Document:

Settlement Agreement

 Exhibit 10.1 
 SETTLEMENT AGREEMENT 
 This Settlement Agreement (this
“Agreement”), dated as of
February 6th, 2013, is made by and among Avantair,
Inc., a Delaware corporation (the “Company”), and David M. Greenhouse, Special Situations Fund III QP, L.P., Special Situations Cayman Fund, L.P. and Special Situations Private Equity Fund, L.P. (the “Holders”).

 WHEREAS, the Holders are party to the Registration Rights Agreement dated as of October 16, 2009 (the
“2009 Registration Rights Agreement”) by and among the Company, the Investors (as defined therein), and EarlyBird Capital, LLC; 
 WHEREAS, pursuant to the 2009 Registration Rights Agreement, the Company is obligated to pay to the Holders liquidated damages in amounts calculated pursuant to the 2009 Registration Rights
Agreement in certain circumstances; 
 WHEREAS, the Company and the Holders have agreed that the Company owes the Holders
an aggregate of $1,055,537.05 (the “Amount Due”) under the 2009 Registration Rights Agreement as of the date hereof; 
 WHEREAS, the Holders have agreed that, they will accept senior secured convertible promissory notes of the Company in the form attached hereto as Exhibit A in the aggregate principal amount
of $1,055,537.05 (the “Notes”), and warrants to purchase an aggregate of 4,222,148 shares of the Company’s common stock, $0.0001 per share (the “Common Stock”), in the form attached hereto as Exhibit B
(the “Warrants”, and together with the Notes, the “Securities”) in payment in full of the Amount Due; 
 WHEREAS, the Notes shall be secured by a first priority, perfected lien in and security interest on the Collateral (as defined in the Security Agreement) pursuant to that certain Security Agreement
dated as of November 30, 2012 by and between the Company and Barry Gordon, as collateral agent (the “Security Agreement”); 
 WHEREAS, the issuance of the Notes and Warrants is based on a unit price of $0.25 per unit consisting of a Note convertible into one share of Common Stock and a Warrant to purchase one share of
Common Stock with an exercise price of $0.50 per share; 
 WHEREAS, in consideration of the payment of the Amount Due,
the Holders have agreed to toll until March 15, 2013 any additional liquidated damages that would otherwise accrue under the 2009 Registration Rights; 
 WHEREAS, the shares of Common Stock issuable upon conversion of the Notes and the shares of Common Stock issuable upon the exercise of the Warrants shall be subject to certain registration rights
pursuant to that certain Registration Rights Agreement, dated of even date herewith, by and among the Company and the Holders in the form attached hereto as Exhibit C (the “Registration Rights Agreement”); and 

WHEREAS, this Agreement, the Notes, the Warrants, the Security Agreement and the Registration Rights Agreement are referred to
herein as the “Transaction Documents”; and 

 NOW, THEREFORE, in consideration of the mutual promises, representations, warranties
and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Holders mutually agree as follows. Capitalized terms used and not otherwise defined
herein shall have the meanings given such terms in the Notes. 
 ARTICLE 1 

PURCHASE OF NOTES AND WARRANTS 
 1.1 Issuance of Securities. 
 (a) Securities. No later than the
close of business on the date hereof, the Company shall issue to each of the Holders, the Securities in the respective amounts set forth opposite each such Holder’s name on Annex I in payment in full of the portion of the Amount Due
owing to such Holder. Such Securities shall be registered in such name of names as each Holder may designate. 
 (b)
Tolling. In consideration of the issuance of the Securities and the other covenants set forth herein, each Holder hereby irrevocably and unconditionally agrees that no further liquidated damages shall accrue under the 2009 Registration Rights
Agreement prior to March 15, 2013 (the “Toll-End Date”). From and after the Toll-End Date, the provisions of the 2009 Registration Rights Agreement shall continue in full force and effect. For the avoidance of doubt, the
Company shall not be obligated to pay liquidated damages to the Holders pursuant to the 2009 Registration Rights Agreement for the period commencing on the date hereof and ending on the Toll-End Date. 

