject to the provisions of Section 8.6 hereof, all money deposited with the Trustee pursuant to Section 10.1 hereof shall be held in trust and applied by it, in accordance with the provisions of the Securities with respect to which such deposit was made and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.

 

If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 10.1 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s and any applicable guarantor’s obligations under this Indenture and the applicable Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 10.1 hereof; provided that if the Company has made any payment of principal of, premium, if any, or interest on any such Securities of any Series because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

 

ARTICLE 11
 MISCELLANEOUS

 

Section 11.1.                          Trust Indenture Act Controls.  If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA §318(c), the imposed duties shall control.

 

Section 11.2.                          Notices.  Any notice or communication by the Company or the Trustee to the others or by a Holder to the Company or the Trustee is duly given if in writing and delivered in Person or by first class mail (registered or certified, return receipt requested), facsimile transmission, delivered electronically (in .pdf or similar format) if, in case of electronic notices,

 

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receipt is confirmed, or overnight air courier guaranteeing next day delivery, to the others’ address:

 

If to the Company:

 

TetraLogic Pharmaceuticals Corporation
 343 Phoenixville Pike
 Malvern, PA 19355
 Attention: Pete A. Meyers, Chief Financial Officer and Treasurer
 Facsimile No.: (610) 889-9994

 

With a copy to:

 

Pepper Hamilton LLP
 3000 Two Logan Square
 Eighteenth and Arch Streets
 Philadelphia, PA 19103-2799
 Attention: Steven J. Abrams, Esq.
 Facsimile No.: (866) 422-3671
 E-mail: abramss@pepperlaw.com

 

If to the Trustee:

 

U.S. Bank National Association
 Corporate Trust Services
 60 Livingston Avenue
 St. Paul MN 55107-2292
 Attention: Rick Prokosch (TetraLogic Pharmaceuticals Corporation 2015 Indenture)
 Facsimile No.: (651) 466-7430

 

The Company or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

 

All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by facsimile or email; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next Business Day delivery.

 

Any notice or communication to a Holder shall be delivered by electronic transmission, first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next Business Day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so delivered to any Person described in TIA § 313(c), to the extent required by the TIA. Failure to deliver a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders.

 

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If a notice or communication is delivered in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.

 

If the Company delivers a notice or communication to Holders, it will deliver a copy to the Trustee and each Agent at the same time.

 

Where the Indenture provides for notice of any event to a Holder of a Global Security, such notice shall be sufficiently given if given to the Depository for such Global Security (or its designee), pursuant to the applicable procedures of the Depository, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice.

 

Section 11.3.                          Communication by Holders of Securities with Other Holders of Securities.  Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their rights under this Indenture or the applicable Securities. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

 

Section 11.4.                          Certificate and Opinion as to Conditions Precedent.  Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:

 

(a)                                 an Officers’ Certificate in form reasonably satisfactory to the Trustee (which must include the statements set forth in Section 11.5 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and

 

(b)                                 an Opinion of Counsel in form reasonably satisfactory to the Trustee (which must include the statements set forth in Section 11.5 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.

 

Section 11.5.                          Statements Required in Certificate or Opinion.  Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 4.4 hereof or TIA § 314(a)(4)) must comply with the provisions of TIA § 314(e) and must include:

 

(a)                                 a statement that the Person making such certificate or opinion has read such covenant or condition;

 

(b)                                 a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

(c)                                  a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied (and, in the case of an Opinion of Counsel, may be limited to reliance on an Officers’ Certificate as to matters of fact); and

 

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(d)                                 a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.

 

Section 11.6.                          Rules by Trustee and Agents.  The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

 

Section 11.7.                          No Personal Liability of Directors, Officers, Employees and Stockholder Members.  No past, present or future director, officer, employee, incorporator, agent, stockholder or Affiliate of the Company, as such, shall have any liability for any obligations of the Company under any Securities of any Series or under this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. No past, present or future director, officer, employee, incorporator, agent, stockholder or Affiliate of the Company, as such, shall have any liability for any obligations of the Company under the Securities, this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liabilities. The waiver and release are part of the consideration for the execution of this Indenture and the issuance of the Securities.

 

Section 11.8.                          Governing Law.  THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE SECURITIES AND THE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

 

Section 11.9.                          No Adverse Interpretation of Other Agreements.  This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company, any of its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

 

Section 11.10.                   Successors.  All agreements of the Company in this Indenture and the Securities shall bind their respective successors and assigns. All agreements of the Trustee in this Indenture will bind its successors.

 

Section 11.11.                   Severability.  In case any provision in this Indenture or in the Securities 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.

 

Section 11.12.                   Counterpart Originals.  This Indenture may be executed in any number of counterparts, and by the different parties on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 11.13.                   Table of Contents, Headings, etc.  The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for

 

45

 

convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof.

 

Section 11.14.                   Waiver of Trial by Jury.  EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 11.15.                   Calculations.  The Company will be responsible for making all calculations called for under this Indenture or the Securities. The Company will make all such calculations in good faith and, absent manifest error, its calculations will be final and binding on Holders. The Company will provide a schedule of its calculations to the Trustee and the Trustee is entitled to rely conclusively upon the accuracy of such calculations without independent verification. The Trustee will deliver a copy of such schedule to any Holder upon the written request of such Holder.

 

Section 11.16.                   Force Majeure.  In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

Section 11.17. U.S.A. Patriot Act.  The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.

 

[Signatures on following page]

 

46

 

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

 

	
 
    	
TETRALOGIC PHARMACEUTICALS CORPORATION, as the Company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
U.S. BANK NATIONAL ASSOCIATION, as Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

47Exhibit 10.1

 

VUZIX CORPORATION

SERIES A PREFERRED STOCK PURCHASE AGREEMENT

 

This Series A Preferred
Stock Purchase Agreement (this “Agreement”) is dated as of January 2, 2015, between Vuzix Corporation, a Delaware
corporation (the “Company”), and Intel Corporation, a Delaware corporation (the “Purchaser”).

 

WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchaser,
and the Purchaser desires to purchase from the Company, securities of the Company as more fully described in this Agreement (the
“Offering”).

 

NOW, THEREFORE, in
consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

 

Article
I.

DEFINITIONS

 

1.1           Definitions.
The following terms have the meanings set forth in this Section 1.1:

 

“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.7.

 

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

 

“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Board of
Directors” means the board of directors of the Company.

 

“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of California are authorized or required by law or other governmental action
to close.

 

“Certificate
of Designation” means the Certificate of Designation of the Company, attached as Exhibit A to this Agreement,
setting forth the rights, preferences and privileges of the Series A Preferred Stock.

 

“Closing”
shall have the meaning ascribed to such term in Section 2.2(a).

 

“Closing Date”
means the date on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and
all conditions precedent to (i) the Purchaser’s obligations to pay the Subscription Amount at such Closing and (ii) the Company’s
obligations to deliver the Securities to be issued and sold at such Closing, in each case, have been satisfied or waived.

 

    	 

    	 

    

 

“Code”
means the Internal Revenue Code of 1986, as amended.

 

“Commission”
means the United States Securities and Exchange Commission.

 

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

 

“Common Stock
Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

 

“Company Counsel”
means Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, NY 10006, Attn: Greg Sichenzia, Esq.,
facsimile: (212) 930-9725.

 

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

 

“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(r).

 

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

 

“Exempt Issuance”
means the issuance of (a) with the prior written consent of the Purchaser, securities of the Company as full or partial consideration
in connection with a strategic merger, acquisition, consolidation or purchase of substantially all of the securities or assets
of a corporation or other entity or in connection with strategic license agreements or other partnering arrangements so long as
such issuances are not primarily for the purpose of raising capital, (b) shares of Common Stock and options to officers, directors,
employees or service providers of the Company, prior to and after the Closing Date up to the amounts and on the terms set forth
on Schedule 4.15, (c) securities issuable pursuant to this Agreement, including without limitation, Section 4.15
and 4.16 hereof, or upon conversion of such securities (subject to adjustment for forward and reverse stock splits and similar
events that occur after the date hereof) and/or other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that such securities and any term thereof have not
been amended since the date of this Agreement to increase the number of such securities or to decrease the issue price, exercise
price, exchange price or conversion price of such securities and which securities and the principal terms thereof are set forth
on Schedule 3.1(g), or described in the SEC Reports filed not later than ten (10) days before the Closing Date and (d) issuances
set forth on Schedule 4.15.