ARTICLE 2 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY 
 The Company represents and warrants to each of the Holders as follows. 
 2.1
Organization, Qualifications and Corporate Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. The Company has the corporate power and authority to execute,
deliver and perform the Transaction Documents to which it is a party and to issue, sell and deliver the Securities; provided that the Company may not have a sufficient number of authorized and unreserved shares of Common Stock to issue and deliver
the shares of Common Stock issuable upon conversions of the Notes (the “Note Shares”) and to issue and deliver the shares of Common Stock issuable upon exercise of the Warrants (the “Warrant Shares”), in which case,
the Company would need to seek stockholder approval to increase the number of authorized shares of Common Stock in order to satisfy its obligations to deliver Note Shares and Warrant Shares. 

  
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 2.2 Authorization of Agreements, Etc. 

(a) The execution and delivery by the Company of the Transaction Documents to which it is a party, the performance by the Company of its
obligations thereunder, the issuance, sale and delivery of the Securities have been duly authorized by all requisite corporate action. 
 (b) The Transaction Documents have been duly authorized, executed, issued and delivered and will constitute valid and legally binding obligations of the Company, enforceable in accordance with their
terms, subject as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles. 

(c) Except for the approval of the Proposal (as defined in Section 4.2) by its stockholders and the filing of the Certificate of
Amendment as contemplated in Section 4.2, the execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Securities require no consent of, action by or in respect of, or filing with,
any Person, governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws which the Company undertakes to
file within the applicable time periods. 
 (d) The execution, delivery and performance of the Transaction Documents by the
Company and the issuance and sale of the Securities will not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under (i) the Company’s Certificate of Incorporation or the
Company’s Bylaws, both as in effect on the date hereof (true and complete copies of which have been filed on EDGAR), or (ii)(a) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company, any subsidiary of the Company or any of their respective assets or properties, or (b) any agreement or instrument to which the Company or any subsidiary of is a party or by which the Company or a subsidiary is
bound or to which any of their respective assets or properties is subject. 
 (e) Neither the Company nor any Person acting on
its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale of any of the Securities. 

(f) 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 Company security or solicited any offers to buy any security, under circumstances that would adversely affect reliance by the Company on Section 4(2) for the exemption from registration for the transactions contemplated
hereby or would require registration of the Securities under the Act. 
 (g) The offer and sale of the Securities to the Holders
as contemplated hereby is exempt from the registration requirements of the Act. 

  
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 ARTICLE 3 
 REPRESENTATIONS AND WARRANTIES OF THE HOLDERS 
 Each Holder, severally and
not jointly, represents and warrants to the Company that: 
 3.1 Holder is an “accredited investor” as defined by Rule
501 of Regulation D (“Regulation D”), promulgated by the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”), and Holder is capable of
evaluating the merits and risks of its investment in the Securities and has the ability and capacity to protect its interests. 

3.2 Holder understands that the Securities, the Note Shares issuable upon conversion of Notes and the Warrant Shares issuable upon
exercise of Warrants have not been registered under the Act on the ground that the issuance thereof is exempt under Section 4(2) of the Act and/or Regulation D as a transaction by an issuer not involving any public offering and that, in the
view of the Commission, the statutory basis for the exception claimed would not be present if any of the representations and warranties of Holder contained in this Agreement are untrue or, notwithstanding the Holder’s representations and
warranties, the Holder currently has in mind acquiring any of the Securities, Notes Shares or Warrant Shares for resale upon the occurrence or non-occurrence of some predetermined event. 

3.3 Holder is acquiring the Securities and, in the event that the Holder should acquire any Note Shares issuable upon conversion of Notes
or Warrant Shares issuable upon exercise of Warrants, will be acquiring such Note Shares or such Warrant Shares, as applicable, as principal for its own account, and not for the benefit of any other Person, for investment purposes and not with a
view to distribution or resale in violation of the Act and such Holder has no present intention of selling, granting any participation in, or otherwise distributing the same in violation of the Act without prejudice, however, to such Holder’s
right at all times to sell or otherwise dispose of all or any part of such Securities, Note Shares and/or Warrant Shares in compliance with applicable federal and state securities laws. Nothing contained herein shall be deemed a representation or
warranty by such Investor to hold the Securities, the Note Shares and/or the Warrant Shares for any period of time. 
 3.4
Holder confirms that Holder has had the opportunity to ask questions of, and receive answers from, the Company or any authorized Person acting on its behalf concerning the Company and its business and to obtain any additional information, to the
extent possessed by the Company (or to the extent it could have been acquired by the Company without unreasonable effort or expense). In connection therewith, Holder acknowledges that Holder has had the opportunity to discuss the Company’s
business, management and financial affairs with the Company’s management or any authorized Person acting on its behalf. Neither such inquiries nor any other due diligence investigation conducted by such Holder shall modify, limit or otherwise
affect such Holder’s right to rely on the Company’s representations and warranties contained in this Agreement and the other Transaction Documents. 
 3.5 Holder has all requisite legal and other power and authority to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement.

  
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This Agreement constitutes a valid and legally binding obligation of Holder enforceable in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors’ rights and to general equity principles. 
 3.6
Holder has carefully considered and has discussed with its legal, tax, accounting and financial advisors, to the extent the Holder has deemed necessary, the suitability of this investment and the transactions contemplated by this Agreement for the
Holder’s particular federal, state, local and foreign tax and financial situation and has independently determined that this investment and the transactions contemplated by this Agreement are a suitable investment for the Holder. Holder
understands that it (and not the Company) shall be responsible for Holder’s own tax liability that may arise as a result of the investment in the Securities or the transactions contemplated by this Agreement. 

3.7 Holder acknowledges that an investment in the Securities is speculative and involves a high degree of risk and that Holder can bear
the economic risk of the acceptance of such Securities, including a total loss of its investment. Holder recognizes and understands that no federal, state, or foreign agency has recommended or endorsed the purchase of the Securities. Holder
acknowledges that it has such knowledge and experience in financial and business matters that Holder is capable of evaluating the merits and risks of an investment in the Securities and of making an informed investment decision with respect thereto.

 3.8 Because of the legal restrictions imposed on resale or transfer of the Securities, Holder understands that the Company
shall have the right to note stop-transfer instructions in its records to the extent and for such period as may be reasonably required for compliance with applicable securities laws, and Holder has been informed of the Company’s intention to do
so. Any sales, transfers, or other dispositions of the Securities by Holder, if any, will be made in compliance with the Act and any other applicable securities laws, and all applicable rules and regulations promulgated thereunder and the terms of
this Agreement. 
 3.9 The residency of Holder (or, in the case of a partnership, limited liability company or corporation, such
entity’s principal place of business) is correctly set forth below Holder’s name on Annex I. 
 ARTICLE 4

 COVENANTS 
 4.1 Removal of Legends. In connection with any sale or disposition of the Securities, the Note Shares and/or the Warrant Shares by an Holder pursuant to Rule 144 or pursuant to any other exemption
under the Act such that the purchaser acquires freely tradable shares and upon compliance by the Holder with the requirements of this Agreement, the Company shall or, in the case of Common Stock, shall cause the transfer agent for the Common Stock
(the “Transfer Agent”) to issue replacement certificates representing the securities sold or disposed of without restrictive legends. Upon the earlier of (i) registration for resale pursuant to the Registration Rights Agreement
or (ii) the securities becoming freely tradable by a non-affiliate pursuant to Rule 144 the Company shall (A) deliver to the Transfer Agent irrevocable instructions that the 