 

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

 

“Form 8-K”
shall have the meaning ascribed to such term in Section 4.6.

 

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

 

    	2

    	 

    

 

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

 

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

 

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

 

“Listing Default”
shall have the meaning ascribed to such term in Section 4.10.

 

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

 

“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m).

 

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

 

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

 

“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.15(a).

 

“Permitted
Indebtedness” means: (v) secured or unsecured equipment loans not in excess of $300,000 in the aggregate, (w) standard
operating loans or accounts receivable factoring from a bank or financial institution licensed in the United States regularly engaged
in the business of extending such loans, secured with a lien on the Company’s accounts receivable and/or inventory in connection
with which such credit facility was provided which shall be senior to the lien on the accounts receivable and the inventory and
junior on all other assets, (x) any liabilities for borrowed money or amounts owed not in excess of $300,000 in the aggregate (other
than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated
balance sheet (or the notes thereto) not affecting more than $300,000 in the aggregate, except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of
any lease payments not in excess of $300,000 due under leases required to be capitalized in accordance with GAAP.

 

“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for Taxes that are either (i) not yet
due or (ii) being contested in good faith and by appropriate proceedings for which adequate reserves have been established
in the financial statements included in the SEC Reports in accordance with GAAP, (b) Liens imposed by law which were incurred in
the ordinary course of the business of the Company or any of its Subsidiaries, such as suppliers’, vendors’, carriers’,
warehousemen’s and mechanics’ Liens, statutory workmen’s, repairmen’s and landlords’ Liens, and other
similar Liens arising in the ordinary course of the business of the Company or any of its Subsidiaries, and which (x) do not individually
or in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation
of the business of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings,
which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject
to such Lien, (c) Liens incurred prior to the Closing Date in connection with Permitted Indebtedness as described on Schedule
3.1(n), (d) Liens incurred in connection with Permitted Indebtedness, provided that such Liens are not secured by assets of
the Company or its Subsidiaries other than the assets so acquired or leased, (e) non-exclusive licenses granted by the Company
in respect of its intellectual property granted in the ordinary course of business in connection with the sale of the Company’s
products pursuant to the Company’s standard terms provided in Schedule 3.1(o), (f) Liens disclosed on Schedule
3.1(n) to this Agreement and (g) the Lien on accounts receivable and inventory in favor a bank or financial institution listed
in clause (w) of the definition of Permitted Indebtedness.

 

    	3

    	 

    

 

“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.15.

 

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

 

“Public Information
Failure” shall have the meaning ascribed to such term in Section 4.3(b).

 

“Public Information
Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).

 

“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.9.

 

“Recognized
Stock Exchange” means New York Stock Exchange, National Association of Securities Dealers Automated Quotation System
(“NASDAQ”), the NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
or OTC Bulletin Board.

 

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

 

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

 

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

 

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

 

 

    	4

    	 

    

 

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

 

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

 

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

 

“Securities”
means the Series A Preferred Stock of the Company, par value $0.001 per share, and the Underlying Shares.

 

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

 

“Series A
Preferred Stock” means the Series A Preferred Stock of the Company, par value $0.001 per share.

 

“Short Sales”
means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to
include the location and/or reservation of borrowable shares of Common Stock).

 

“Subscription
Amount” means $24,813,000.

 

“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.15.

 

“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.15.

 

“Subsidiary”
means with respect to any entity at any date, any direct or indirect corporation, limited or general partnership, limited liability
company, trust, estate, association, joint venture or other business entity of which (A) more than 30% of (i) the outstanding capital
stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other managing
body of such entity, (ii) in the case of a partnership or limited liability company, the interest in the capital or profits of
such partnership or limited liability company or (iii) in the case of a trust, estate, association, joint venture or other entity,
the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or
controlled directly or indirectly through one or more intermediaries, by such entity, or (B) is under the actual control of the
Company.

 

“Tax”
and “Taxes” shall have the meanings ascribed to such term in Section 3.1(aa).

 

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

 

“Trading Market”
means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question:
the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange,
the OTC Bulletin Board, the OTCQB, or the OTCQX (or any successors to any of the foregoing).

 

    	5

    	 

    

 

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

 

“Transfer
Agent” means Computershare Trust Company, N.A., and any successor transfer agent of the Company.

 

“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion of the Series A Preferred Stock and any
other shares of Common Stock issued or issuable to the Purchaser in connection with or pursuant to the Securities or Transaction
Documents.

 

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market,
the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board,
(c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are
then reported on the OTCQX, OTCQB or OTC Pink Marketplace maintained by the OTC Markets Group, Inc. (or a similar organization
or agency succeeding to its functions of reporting prices), the volume weighted average price of the Common Stock on the first
such facility (or a similar organization or agency succeeding to its functions of reporting prices), or (d) in all other cases,
the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchaser
and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

Article
II.

PURCHASE AND SALE OF SERIES A PREFERRED STOCK

 

2.1          Sale
and Issuance of Series A Preferred Stock.

 

(a)          The
Company has adopted and has filed with the Secretary of State of the State of Delaware the Certificate of Designation, and the
Certificate of Designation is in full force and effect.

 

(b)          Subject
to the terms and conditions of this Agreement, the Purchaser agrees to purchase at the Closing and the Company agrees to sell and
issue to the Purchaser at the Closing 49,626 shares of Series A Preferred Stock at a purchase price of $500.00 per share.

 

    	6

    	 

    

 

2.2          Deliveries.

 

(a)          The
purchase and sale of the Securities shall take place remotely via the exchange of documents and signatures, at 10:00 a.m., on January 2, 2015, or at such other time and place as the Company and the Purchaser mutually agree, orally or in writing (which time and place
are designated as the “Closing”).

 

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

 

(i)          a
certificate representing the Securities being purchased by the Purchaser against payment of the purchase price therefor by wire
transfer to a bank account designated by the Company;

 

(ii)         this
Agreement duly executed by the Company;

 

(iii)        a
legal opinion of Company Counsel, substantially in the form of Exhibit C attached hereto;

 

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

 

(v)         a
copy of the Certificate of Designation as filed with the Secretary of State of the State of Delaware;

 

(vi)        a
certificate of the secretary of the Company, in a form reasonably satisfactory to the Purchaser, dated the Closing Date, certifying
on behalf of the Company (i) the Certificate of Incorporation of the Company and the Certificate of Designation, (ii) the
Bylaws of the Company and (iii) resolutions of the Board of Directors of the Company approving this Agreement, the Certificate
of Designation, the Rights Agreement and the transactions contemplated hereunder and thereunder;

 

(vii)       a
certificate of an executive officer of the Company, in a form reasonably satisfactory to the Purchaser, dated the Closing Date
certifying on behalf of the Company the matters set forth in Sections 2.3(b)(i) and 2.3(b)(ii); and

 

(viii)      the
Required Consents.

 

(c)          At
the Closing, the Purchaser shall deliver, or cause to be delivered, to the Company the following:

 

(i)          this
Agreement duly executed by the Purchaser;

 

(ii)         the
Rights Agreement duly executed by the Purchaser;

 

(iii)        a
certificate of an officer of the Purchaser, in a form reasonably satisfactory to the Company, dated the Closing Date certifying
on behalf of the Purchaser the matters set forth in Sections 2.3(a)(i); and

 

    	7

    	 

    

 

(iv)        the
Subscription Amount by wire transfer to an account designated in writing by the Company at least three business days prior to the
Closing Date.

 

2.3          Closing
Conditions.

 

(a)          The
obligations of the Company hereunder to effect the Closing, unless waived by the Company, are subject to the following conditions
being met:

 

(i)          the
accuracy in all material respects on the Closing Date of the representations and warranties of the Purchaser contained herein (unless
as of a specific date therein in which case they shall be accurate as of such date);

 

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

 

(iii)        the
delivery by the Purchaser of the items set forth in Section 2.2(c) of this Agreement.

 

(b)          The
respective obligations of the Purchaser hereunder to effect the Closing, unless waived by the Purchaser, are subject to the following
conditions being met:

 

(i)          the
accuracy in all material respects (determined without regard to any materiality, Material Adverse Effect or other similar qualifiers
therein) on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date
therein in which case they shall be accurate as of such date);

 

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

 

(iii)        the
delivery by the Company of the items set forth in Section 2.2(b) of this Agreement;

 

(iv)        there
shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

 

(v)         from
the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are
reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of the Purchaser, makes it impracticable or inadvisable to purchase the Securities at the
Closing.