  
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Transfer Agent shall reissue a certificate representing shares of Common Stock without legends upon receipt by such Transfer Agent of the legended certificates for such shares, together with
either (1) a customary representation by the Holder that Rule 144 applies to the shares of Common Stock represented thereby or (2) a statement by the Holder that such Holder has sold the shares of Common Stock represented thereby in
accordance with the Plan of Distribution contained in the Registration Statement, and (B) cause its counsel to deliver to the Transfer Agent one or more blanket opinions to the effect that the removal of such legends in such circumstances may
be effected under the Act. From and after the earlier of such dates, upon an Holder’s written request, the Company shall promptly cause certificates evidencing the Holder’s Securities to be replaced with certificates which do not bear such
restrictive legends, and Note Shares subsequently issued upon due conversion of the Notes and Warrant Shares subsequently issued upon due exercise of the Warrants shall not bear such restrictive legends provided the provisions of either clause
(i) or clause (ii) above, as applicable, are satisfied with respect to such Note Shares and Warrant Shares, as applicable. When the Company is required to cause an unlegended certificate to replace a previously issued legended certificate,
if: (1) the unlegended certificate is not delivered to an Holder within three (3) Business Days of submission by that Holder of a legended certificate and supporting documentation to the Transfer Agent as provided above and (2) prior
to the time such unlegended certificate is received by the Holder, the Holder, or any third party on behalf of such Holder or for the Holder’s account, purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of shares represented by such certificate (a “Buy-In”), then the Company shall pay in cash to the Holder (for costs incurred either directly by such Holder or on behalf of a third party) the
amount by which the total purchase price paid for Common Stock as a result of the Buy-In (including brokerage commissions, if any) exceeds the proceeds received by such Holder as a result of the sale to which such Buy-In relates. The Holder shall
provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In 
 4.2
Stockholder’s Consent; Share Increase. 
 (a) The Holders hereby irrevocable consent to an increase in the
authorized number of shares of Common Stock from 75,000,000 to 175,000,000 (the “Share Increase”). The Company shall use its commercially reasonable efforts to obtain such additional consents from stockholders of the Company as
shall be necessary to approve the Share Increase pursuant to the requirements of applicable law and the terms of the Company’s Certificate of Incorporation and Bylaws. 
 (b) Promptly following the execution and delivery of this Agreement but no later than March 23, 2013, the Company shall prepare and file with the SEC an information statement, disclosing that it
intends to effect the Share Increase and that the requisite stockholders of the Company have irrevocably consented to the Share Increase in accordance with applicable law and the Company’s Certificate of Incorporation and Bylaws and otherwise
meeting the requirements of Section 14(c) of the Securities Exchange Act of 1934, as amended (the “1934 Act”) and the rules and regulations promulgated thereunder (the “Information Statement”) and, after
receiving and promptly responding to any comments of the SEC thereon, shall promptly mail such Information Statement to the stockholders of the Company not less than 20 calendar days prior to the effective date of the Share Increase (the
“Share Increase Effective Date”), or such longer period as may be required by applicable law or the Company’s Certificate 

  
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of Incorporation or Bylaws. Each Holder shall promptly furnish in writing to the Company such information relating to such Holder and its investment in the Company as the Company may reasonably
request for inclusion in the Information Statement. The Company will comply with Section 14(c) of the 1934 Act and the rules and regulations promulgated thereunder in connection with the preparation and mailing of the Information Statement, and
the Information Statement shall not, as of the date that the Information Statement (or any amendment thereof or supplement thereto) is first mailed to stockholders, or at the Share Increase Effective Date, contain any statement which, at the time
and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary
to correct any statement in any earlier communication with respect to the same subject matter which has become false or misleading. If the Company should discover at any time prior to the Share Increase Effective Date, any event relating to the
Company or any of its subsidiaries or any of their respective affiliates, officers or directors that is required to be set forth in a supplement or amendment to the Information Statement, in addition to the Company’s obligations under the 1934
Act, the Company will promptly inform the Holders thereof. 
 (c) No later than two Business Days following the earliest date
that the Company can effect the Share Increase in accordance with applicable law, the Company’s Certificate of Incorporation and Bylaws and the provisions of Section 14(c) of the 1934 Act and the rules and regulations promulgated
thereunder, the Company shall prepare and file with the Secretary of State of the State of Delaware an amendment to the Company’s Certificate of Incorporation effecting the Share Increase. 

(d) If the Share Increase Effective Date does not occur on or prior to May 17, 2013 (the “Share Increase
Deadline”), the Company will make pro rata payments to each Holder, as liquidated damages and not as a penalty, in an amount equal to 1.5% of the aggregate Amount Due to such Holder hereunder for each 30-day period or pro rata for any
portion thereof following the Share Increase Deadline until the Share Increase Effective Date occurs. Such payments shall constitute the Holders’ exclusive monetary remedy for such events, but shall not affect the right of the Holders to seek
injunctive relief. Such payments shall be made to each Holder in cash no later than three (3) Business Days after the end of each 30-day period. 
 4.3 Reservation of Common Stock. From and after the Share Increase Effective Date, the Company shall at all times reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of providing for the conversion of the Notes and the exercise of the Warrants, such number of shares of Common Stock as shall from time to time equal the number of shares sufficient to permit the conversion of the Notes
and the exercise of the Warrants in accordance with their respective terms. 
 4.4 Amendment to Security Agreement. No
later than the close of business on the date hereof, the Company shall deliver to the Holders an amendment or supplement to the Security Agreement in form and substance satisfactory to the Holders and their counsel pursuant to which the obligations
of the Company hereunder and under the Transaction Documents will be “Obligations” under the Security Agreement and entitled to the first priority liens in and security interests on the Collateral to the same extent as the other
Obligations secured thereby. 