 

    	8

    	 

    

 

Article
III.

REPRESENTATIONS AND WARRANTIES

 

3.1          Representations
and Warranties of the Company. Except as set forth in the SEC Reports or the Disclosure Schedules, which Disclosure Schedules
shall be deemed a part hereof and shall qualify any representation made herein only to the extent of the disclosure contained in
the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to
the Purchaser:

 

(a)          Subsidiaries.
All of the direct and indirect subsidiaries of the Company and the Company’s ownership interests therein are set forth on
Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary
free and clear of any Liens, other than Permitted Liens, and all of the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or
purchase securities.

 

(b)          Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “Material Adverse Effect”) and, no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(c)          Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith
or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which
it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.

 

    	9

    	 

    

 

(d)          No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents, the
issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby to which it
is a party do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (ii) subject to Required Approvals, conflict
with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary
is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities
laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case
of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(e)          Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.6 of this Agreement, (ii) the notice and/or application(s) to each applicable
Trading Market for the issuance and sale of the Securities and the listing of the Underlying Shares for trading thereon in the
time and manner required thereby, (iii) the waivers and consents from the Persons set forth on Schedule 3.1(e)
(the “Required Consents”), each of has been obtained by the Company prior to the date of this Agreement, and
(iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws
(collectively, the “Required Approvals”).

 

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

 

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(g)          Capitalization.
The capitalization of the Company is as set forth in Schedule 3.1(g). Except as set forth on Schedule 3.1(g), the Company
has not issued any capital stock since its most recently filed periodic report under the Exchange Act. Except as set forth on Schedule
3.1(g), no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate
in the transactions contemplated by the Transaction Documents. Except as disclosed on Schedule 3.1(g), there are no outstanding
options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights
or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire
any shares of Common Stock, or any material contracts, commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. Except as set forth on
Schedule 3.1(g), the issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchaser) and will not result in a right of any holder of Company securities to
adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in material compliance
with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of
Directors or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements
or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company’s stockholders.

 

(h)          SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and
none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required
by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as
of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

 

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(i)          Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof or on Schedule 3.1(i):
(i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any material liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with past practice, (B) liabilities not required to
be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission and
(C) transaction expenses incurred in connection with the Transaction Documents, (iii) the Company has not altered its method
of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders
or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate except as set forth on Schedule 3.1(g) pursuant to existing
Company stock option plans which issuances prior to the date of this Agreement are described on Schedule 3.1(g). The Company
does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the
Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability, fact, circumstance, occurrence
or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries
or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by
the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly
disclosed at least two Trading Days prior to the date that this representation is made.

 

(j)          Litigation.
Except as set forth on Schedule 3.1(j), there is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective
properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county,
local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity
or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have
or reasonably be expected to result in a Material Adverse Effect. Except as set forth in Schedule 3.1(j), since December
31, 2013, neither the Company nor any Subsidiary, nor, to the Company’s knowledge, any director or officer thereof, is or
has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim
of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission
has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or
any Subsidiary under the Exchange Act or the Securities Act.

 

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(k)          Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or
any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, which could reasonably be expected to result in a Material Adverse Effect and the continued employment
of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of
the foregoing matters. The Company and its Subsidiaries are in compliance with all applicable U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except
where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.

 

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

 

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

 

(n)          Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property (if any) owned
by them and good and marketable title in all personal property owned by them that is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens, except for Permitted Liens, as do not materially
affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by
the Company and the Subsidiaries, and (iii) Permitted Liens. Any real property and facilities held under lease by the Company and
the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are
in compliance, except where the non-compliance would not reasonably be expected to result in a Material Adverse Effect.

 

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(o)          Intellectual
Property.

 

(i)          The
term “Intellectual Property Rights” includes:

 

(1)         the
name of the Company and each Subsidiary, all fictional business names, trading names, registered and unregistered trademarks, service
marks, and applications of the Company and each Subsidiary (collectively, “Marks”);

 

(2)         all
patents, patent applications, and inventions and discoveries that may be patentable of the Company and each Subsidiary including
without limitation, any such rights that are or that are purported to be owned or exclusively licensed by the Company or any of
its Subsidiaries (collectively, “Patents”);

 

(3)         all
copyrights in both published works and published works of the Company and each Subsidiary (collectively, “Copyrights”);

 

(4)         all
rights in mask works of the Company and each Subsidiary (collectively, “Rights in Mask Works”); and

 

(5)         all
know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans,
drawings, and blue prints (collectively, “Trade Secrets”); owned, used, or licensed by the Company and each
Subsidiary as licensee or licensor.

 

(ii)         Agreements.
There are no outstanding and, to Company’s knowledge, no threatened disputes or disagreements with respect to any agreements
relating to any Intellectual Property Rights to which the Company is a party or by which the Company is bound.

 

(iii)        Intellectual
Property Rights Necessary for the Business. The Intellectual Property Rights are all those necessary for the operation of the
Company’s businesses as it is currently conducted or as currently planned by the Company to be conducted, pursuant to the
Company’s written plans shared with Purchaser. Except as set forth on Schedule 3.1(o), the Company is the owner of all right,
title, and interest in and to each of the Intellectual Property Rights, free and clear of all liens, other than Permitted Liens,
security interests, charges, encumbrances, equities, and other adverse claims, and has the right to use all of the Intellectual
Property Rights. To the Company’s knowledge, no employee of the Company has entered into any contract that restricts or limits
in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose
information concerning his work to anyone other than the Company.

 

    	14

    	 

    

 

(iv)        Patents.
Except as set forth on Schedule 3.1(o), (i) the Company is the sole and exclusive owner of all right, title and interest in and
to each of the Patents, free and clear of all Liens, other than Permitted Liens, and other adverse claims and (ii) the Company
has the sole and exclusive rights that are necessary and sufficient to enforce the Patents. All of the issued Patents are currently
in compliance with formal legal requirements (including payment of filing, examination, and maintenance fees and proofs of working
or use), are valid and enforceable, and are not subject to any maintenance fees or Taxes or actions falling due within ninety days
after the Closing Date. No Patent has been or is now involved in any interference, reissue, reexamination, or opposition proceeding.
To the Company’s knowledge: (1) there is no potentially interfering patent or patent application of any third party, and
(2) no Patent is infringed or has been challenged or threatened in any way. To the Company’s knowledge after due inquiry,
none of the products manufactured and sold, nor any process or know-how used, by the Company infringes or is alleged to infringe
any patent or other proprietary right of any other Person.

 

(v)         Trademarks.
Except as set forth on Schedule 3.1(o), the Company is the owner of all right, title, and interest in and to each of the Marks,
free and clear of all Liens, other than Permitted Liens, and other adverse claims. All Marks that have been registered with the
United States Patent and Trademark Office are currently in compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal applications), are valid and enforceable, and are
not subject to any maintenance fees or Taxes or actions falling due within ninety days after the Closing Date. No Mark has been
or is now involved in any opposition, invalidation, or cancellation and, to the Company’s knowledge, no such action is threatened
with respect to any of the Marks. To the Company’s knowledge: (1) there is no potentially interfering trademark or trademark
application of any third party, and (2) no Mark is infringed or has been challenged or threatened in any way. To the Company’s
knowledge, none of the Marks used by the Company infringes or is alleged to infringe any trade name, trademark, or service mark
of any third party.

 

(vi)        Copyrights.
Except as set forth on Schedule 3.1(o), the Company is the owner of all right, title, and interest in and to each of the Copyrights,
free and clear of all Liens, other than Permitted Liens, and other adverse claims. All the Copyrights have been registered and
are currently in compliance with formal requirements, are valid and enforceable, and are not subject to any maintenance fees or
Taxes or actions falling due within ninety days after the date of the Closing. No Copyright is infringed or, to the Company’s
knowledge, has been challenged or threatened in any way. To the Company’s knowledge, none of the subject matter of any of
the Copyrights infringes or is alleged to infringe any copyright of any third party or is a derivative work based on the work of
a third party. All works encompassed by the Copyrights have been marked with the proper copyright notice.