  
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 ARTICLE 5 
 MISCELLANEOUS 
 5.1 Expenses. The Company and the Holders shall each
bear their own costs and expenses, including without limitation legal fees and expenses, incurred in connection with the negotiation of this Agreement and the other Transaction Documents. In the event that legal proceedings are commenced by any
party to this Agreement against another party to this Agreement in connection with this Agreement or the other Transaction Documents, the party or parties which do not prevail in such proceedings shall severally, but not jointly, pay their pro rata
share of the reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party in such proceedings. 
 5.2 Further Assurances. The Company shall duly execute and deliver, or cause to be duly executed and delivered, at its own cost and expense, such further instruments and documents and to take all
such action, in each case as may be necessary or proper in the reasonable judgment of the Holders to carry out the provisions and purposes of this Agreement and the other Transaction Documents. 

5.3 Survival. The representations, warranties, covenants and agreements made herein shall survive any investigation made by any
party hereto, the execution and delivery of this Agreement and the closing of the transactions contemplated hereby. 
 5.4
Successors and Assigns. This Agreement shall bind and inure to the benefit of the Company and the Holders and their respective successors and permitted assigns. Subject to applicable federal and state securities laws and regulations, the
Holders may freely assign either this Agreement or any of their rights, interests, or obligations hereunder without the prior written approval of the Company. 
 5.5 Entire Agreement. This Agreement and the other writings referred to herein or delivered pursuant hereto (including the other Transaction Documents) which form a part hereof contain the entire
agreement among the parties with respect to the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements or understandings with respect thereto. 

5.6 Notices. All notices, requests, demands, claims, consents and other communications delivered hereunder (whether or not
required to be delivered hereunder) shall be deemed to be sufficient and duly given if contained in a written instrument (a) personally delivered, (b) sent by fax, (c) sent by nationally-recognized overnight courier guaranteeing next
business day delivery or (d) sent by first class registered or certified mail, postage prepaid, return receipt requested, in each case addressed as follows: 
 (i) if to the Company, to: 
 Avantair, Inc. 

4311 General Howard Drive 
 Clearwater, Florida 33762 
 Attention: Chief Executive Officer 

Fax: (727) 216-0036 

  
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 with a copy to: 
 Michael L. Fantozzi, Esq. 
 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

 One Financial Center 
 Boston, MA 02111 
 Fax: (617) 542-2241 

and 
 (ii) if
to a Holder, to him, her or it at his, her or its address set forth on Annex I hereto. 
 or to such other address as the party to whom
such notice or other communication is to be given may have furnished to each other party in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (A) when delivered, if personally delivered,
(B) when sent, if sent by telecopy on a business day (or, if not sent on a business day, on the next business day after the date sent by telecopy), (C) on the next business day after dispatch, if sent by nationally recognized, overnight
courier guaranteeing next business day delivery, and (D) on the fifth (5th) business day following the date on which the piece of mail containing such communication is posted, if sent by mail. 

5.7 Amendments, Modifications, Terminations and Waivers. Provisions of this Agreement and the Securities may be amended, modified,
terminated or waived only by the written consent of the Company and holders of at least a majority of the aggregate principal amount of the Notes then outstanding. 
 5.8 Governing Law; Waiver of Jury Trial. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law
principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the
purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto
anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying
of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER. 

  
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 5.9 No Third Party Reliance. Anything contained herein to the contrary
notwithstanding, the representations and warranties of the Company contained in this Agreement (a) are being given by the Company as an inducement to the Holders to enter into this Agreement and the other Transaction Documents (and the Company
acknowledges that the Holders have expressly relied thereon) and (b) are solely for the benefit of the Holders. Accordingly, no third party (including, without limitation, any holder of capital stock of the Company) or anyone acting on behalf
of any holder thereof other than the Holders, and each of them, shall be a third-party or other beneficiary of such representations and warranties and no such third party shall have any rights of contribution against the Holders or the Company with
respect to such representations or warranties or any matter subject to or resulting in indemnification under this Agreement or otherwise. 
 5.10 Publicity. Neither the Holders nor the Company shall issue any press release or make any public disclosure regarding the transactions contemplated hereby unless such press release or public
disclosure is approved by the Company in advance. Notwithstanding the foregoing, each of the parties hereto may, in documents required to be filed by it with the Commission or other regulatory bodies, make such statements with respect to the
transactions contemplated hereby as each may be advised by counsel is legally necessary or advisable. 
 5.11
Severability. It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the law and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in any jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the
remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as to not be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