 

(vii)       Trade
Secrets. With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate, and sufficient
in detail and content in all material respects to identify and explain it and to allow its full and proper use without reliance
on the knowledge or memory of any individual. The Company has taken all reasonable precautions to protect the secrecy, confidentiality,
and value of its Trade Secrets. The Company has good title and an absolute right to use the Trade Secrets. The Trade Secrets are
not part of the public knowledge or literature, and, to the Company’s knowledge, have not been used, divulged, or appropriated
either for the benefit of any Person (other the Company) or to the detriment of the Company or in any manner that otherwise compromises
the secrecy and confidentiality thereof. No Trade Secret is subject to any adverse claim or has been challenged or threatened in
any way.

 

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

 

(q)          Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or
any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party
to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $100,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan
of the Company except as disclosed on Schedule 3.1(g).

 

(r)          Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in material compliance with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date except as disclosed in the Company’s
SEC Reports. Except as described in the SEC Reports, the Company and the Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general
or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity
with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s
general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed
such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures
of the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange
Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under
the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over
financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected,
or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.

 

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(s)          Certain
Fees. Except as set forth on Schedule 3.1(s), no brokerage, finder’s fees, commissions or due diligence fees are
or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchaser shall have
no obligation with respect to any such fees or with respect to any claims made by or on behalf of other Persons for fees of a type
contemplated in this Section 3.1(s) that may be due in connection with the transactions contemplated by the Transaction
Documents.

 

(t)           Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.

 

(u)          Registration
Rights. No Person, other than the Purchaser and the Persons listed on Schedule 3.1(u), has any right to cause the Company
or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.

 

(v)          Reporting
Company/Shell Company. The Company is a publicly-held company subject to reporting obligations pursuant to Sections 12(g) and
13 of the Exchange Act. Pursuant to the provisions of the Exchange Act, except as set forth on Schedule 3.1(v), the Company
has timely filed all reports and other materials required to be filed by the Company thereunder with the SEC during the preceding
twelve months. As of the Closing Date, the Company is not a “shell company”, nor a former “shell company”
as those terms are employed in Rule 144 under the Securities Act. The Company is, and has no reason to believe that it will not
in the foreseeable future continue to be in compliance with all such listing and maintenance requirements.

 

(w)         Application
of Takeover Protections. The Company and the Board of Directors has taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation (including without limitation, Section 203 of the Delaware General Corporation Law)
that is or could become applicable to the Purchaser as a result of the Purchaser and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance
of the Securities, the Purchaser’s ownership of the Securities and any acquisition in the future by Purchaser of the Company
or of additional securities of the Company.

 

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(x)          Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided the Purchaser or its agents or counsel with any
information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms
that the Purchaser will rely on the foregoing representation in effecting transactions in securities of the Company. All of the
disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company and its Subsidiaries, their respective
businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, when taken together
as a whole, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do
not 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 therein, in light of the circumstances under which they were made and when made, not misleading.
The Company acknowledges and agrees that the Purchaser makes no and has made no representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

(y)          No
Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section
3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company for purposes of: (i) the Securities Act which would
require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions
of any Trading Market on which any of the securities of the Company are listed or designated.

 

(z)          Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, and the Company’s good faith estimate
of the fair market value of its assets, after giving effect to the receipt by the Company of the proceeds from the sale of the
Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be
paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they
mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted
and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business
conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current
cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking
into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when
such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of
any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(z) sets forth as of the date
hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary
has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money
or amounts owed in excess of $300,000 in the aggregate (other than trade accounts payable incurred in the ordinary course of business),
(y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same
are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present
value of any lease payments in excess of $300,000 due under leases required to be capitalized in accordance with GAAP. Neither
the Company nor any Subsidiary is in default with respect to any Indebtedness.

 

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(aa)        Tax
Matters. The Company and each of its Subsidiaries (i) has filed or caused to be filed all income and other material Tax Returns
required to be filed by it, and all such Tax Returns are true, correct and complete in all material respects, (ii) has paid all
Taxes that have become due and payable, other than Taxes the nonpayment of which, individually or in the aggregate, are not material,
(iii) has established on the financial statements included in the SEC Reports adequate reserves in accordance with GAAP for all
Taxes accrued through the dates of such financial statements, (iv) has set aside on its books provision reasonably adequate for
the payment of all material Taxes not yet due, and (v) has no material liability for Taxes other than non-delinquent Taxes incurred
in the ordinary course of business consistent with amounts incurred and paid in the most recent comparable period (adjusted solely
for ordinary course changes in the business of the Company and its Subsidiaries). With respect to the Company and each of its Subsidiaries,
there are no (A) proposed, threatened or actual assessments, audits, examinations or disputes as to Taxes that have not been finally
resolved with all amounts owing with respect thereto either fully paid or accrued in the financial statements included in the SEC
Reports, (B) adjustments under Section 481 of the Code or any similar adjustments, or (C) waivers or extensions of the statute
of limitations with respect to Taxes. The Company does not know of any basis for the assertion by a taxing authority of a material
Tax deficiency against the Company or any Subsidiary. Neither the Company nor any Subsidiary (nor any predecessor thereof) has
been a “distributing corporation” or a “controlled corporation” in connection with a distribution governed
or intended to be governed by Section 355 of the Code. Neither the Company nor any Subsidiary (nor any predecessor thereof) has
been a member of an affiliated group of corporations, within the meaning of Section 1504 of the Code, or a member of a combined,
consolidated or unitary group for state, local or foreign Tax purposes, other than an affiliated group the common parent of which
is the Company. The Company and its Subsidiaries are in compliance in all material respects with each Tax holiday, Tax rate reduction
or other agreement with a Taxing authority with respect to Taxes. For purposes hereof, “Tax” (including “Taxes”)
means (A) all federal, state, local, foreign and other taxes (including but not limited to withholding taxes) and other governmental
assessments, fees, duties or charges of any kind or nature whatsoever, together with any interest and any penalties, additions
to tax or additional amounts with respect thereto, (B) any liability for payment of amounts described in clause (A) whether as
a result of transferee or successor liability, joint and several liability for being a member of an affiliated, consolidated, combined
or unitary group for any period, or otherwise by operation of law and (C) any liability for the payment of amounts described in
clause (A) or (B) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement
to pay or indemnify any other person; and “Tax Return” means any return, declaration, report, statement, information
statement and other document required to be filed with respect to Taxes, including any claims for refunds of Taxes and any amendments
or supplements of any of the foregoing.

 

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

 

(cc)        Accountants.
The Company’s accounting firm is set forth on Schedule 3.1(cc) of the Disclosure Schedules. To the knowledge
and belief of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and
(ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report
for the fiscal year ending December 31, 2014.

 

(dd)       Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding,
it is understood and acknowledged by the Company that: (i) the Purchaser has not been asked by the Company to agree, nor has the
Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities for any specified term, (ii) past or future open
market or other transactions by the Purchaser, specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price
of the Company’s publicly-traded securities, and (iii) the Purchaser shall not be deemed to have any affiliation with
or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands
and acknowledges that (y) the Purchaser may engage in hedging activities at various times during the period that the Securities
are outstanding, including, without limitation, during the periods that the value of the Underlying Shares deliverable with respect
to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing stockholders’
equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges
that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents, provided that such
activities do not breach the Purchaser’s representations made in Section 3.2 of this Agreement. There are no disagreements
of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and
lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants
and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents.

 

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(ee)        Regulation
M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities, or (iii) except as set forth on Schedule 3.1(ee), paid or agreed to pay to any Person any compensation
for soliciting another to purchase any other securities of the Company.

 

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

 

(gg)        Stock
Option Plans. Each stock option granted by the Company under the stock option plan was granted (i) in accordance with the terms
of such stock option plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the
date such stock option would be considered granted under GAAP and applicable law. No stock option granted under any stock option
plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly
grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement
of material information regarding the Company or its Subsidiaries or their financial results or prospects.

 

(hh)        Office
of Foreign Assets Control; International Traffic In Arms Regulations.
Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate
of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”). None of the technical data, software, products or services that comprise the Company’s
products, Intellectual Property Rights or services is directly related to defense articles, technical data or defense services
(as each term is defined in the International Traffic In Arms Regulations 22 CFR Part §120).

 

(ii)          Private
Placement. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 

(jj)          No
General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchaser.