 5.12 Independence of Agreements, Covenants, Representations and Warranties. All agreements and covenants hereunder
shall be given independent effect so that if a certain action or condition constitutes a default under a certain agreement or covenant, the fact that such action or condition is permitted by another agreement or covenant shall not affect the
occurrence of such default, unless expressly permitted under an exception to such covenant. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be
incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of or a breach of a representation and warranty hereunder. The
annexes and exhibits attached hereto are hereby made part of this Agreement in all respects. 
 5.13 Counterparts; Facsimile
and Electronic Signatures. This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.
Counterpart signatures to this Agreement delivered by facsimile or other electronic transmission shall be acceptable and binding. 

  
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 5.14 Headings. The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 
 5.15
Appointment. The Holders by their acceptance of the benefits of this Agreement and the Security Agreement, hereby designate Barry Gordon (or if a successor Collateral Agent has been appointed under the Security Agreement, hereby designate
such successor) as the Collateral Agent (as defined in the Security Agreement) to act as specified in the Security Agreement. Each Holder shall be deemed irrevocably to authorize the Collateral Agent to take such action on its behalf under the
provisions of the Security Agreement and to exercise such powers and to perform such duties thereunder as are specifically delegated to or required of the Collateral Agent by the terms thereof and such other powers as are reasonably incidental
thereto. The Collateral Agent may perform any of its duties thereunder by or through its agents or employees. 

*        *        *      
  *        * 

  
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 IN WITNESS WHEREOF, each of the undersigned has duly executed this Note and Warrant
Purchase Agreement as of the date first written above. 
  

					
	AVANTAIR, INC.
		
	By:	 	 /s/ Stephen M. Wagman

		 	Name:	 	Stephen M. Wagman
		 	Title:	 	President

 IN WITNESS WHEREOF, each of the undersigned has duly executed this Note and Warrant
Purchase Agreement as of the date first written above. 
  

							
	WITNESS:	  		 	DAVID M. GREENHOUSE
			
	  
	  		 	 /s/ David M. Greenhouse

			
	WITNESS:	  		 	SPECIAL SITUATIONS FUND III QP, L.P.
		  		 	SPECIAL SITUATIONS CAYMAN FUND, L.P.
		  		 	SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
				
	  
	  		 	By:	 	 /s/ David M. Greenhouse

		  		 		 	David M. Greenhouse, General Partner

 ANNEX I 

Schedule of Holders 
  

									
	 Holders (Holder Name, Address and Contact Information)
	  	Purchase Price
(Principal Amount
of Note)	 	  	Warrant
Shares	 
	 DAVID M. GREENHOUSE
	  	$	66,498.83	  	  	 	265,995	  
	 527 Madison Avenue Suite 2600

New York, NY 10022

(212) 319-6670
	  				  			
			
	 SPECIAL SITUATIONS FUND III QP, L.P.
	  	$	618,122.50	  	  	 	2,472,490	  
	 527 Madison Avenue Suite 2600

New York, NY 10022

(212) 319-6670
	  				  			
			
	 SPECIAL SITUATIONS CAYMAN FUND, L.P.
	  	$	206,040.83	  	  	 	824,163	  
	 527 Madison Avenue Suite 2600

New York, NY 10022

(212) 319-6670
	  				  			
			
	 SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
	  	$	164,874.89	  	  	 	659,500	  
	 527 Madison Avenue Suite 2600

New York, NY 10022

(212) 319-6670
	  				  			
		  	  
	  
	 	  	  
	  
	 
			
	 Total
	  	$	1,055,537.05	  	  	 	4,222,148	  
		  	  
	  
	 	  	  
	  
	 

 EXHIBIT A 

Form of Senior Secured Convertible Promissory Note 
 (See attached) 

 EXHIBIT B 

Form of Warrant to Purchase Shares of Common Stock 
 (See attached) 

 EXHIBIT C 

Form of Registration Rights Agreement 
 (See attached)Form of Senior Secured Convertible Promissory Note