 

(kk)        Indebtedness
and Seniority. As of the date hereof, all Indebtedness and Liens are as set forth on Schedule 3.1(kk).

 

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(ll)          Listing
and Maintenance Requirements. The Common Stock is quoted on the OTCBB under the symbol VUZI. Except as set forth on Schedule 3.1(ll),
the Company has not, in the twenty-four (24) months preceding the date hereof, received notice from any Trading Market on which
the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market.

 

(mm)      Survival.
The foregoing representations and warranties shall survive the Closing Date.

 

3.2          Representations
and Warranties of the Purchaser. The Purchaser hereby represents and warrants as of the date hereof and as of the Closing Date
to the Company as follows (unless as of a specific date therein):

 

(a)          Organization;
Authority. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware
with full right, corporate power and authority to enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents
and performance by the Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all
necessary corporate action on the part of the Purchaser. Each Transaction Document to which it is a party has been duly executed
by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally
binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement
of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable
law.

 

(b)          Understandings
or Arrangements. The Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting the Purchaser’s right to sell the Securities pursuant to a registration
statement or otherwise in compliance with applicable federal and state securities laws). The Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.

 

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(c)          Purchaser
Status. At the time the Purchaser was offered the Securities, it was, and as of the date hereof it is: (i) an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities Act. The Purchaser is not required to be registered
as a broker-dealer under Section 15 of the Exchange Act. The Purchaser has the authority and is duly and legally qualified to purchase
and own the Securities. The Purchaser is able to bear the risk of such investment for an indefinite period and to afford a complete
loss thereof. The Purchaser has had no position, office or other material relationship within the past three years with the Company
or Persons (as defined below) known to the Purchaser to be affiliates of the Company, and is not a member of the Financial Industry
Regulatory Authority or an “associated person” (as such term is defined under the FINRA Membership and Registration
Rules Section 1011).

 

(d)          Experience
of the Purchaser. The Purchaser has such knowledge, sophistication and experience in business and financial matters so as to
be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.

 

(e)          Information
on Company. The Purchaser has been furnished with or has had access to the EDGAR Website of the Commission to the Company’s
filings made with the Commission during the period from the date that is two years preceding the date hereof through the tenth
business day preceding the Closing Date in which the Purchaser purchases Securities hereunder, including the Company’s Annual
Report on Form 10-K filed with the Commission on April 9, 2014 together with the Closing Form 8-K (hereinafter referred to collectively
as the “Reports”). The Purchaser is not deemed to have any knowledge of any information not included in the
Reports. In addition, the Purchaser considered all factors the Purchaser deems material in deciding on the advisability of investing
in the Securities. The Purchaser was afforded (i) the opportunity to ask such questions as the Purchaser deemed necessary of, and
to receive answers from, representatives of the Company concerning the merits and risks of acquiring the Securities; (ii) the right
of access to information about the Company and its financial condition, results of operations, business, properties, management
and prospects sufficient to enable the Purchaser to evaluate the Securities; and (iii) the opportunity to obtain such additional
information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed
investment decision with respect to acquiring the Securities.

 

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(f)           Compliance
with Securities Act; Reliance on Exemptions. The Purchaser understands and agrees that (i) the Securities have not been and
are not being registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned
or transferred unless (A) subsequently registered thereunder, (B) Purchaser shall have delivered to the Company (if requested by
the Company) an opinion of counsel to Purchaser, in a form reasonably acceptable to the Company, to the effect that such Securities
to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C)
Purchaser provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to
Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto); (ii) any sale of the Securities made
in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable,
any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the Commission promulgated thereunder; and (iii) except as contemplated by the Rights
Agreement, neither the Company nor any other Person is under any obligation to register the Securities under the Securities Act
or any state securities laws or to comply with the terms and conditions of any exemption thereunder. The Purchaser understands
and agrees that the Securities are being offered and sold to the Purchaser in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and regulations and that the Company is relying in part upon the
truth and accuracy of, and the Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility
of the Purchaser to acquire the Securities.

 

(g)          Communication
of Offer. The Purchaser is not purchasing the Securities as a result of any “general solicitation” or “general
advertising,” as such terms are defined in Regulation D, which includes, but is not limited to, any advertisement, article,
notice or other communication regarding the Securities published in any newspaper, magazine or similar media or on the internet
or broadcast over television, radio or the internet or presented at any seminar or any other general solicitation or general advertisement.

 

(h)          No
Governmental Review. The Purchaser understands that no United States federal or state agency or any other governmental or state
agency has passed on or made recommendations or endorsement of the Securities or the suitability of the investment in the Securities
nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

(i)           No
Conflicts. The execution, delivery and performance of this Agreement and performance under the other Transaction Documents
and the consummation by the Purchaser of the transactions contemplated hereby and thereby or relating hereto or thereto do not
and will not (i) result in a violation of the Purchaser’s charter documents, bylaws or other organizational documents, if
applicable, (ii) conflict with nor constitute a default (or an event which with notice or lapse of time or both would become a
default) under any agreement to which the Purchaser is a party, nor (iii) result in a violation of any law, rule, or regulation,
or any order, judgment or decree of any court or governmental agency applicable to the Purchaser or its properties (except for
such conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on the Purchaser).
The Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court
or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or perform under
the other Transaction Documents nor to purchase the Securities in accordance with the terms hereof, provided that for purposes
of the representation made in this sentence, the Purchaser is assuming and relying upon the accuracy of the relevant representations
and agreements of the Company herein.

 

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(j)           Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, the Purchaser has not directly
or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser, executed any purchases
or sales, including Short Sales, of the securities of the Company during the period commencing December 1, 2014 and ending
immediately prior to the execution hereof. Notwithstanding the foregoing, the Purchaser has separate portfolio managers who manage
separate portions of the Purchaser’s investment assets and the portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of the Purchaser’s investment assets; accordingly, the representation
set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement.

 

(k)          Survival.
The foregoing representations and warranties shall survive the Closing Date.

 

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

 

Article
IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1          Transfer
Restrictions.

 

(a)          The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of the Purchaser
or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to
the Company, at the Company’s expense, an opinion of counsel selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer
does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee
shall agree in writing to be bound by the terms of this Agreement, and the Rights Agreement and shall have the rights and obligations
of the Purchaser under this Agreement and the Rights Agreement.

 

(b)          The
Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in
the following form:

 

“[NEITHER THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE
BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF
COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.”

 

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The Company acknowledges
and agrees that the Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor”
as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and the Rights
Agreement and, if required under the terms of such arrangement, such Purchaser may transfer, pledge or secure Securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of
legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required
of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation
as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including,
if the Securities are subject to registration pursuant to the Rights Agreement, the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend
the list of selling stockholders thereunder.

 

(c)          Certificates
evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof):
(i) following any sale of such Underlying Shares pursuant to Rule 144, (ii) if such Underlying Shares are eligible for sale under
Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144
as to such Underlying Shares and without volume or manner-of-sale restrictions or (iii) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission).
The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Legend Removal Date if required
by the Transfer Agent to effect the removal of the legend hereunder upon the occurrence of the sale of the Underlying Shares. If
all or any shares of the Series A Preferred Stock are converted at a time when there is an effective registration statement to
cover the resale of the Underlying Shares, or if such Underlying Shares may be sold under Rule 144 without the requirement for
the Company to be in compliance with the current public information and any other limitations or requirements set forth in Rule
144, including, without limitation, volume or manner of sale restrictions, or if such legend is not otherwise required under applicable
requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission),
then such Underlying Shares shall be reissued without the legends. The Company agrees that following the Legend Removal Date or
such time as such legend is no longer required under this Section 4.1(c), it will, no later than seven Trading Days following
the delivery by the Purchaser to the Company or the Transfer Agent of a certificate representing Underlying Shares, as applicable,
issued with a restrictive legend, together with any reasonable certifications requested by the Company, the Company’s counsel
or the Transfer Agent (such seventh Trading Day, the “Legend Removal Date”), deliver or cause to be delivered
to the Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not
make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth
in this Section 4. Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer
Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System
as directed by the Purchaser.

 

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(d)          In
addition to the Purchaser’s other available remedies, the Company shall pay to the Purchaser, in cash, as partial liquidated
damages and not as a penalty, for each $1,000 of Underlying Shares (based on the higher of the actual purchase price or VWAP of
the Common Stock on the date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend
and subject to Section 4.1(c), $10 per Trading Day for each Trading Day after the Legend Removal Date until such certificate
is delivered without a legend (the “Unlegended Shares”). Nothing herein shall limit the Purchaser’s right
to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required by the
Transaction Documents, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief.

 

(e)          In
lieu of delivering physical certificates representing the Unlegended Shares, upon request of the Purchaser, so long as the certificates
therefor do not bear a legend and the Purchaser is not obligated to return such certificate for the placement of a legend thereon,
the Company shall cause its transfer agent to electronically transmit the Unlegended Shares by crediting the account of Purchaser’s
prime broker with the Depository Trust Company through its Deposit Withdrawal At Custodian system, provided that the Company’s
Common Stock is DTC eligible and the Company’s transfer agent participates in the Deposit Withdrawal at Custodian system.
Such delivery must be made on or before the Legend Removal Date.

 

(f)           In
the event the Purchaser shall request delivery of Unlegended Shares as described in this Section 4.1 and the Company is
required to deliver such Unlegended Shares, the Company may not refuse to deliver Unlegended Shares based on any claim that such
Purchaser or anyone associated or affiliated with such Purchaser has not complied with Purchaser’s obligations under the
Transaction Documents, or for any other reason, unless, an injunction or temporary restraining order from a court, on notice, restraining
and or enjoining delivery of such Unlegended Shares shall have been sought and obtained by the Company and the Company has posted
a surety bond for the benefit of such Purchaser in the amount of the greater of (i) 120% of the amount of the aggregate purchase
price of the Underlying Shares to be subject to the injunction or temporary restraining order, or (ii) the VWAP of the Common Stock
on the trading day before the issue date of the injunction multiplied by the number of Unlegended Shares to be subject to the injunction,
which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall
be payable to such Purchaser to the extent Purchaser obtains judgment in Purchaser’s favor.

 

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(g)          In
addition to any other rights available to Purchaser, if the Company fails to deliver to the Purchaser Unlegended Shares as required
pursuant to this Agreement and after the Legend Removal Date the Purchaser, or a broker on the Purchaser’s behalf, purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of the
shares of Common Stock which the Purchaser was entitled to receive in unlegended form from the Company (a “Buy-In”),
then the Company shall promptly pay in cash to the Purchaser (in addition to any remedies available to or elected by the Purchaser)
the amount, if any, by which (A) the Purchaser’s total purchase price (including brokerage commissions, if any) for the shares
of Common Stock so purchased exceeds (B) the aggregate purchase price of the shares of Common Stock delivered to the Company for
reissuance as Unlegended Shares together with interest thereon at a rate of 15% per annum accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty). For example, if the Purchaser
purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
price of shares of Common Stock delivered to the Company for reissuance as Unlegended Shares, the Company shall be required to
pay the Purchaser $1,000, plus interest, if any. The Purchaser shall provide the Company written notice indicating the amounts
payable to the Purchaser in respect of the Buy-In.

 

(h)          The
Purchaser agrees with the Company that the Purchaser will sell any Securities pursuant to either the registration requirements
of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities
are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein,
and acknowledges that the removal of the restrictive legend from certificates representing Securities as set forth in this Section
4.1 is predicated upon the Company’s reliance upon this understanding.

 

4.2          [Reserved.]

 

4.3          Furnishing
of Information; Public Information.

 

(a)          For
the shorter of (i) three years after the Closing Date or (ii) until the time that the Purchaser no longer owns Securities, the
Company covenants to file all periodic reports with the Commission pursuant to Section 15(d) of the Exchange Act or alternatively,
if registered under Section 12(b) or 12(g) of the 1934 Act, maintain the registration of the Common Stock under Section 12(b) or
12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period)
all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then
subject to the reporting requirements of the Exchange Act.

 

(b)          At
any time commencing on the Closing Date and ending at such time that all of the Securities may be sold without the requirement
for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if
the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to the Purchaser’s other available remedies, the Company shall pay to the
Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability
to sell the Securities, an amount in cash equal to one-half percent (0.5%) of the aggregate Subscription Amount of the Securities
held by the Purchaser on the day of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling
less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time
that such public information is no longer required for the Purchaser to transfer the Underlying Shares pursuant to Rule 144. The
payments to which the Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to herein as “Public
Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day of
the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after
the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public
Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5%
per month (prorated for partial months) until paid in full. Nothing herein shall limit the Purchaser’s right to pursue actual
damages for the Public Information Failure, and the Purchaser shall have the right to pursue all remedies available to it at law
or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

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4.4          Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior
to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

 

4.5          Conversion
and Exercise Procedures. No additional legal opinion, other information or instructions shall be required of the Purchaser
to convert its shares of Series A Preferred Stock into Underlying Shares other than reasonable information (which may include a
legal opinion) requested by the Transfer Agent or required by applicable law. The Company shall honor conversions of the Series A
Preferred Stock and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the
Transaction Documents.

 

4.6          Securities
Laws Disclosure; Publicity. The Company shall, by 9:00 a.m. (New York City time) on the second Trading Day immediately following
the Closing Date, issue a press release disclosing the material terms of the transactions contemplated hereby, and shall file a
Current Report on Form 8-K including the Transaction Documents as exhibits thereto within one Business Day of the date hereof (“Form
8-K”). A form of the Form 8-K is annexed hereto as Exhibit D. Such Exhibit D will be identical
to the Form 8-K which will be filed with the Commission except for the omission of signatures thereto by the Company and auditors
providing the financial statements. From and after the issuance of such press release and filing of the Form 8-K, the Company
represents to the Purchaser that it shall have publicly disclosed all material, non-public information delivered to the Purchaser
by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with
the transactions contemplated by the Transaction Documents.

 

4.7          Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that the
Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or in any other manner.

 

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4.8          Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for general corporate purposes
and to accelerate the Company’s on-going development of its technology and shall not use such proceeds: (a) for the satisfaction
of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s
business and prior practices or Permitted Indebtedness when and as it comes due without acceleration or prepayment), (b) for the
redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation
of FCPA or OFAC regulations.

 

4.9          Indemnification
of the Purchaser. Subject to the provisions of this Section 4.9, the Company will indemnify and hold the Purchaser and
its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses (including diminution in value of any Purchaser Party’s rights or property (including the
Securities), liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid
in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any the Purchaser Party may suffer
or incur as a result of or relating to (a) any breach or inaccuracy of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against Purchaser Parties
in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of the
Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based
upon a breach of the Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements
or understandings the Purchaser Party may have with any such stockholder or any violations by the Purchaser Party of state or federal
securities laws or any conduct by the Purchaser Party which constitutes fraud, gross negligence, willful misconduct or malfeasance).
If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement,
the Purchaser Party shall promptly notify the Company in writing, and except to the extent such action relates to Taxes of any
Purchaser Party, the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable
to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate
in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Purchaser Party except to the
extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed
after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable
opinion of counsel, a material conflict on any material issue between the position of the Company and the position of the Purchaser
Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.
The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by the Purchaser Party effected
without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but
only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of its representations,
warranties or covenants under the Transaction Documents. The indemnification required by this Section 4.9 shall be made
by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or
are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser
Party against the Company or others and any liabilities the Company may be subject to pursuant to law. The Company and the Purchaser
agree to treat any indemnity payment made pursuant to this Section 4.9 as an adjustment to the price paid by the Purchaser to acquire
the Securities in the Offering.

 

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4.10        Reservation
and Listing of Securities.

 

(a)          The
Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents
in such amount as may then be required to fulfill its obligations in full under the Transaction Documents, but not less than the
Required Minimum.

 

(b)          If,
on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required
Minimum on such date (such date, the “Authorized Share Failure”), then the Company shall promptly take all action
necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve
and have available the Required Minimum as of such date. Without limiting the generality of the foregoing sentence, as soon as
practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than ninety (90) days after
the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders or conduct a consent solicitation
for the approval of an increase in the number of authorized shares of Common Stock to have available the Required Minimum.