 Exhibit 10.2 
 SENIOR SECURED CONVERTIBLE PROMISSORY NOTE 
 NEITHER THE ISSUANCE AND SALE OF THIS NOTE
NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THIS NOTE OR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
NOTE, AS THE CASE MAY BE, UNDER THE SECURITIES ACT, OR (B) AN OPINION OF COUNSEL (SELECTED BY THE HOLDER AND REASONABLY ACCEPTABLE TO THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT THIS NOTE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS NOTE MAY BE OFFERED FOR SALE, SOLD, ASSIGNED OR TRANSFERRED PURSUANT TO AN EXEMPTION FROM REGISTRATION OR (II) THE HOLDER PROVIDES THE COMPANY WITH CUSTOMARY ASSURANCE (REASONABLY SATISFACTORY TO THE COMPANY) THAT
SUCH NOTE OR THE SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION OF THE NOTE CAN BE SOLD, ASSIGNED OR TRANSFERRED PURSUANT TO RULE 144. 
 AVANTAIR, INC. 
 SERIES B SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

  

					
	No. [            ]	 		  	Issuance Date: February 6, 2013
			
	Principal: U.S. $        	 		  	

 FOR VALUE RECEIVED, Avantair, Inc., a Delaware corporation (the “Company”), hereby promises to
pay to                      or registered assigns (“Holder”) the amount set out above as the Principal (as reduced pursuant to the
terms hereof pursuant to conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, or otherwise (in each case in accordance with the terms hereof) and to accrue interest
(“Interest”) on any outstanding Principal at the Interest Rate (as defined below), from February 6, 2013 (the “Issuance Date”) until the same becomes due and payable, whether upon the Maturity Date,
acceleration, conversion, or otherwise (in each case, in accordance with the terms hereof). This Series B Senior Secured Convertible Promissory Note (including all Series B Senior Secured Convertible Promissory Notes issued in exchange, transfer or
replacement hereof, this “Note”) is one of an issue of Series B Senior Secured Convertible Promissory Notes issued pursuant to the Settlement Agreement (as defined below) (collectively, the “Notes” and the
holders of such Notes, “Holders”). The Notes shall be secured by the Collateral (as defined in the Security Agreement). 

Certain capitalized terms used herein are defined in Section 25. Unless otherwise defined herein, capitalized terms used herein have the respective
meanings ascribed thereto in the Settlement Agreement. 

 (1) MATURITY. On the Maturity Date, the Holder shall surrender this Note to the Company and the
Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest. The “Maturity Date” shall be November 28, 2015. 
 (2) INTEREST; INTEREST RATE. Interest on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 360-day year comprised of twelve 30-day months and shall be
payable entirely in cash with respect to the unpaid balance of any Principal upon the repayment thereof. Prior to the payment of Interest upon repayment, Interest on this Note shall accrue at the Interest Rate and shall be payable by way of
inclusion of Interest in the Conversion Amount in accordance with Section 3(b)(i). All payments of Interest on the Notes shall be made on a pro rata basis in accordance with each Holder’s percentage ownership of then outstanding Notes.

 (3) CONVERSION OF NOTES. This Note shall be convertible into shares of Common Stock, on the terms and conditions set forth in this
Section 3. 
 (a) Conversion. At any time or times on or after the Issuance Date and before the date that is five
(5) Business Days before the Prepayment Date (as defined below), the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in
accordance with Section 3(c), at the Conversion Rate (as defined below), but only to the extent that the Company has an adequate number of shares of Common Stock that are not otherwise reserved for issuance. The Company shall not issue any
fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock equal to or in excess of one half of one share, the Company shall round such fraction of a share of Common
Stock up to the nearest whole share. The Company shall pay any and all stock transfer, stamp, documentary and similar taxes (excluding any taxes on the income or gain of the Holder) that may be payable with respect to the issuance and delivery of
shares of Common Stock to the Holder upon conversion of any Conversion Amount. To the extent that there are not adequate authorized shares of Common Stock that are not otherwise reserved for issuance by the Company at the time of any proposed
conversion under this Section 3(a), the Company shall issue such shares of Common Stock as are available for issuance upon such conversion in accordance with Section 3(c)(i) and issue a new Note for principal amounts that have not been
converted at such time. Such new Note (or portion thereof) shall automatically convert into fully paid and nonassessable shares of Common Stock on the first date that the Company has available for issuance to the Holders of Notes additional shares
of authorized Common Stock. All issuances of Common Stock shall be made on a pro rata basis in the manner described in Section 3(c) hereof. 
 (b) Conversion Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) (the “Conversion Rate”) shall be
determined by dividing (x) such Conversion Amount by (y) the Conversion Price. 
 (i) “Conversion
Amount” means the sum of (A) the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made, and (B) accrued and unpaid Interest with respect to such Principal.