 

(c)          The
Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading
Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum
on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing
or quotation on such Trading Market as soon as possible thereafter, (iii) provide to the Purchaser evidence of such listing
or quotation and (iv) maintain the listing or quotation of such Common Stock on any date at least equal to the Required Minimum
on such date on such Trading Market or another Trading Market. The Company will then take all action necessary to continue the
listing or quotation and trading of its Common Stock on a Trading Market until at least three years after the Closing Date, and
will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading
Market at least until the shorter of (i) such time as the Purchaser no longer holds the Securities or (ii) three years
after the Closing Date. In the event the aforedescribed listing is not continuously maintained for three years after the Closing
Date (a “Listing Default”), then in addition to any other rights the Purchaser may have hereunder or under applicable
law, on the first day of a Listing Default and on each monthly anniversary of each such Listing Default date (if the applicable
Listing Default shall not have been cured by such date) until the applicable Listing Default is cured, the Company shall pay to
the Purchaser an amount in cash, as partial liquidated damages and not as a penalty, equal to 2% of the aggregate Subscription
Amount held by the Purchaser on the day of a Listing Default and on every thirtieth day (pro-rated for periods less than thirty
days) thereafter until the date such Listing Default is cured. If the Company fails to pay any liquidated damages pursuant to this
Section in a timely manner, the Company will pay interest thereon at a rate of 1.5% per month (pro-rated for partial months) to
the Purchaser.

 

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4.11        Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchaser
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of the Purchaser.

 

4.12        Derivative
Liabilities. Provided the Company has successfully uplisted to a Recognized Stock Exchange (“Uplisting”)
and eliminated from its balance sheet all derivative liabilities, then, for a period of six months following the Uplisting, except
in connection with an Exempt Issuance, the Company undertakes that it will not enter into any transaction which could result in
the Company recognizing a derivative liability.

 

4.13        Capital
Changes. Until the one year anniversary of the Closing Date, the Company shall not undertake a reverse or forward stock split
or reclassification of the Common Stock without 10 days prior written notice to the Purchaser, unless such reverse split is made
in conjunction with the listing of the Common Stock on a national securities exchange.

 

4.14        Certain
Transactions and Confidentiality. The Purchaser covenants that neither it, nor any Affiliate acting on its behalf or pursuant
to any understanding with it will execute any purchases or sales, including Short Sales, of any of the Company’s securities
during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by
this Agreement are first publicly announced pursuant to the initial press release or Form 8-K as described in Section 4.6.

 

4.15        Participation
in Future Financings.

 

(a)          From
the date hereof, upon any proposed issuance by the Company or any of its Subsidiaries of Common Stock, or Common Stock Equivalents
for cash consideration, Indebtedness or a combination thereof, other than (i) a rights offering to all holders of Common Stock
and Series A Preferred Stock (which may include extending such rights to holders of Common Stock Equivalents) or (ii) an
Exempt Issuance (a “Subsequent Financing”), the Purchaser shall have the right to participate in such Subsequent
Financing up to its pro rata amount, calculated as its percentage equity ownership of the Company’s outstanding equity (assuming
the conversion of all outstanding Series A Preferred Stock into shares of Common Stock) (the “Participation Maximum”)
on the same terms, conditions and price provided for in the Subsequent Financing, unless the Subsequent Financing is an underwritten
public offering (an “Underwritten Subsequent Financing”), in which case the Company shall offer the Purchaser
the right to participate in such public offering when it is lawful for the Company to do so, but the Purchaser shall not be entitled
to purchase any particular amount of such public offering.

 

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(b)         At
least ten (10) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to the Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask the Purchaser
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).
Upon the request of the Purchaser, and only upon a request by the Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to the Purchaser. The
requesting Purchaser shall be deemed to have acknowledged that the Subsequent Financing Notice may contain material non-public
information. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing,
the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing
is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.

 

(c)          If
the Purchaser wishes to participate in such Subsequent Financing it must provide written notice to the Company by not later than
5:30 p.m. (New York City time) on the fifth (5th) Trading Day after the Purchaser has received the Subsequent Financing
Notice that the Purchaser is willing to participate in the Subsequent Financing, the amount of the Purchaser’s participation,
and representing and warranting that the Purchaser has such funds ready, willing, and available for investment on the terms set
forth in the Subsequent Financing Notice. If the Company receives no such notice from the Purchaser as of such fifth (5th)
Trading Day, the Purchaser shall be deemed to have notified the Company that it does not elect to participate and the Company may
effect the Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.

 

(d)          If
by 5:30 p.m. (New York City time) on the fifth (5th ) Trading Day after the Purchaser has received the Subsequent Financing
Notice, the Company has received written notification by the Purchaser of its willingness to participate in the Subsequent Financing
(or to cause its designees to participate), then the Company shall effect the Subsequent Financing with the Purchaser (in the amount
indicated in its notification up to the Participation Maximum) and, with respect to the remaining portion of such Subsequent Financing
on the terms and with the Persons set forth in the Subsequent Financing Notice.

 

(e)          The
Company must provide the Purchaser with a second Subsequent Financing Notice, and the Purchaser will again have the right of participation
set forth above in this Section 4.15, if the Subsequent Financing subject to the initial Subsequent Financing Notice is
amended in any material respect or is not consummated for any reason on the terms set forth in such Subsequent Financing Notice
within thirty (30) Trading Days after the date of the initial Subsequent Financing Notice.

 

(f)          Notwithstanding
anything to the contrary in this Section 4.15 and unless otherwise agreed to by the Purchaser, the Company shall either
confirm in writing to the Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that the Purchaser
will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the Subsequent
Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to the Subsequent
Financing has been made, and no notice regarding the abandonment of such transaction has been received by the Purchaser, such transaction
shall be deemed to have been abandoned and the Purchaser shall not be deemed to be in possession of any material, non-public information
with respect to the Company or any of its Subsidiaries.

 

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4.16        Catch-Up
Option.

 

(a)          With
respect to each Exempt Issuance or Underwritten Subsequent Financing in which the Purchaser was not afforded the opportunity to
participate pursuant to Section 4.15, the Purchaser shall be afforded by the Company the right and opportunity, but
not the obligation, and in no event (except as provided in Section 4.16(e)), not more than two opportunities per calendar
year to acquire additional securities from the Company (the “Catch-Up Option”) in such amount sufficient to
maintain the Purchaser’s ownership percentage of the Company, calculated as its percentage equity ownership of the Company’s
outstanding equity (assuming the conversion of all outstanding Series A Preferred Stock into shares of Common Stock), equal to
the ownership percentage that the Purchaser had immediately prior to such applicable financing (the “Ownership Threshold”).
If there is more than one such Exempt Issuance and/or Underwritten Subsequent Financing during the applicable period, then the
calculations of the number of shares and the price of such shares pursuant to this Section 4.16 shall be made with
respect each such financing.

 

(b)          The
price per share and type of security to be sold pursuant to the Catch-Up Option shall be equal to the price per share and type
as was sold or issued in the earlier applicable financing that reduced the Purchaser’s percentage ownership below the Ownership
Threshold; provided however, that if such effective price per share of Common Stock in the applicable financing is
lower than the then current market value of the Company’s Common Stock as of the date of the issuance to the Purchaser (“Current
FMV”) and if the Company is subject to any requirements relating to the listing of its Common Stock pursuant to the Exchange
Act or a Trading Market that would prohibit the Company from selling securities to the Purchaser at a price per share below the
Current FMV, then the price per share to be used in connection with the Catch-Up Option shall be the Current FMV.

 

(c)          The
Company shall deliver to the Purchaser as soon as reasonably practicable, but in any event within forty-five (45) days after
the end of each second and fourth fiscal quarter, a schedule (the “Schedule”) setting forth the number and type
of securities issued in each Exempt Issuance or Underwritten Subsequent Financing in which the Purchaser was not afforded the opportunity
to participate during the prior two fiscal quarters, as well as the amount of securities necessary for the Purchaser to maintain
its Ownership Threshold pursuant to this Section 4.16. By written notification received by the Company within twenty
(20) days after receipt of the Schedule, the Purchaser may elect to exercise the Catch-Up Option and purchase the applicable
securities from the Company.

 

(d)          The
Purchaser may elect to forgo, in whole or in part, the purchase of securities pursuant to the Catch-Up Option in any six (6) month
period without forgoing its right to purchase securities at a subsequent date, and such election to forgo such purchase, in whole
or in part, shall in no way impact the rights and obligations of the parties pursuant to this Section.

 

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(e)          If
at any time a Deemed Liquidation Event, as defined in the Certificate of Designation, or other liquidation event is contemplated,
and the Purchaser’s ownership percentage in the Company is below the Ownership Threshold as of the most recent Catch-Up Option
that was made available to the Purchaser, then the Company shall immediately prior to such Deemed Liquidation Event or other liquidation
event provide the Purchaser with the opportunity to purchase securities pursuant to the Catch-Up Option.

 

(f)          The
Company shall take all necessary steps and actions to ensure that the appropriate amount of Common Stock is authorized and reserved
at all times to provide for the issuances pursuant to the Catch-Up Option.

 

4.17        Maintenance
of Property. The Company shall keep all of its property, which is necessary or useful to the conduct of its business, in good
working order and condition, ordinary wear and tear excepted.

 

4.18        Preservation
of Corporate Existence. The Company shall preserve and maintain its corporate existence, rights, privileges and franchises
in the jurisdiction of its incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction in which
such qualification is necessary in view of its business or operations and where the failure to qualify or remain qualified might
reasonably have a Material Adverse Effect upon the financial condition, business or operations of the Company taken as a whole.

 

4.19        Further
Registration Statements. The Company will not, without the consent of the Purchaser, file with the Commission or with state
regulatory authorities any registration statements, or amend any already filed registration statement to increase the amount of
Common Stock registered therein, or reduce the price of which such company securities are registered therein, until the expiration
of the “Exclusion Period,” which shall be defined as the 30-day period from the effectiveness of Registration
Statement.

 

4.20        Reimbursement.
If the Purchaser becomes involved in any capacity in any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by the Purchaser to or with any current stockholder),
solely as a result of the Purchaser’s acquisition of the Securities under this Agreement, the Company will reimburse the
Purchaser for its reasonable legal and other expenses (including the cost of any investigation preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred. The reimbursement obligations of the Company under
this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and
conditions to any Affiliates of the Purchaser who is actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may be, of the Purchaser and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, the
Purchaser and any such Affiliate and any such Person. The Company also agrees that neither the Purchaser nor any such Affiliates,
partners, directors, agents, employees or controlling persons shall have any liability to the Company or any Person asserting claims
on behalf of or in right of the Company solely as a result of acquiring the Securities under this Agreement.

 

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4.21        Waivers
from Note and Warrant Holders.

 

(a)          For
purposes of this Section 4.21:

 

(i)          “Company
Notes” means those certain convertible notes issued by the Company to purchasers thereof pursuant to Securities Purchase
Agreements, dated as of June 3, 2014;

 

(ii)         “Company
Warrants” means those certain warrants issued by the Company pursuant to a public offering of its securities on July
30, 2013, including warrants issued to certain holders of the Company’s then outstanding debt upon conversion of such debt
into equity;

 

(iii)        “Waived
Notes” means those Company Notes covered by the Waiver and Consents given by certain holders of the Company Notes and
delivered by the Company to the Purchaser in connection with the Closing under this Agreement, by which such holders waived the
Anti-dilution Provisions;

 

(iv)        “Waived
Warrants” means those Company Warrants covered by the Waiver and Consents given by certain holders of the Company Warrants
and delivered by the Company to the Purchaser in connection with the Closing under this Agreement, by which such holders waived
the Anti-dilution Provisions; and

 

(v)         “Anti-dilution
Provisions” means, with respect to the Company Notes, the anti-dilution protections and
other rights set forth in Section 5(b) of the Company Notes, and, with respect to the Company Warrants, the anti-dilution
protections and other rights set forth in Section 2(b) of the Company Warrants.

 

(b)          If
additional shares of Common Stock or Common Stock Equivalents are issued or deemed issued by reason of an adjustment to the conversion
ratio of any Waived Warrant or Waived Note as the result of the implementation of the Anti-dilution Provisions, then in each such
instance, the Company promptly shall issue to the Purchaser, for no additional consideration, a number of shares of Common Stock
sufficient to maintain the Purchaser’s Ownership Threshold as of immediately prior to such issuance or deemed issuance. If,
for whatever reason, the Company does not promptly issue such shares of Common Stock to the Purchaser, then the Series A Conversion
Price of the Series A Preferred Stock under the Certificate of Designation shall be appropriately adjusted so as to increase
the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock by an amount equal to the number
of shares of Common Stock that the Company was obligated to issue to the Purchaser pursuant to the foregoing sentence, but did
not so issue.

 

4.22        Collaborative
Development Agreement.  Within the 45-day period following the Closing, the Company and the Purchaser shall use their
commercially reasonable efforts to negotiate in good faith a collaborative development agreement pursuant to which: (a)  the
Company and the Purchaser would collaborate with respect to the following three technologies of the Company: (i) Flat Passive Waveguides,
(ii) Curved Passive Waveguides and (iii) Dynamic Waveguides (the "Specified Technologies"), and (b) the Company would
grant to the Purchaser the right to be the lead partner to commercialize the Specified Technologies for a period of time to be
agreed upon by the Company and the Purchaser, with the terms of such right (including the markets to be agreed upon, which shall
include fashion and athletics) to be further specified in such agreement.

 

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Article
V.

MISCELLANEOUS

 

5.1          Fees
and Expenses. The Company shall pay the Purchaser’s expenses (whether external or internal) arising in connection with
the transactions contemplated by this Agreement and the other Transaction Documents; provided, that (i) the Closing
occurs, and (ii) in no event shall the Company be required to pay more than $75,000 to the Purchaser for such expenses in
the aggregate. Such fee shall be paid concurrently with the Closing by means of a deduction of such amount from the Subscription
Amount to be wired by the Purchaser to the Company at the Closing. Other than the foregoing, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident
to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent
fees (including, without limitation, any fees required for same day processing of any instruction letter delivered by the Company
and any conversion or exercise notice delivered by the Purchaser), stamp taxes and other Taxes levied in connection with the delivery
of any Securities to the Purchaser.

 

5.2          Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.3          Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: Vuzix Corporation, 2166 Brighton Henrietta Townline Road, Rochester, NY
14623, Attn: Paul J. Travers, President and Chief Executive Officer, facsimile: 585-359-4172, with a copy by fax only to (which
shall not constitute notice): Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, NY 10006, Attn: Greg Sichenzia,
Esq., facsimile: (212) 930-9725, and (ii) if to the Purchaser, to: Intel Corporation, 2200 Mission College Blvd., Santa Clara,
CA 95052, Attn: Portfolio Manager RN6-46, facsimile: (408) 765-6038, with copies to: Intel Corporation, 2200 Mission College Blvd.,
Santa Clara, CA 95052, Attn: General Counsel, facsimile: (408) 765-1859, with an additional copy by fax or electronic mail only
to (which shall not constitute notice): Gibson, Dunn & Crutcher LLP, 1881 Page Mill Road, Palo Alto, CA 94304, Attn: Gregory
T. Davidson.

 

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5.4          Amendments;
Waivers. No provision of the Transaction Documents may be waived, modified, supplemented or amended except in a written instrument
signed by the Company and the Purchaser. No waiver of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right.

 

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

 

5.6          Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
the Purchaser (other than by merger). Following the Closing, the Purchaser may assign any or all of its rights under this Agreement
to any Person to whom the Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchaser.”

 

5.7          No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise
set forth in Section 4.9.

 

5.8          Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any action,
suit or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either
party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations
of the Company under Section 4.9, the prevailing party in such action, suit or proceeding shall be reimbursed by the
other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.

 

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5.9          Survival.
The representations and warranties contained herein shall survive the Closing.

 

5.10        Execution.
This Agreement may be executed in counterparts, each of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood
that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or
by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

 

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

 

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

 

5.13        Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or
in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

 

    	39

    	 

    

 

5.14        Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser
and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages
may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents
and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy
at law would be adequate.

 

5.15        Payment
Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to any Transaction Document
or the Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

5.16        Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.

 

5.17        Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding
Business Day.

 

5.18        Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.

 

5.19        Equitable
Adjustment. Trading volume amounts, price/volume amounts and similar figures in the Transaction Documents shall be equitably
adjusted (but without duplication) to offset the effect of stock splits, similar events and as otherwise described in this Agreement.

 

(Signature Page Follows)

 

    	40

    	 

    

 

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

 

	VUZIX CORPORATION

 

	By:	 	 
	 	Name:	 
	 	Title:	 

  

	INTEL CORPORATION

 

	By:	 	 
	 	Name:   	 
	 	Title:

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