  
 2 

 (ii) “Conversion Price” means, as of any Conversion Date (as defined below)
or other date of determination, $0.25, subject to adjustment as provided herein. 
 (iii) “Market Price” as of
a particular date (the “Valuation Date”) shall mean the following: (a) if the Common Stock is then listed on a national stock exchange, the closing sale price of one share of Common Stock on such exchange on the last trading
day prior to the Valuation Date; (b) if the Common Stock is then quoted on the OTC Bulletin Board (the “Bulletin Board”) or such similar quotation system or association, the closing sale price of one share of Common Stock on
the Bulletin Board or such other quotation system or association on the last trading day prior to the Valuation Date or, if no such closing sale price is available, the average of the high bid and the low asked price quoted thereon on the last
trading day prior to the Valuation Date; or (c) if the Common Stock is not then listed on a national stock exchange or quoted on the Bulletin Board or such other quotation system or association, the fair market value of one share of Common
Stock as of the Valuation Date, as determined in good faith by the Board of Directors of the Company. 
 (c) Mechanics of
Conversion. 
 (i) Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a
“Conversion Date”), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 4:00 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as
Exhibit I (the “Conversion Notice”) to the Company and (B) if required by Section 3(c)(ii), cause this Note to be delivered to the Company as soon as practicable on or following such date. On or before 4:00 p.m.,
New York Time, on the first (1st) Business Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile a confirmation of receipt of such Conversion Notice to the Holder (at the facsimile number provided in
the Conversion Notice) and the Company’s transfer agent, if any (the “Transfer Agent”). To the extent that there are not adequate authorized shares of Common Stock on the date of receipt of the Conversion Notice that are not
otherwise reserved for issuance by the Company, the Company shall provide written notice within five (5) days thereof to the Holders of Notes and holders of other securities (“Other Holders”) issued pursuant to (i) the
financings contemplated in the “Liquidity and Capital Resources” section of the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Form 10-Q filed with the U.S.
Securities and Exchange Commission on November 16, 2012, and (ii) the Senior Secured Convertible Promissory Notes (including all Senior Secured Convertible Promissory Notes issued in exchange, transfer or replacement thereof, the
“Series A Notes”) issued pursuant to the Note and Warrant Purchase Agreement (as defined below) (“Other Securities”), which notice shall include the number of shares for which the Holder has elected to
convert in the Conversion Notice and the number of authorized shares of Common Stock available for issuance under the Notes and Other Securities (the “Insufficient Shares Conversion Notice”). Within twenty (20) days after
receipt of such Insufficient Shares Conversion Notice (the “Pro Rata Conversion Notice Due Date”), the Holders may transmit by facsimile (or otherwise deliver) to the Company a copy of an executed notice of conversion (the
“Pro Rata Conversion Notice”) indicating whether such Holder elects to convert such Holder’s Note (or a portion thereof). The “Total Requested Shares” shall mean the aggregate number of shares into which the
Notes (or portion thereof) or Other Securities 

  
 3 

 
elected to convert to Common Stock pursuant to the Conversion Notice or Pro Rata Conversion Notice received by the Company from the Holders and Other Holders. On or before 4:00 p.m., New York
Time, on the fifth (5th) Business Day following the Pro Rata Conversion Notice Due Date (the “Share Delivery Date”), the Company shall issue and deliver to the address as specified in the Conversion Notice, a certificate,
registered in the name of the Holder or its designee, for the number of shares of Common Stock equal to such Holder’s pro rata portion of the Total Requested Shares, calculated based on the aggregate principal amount of the Notes and Other
Securities held, in the aggregate, by the Holders and Other Holders. If this Note is physically surrendered for conversion as required by Section 3(c)(ii) and the outstanding Principal of this Note is greater than the Principal portion of the
Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder a new Note (in accordance
with Section 15(d)), representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on the Conversion Date. 
 (ii) Book-Entry. Notwithstanding anything to the
contrary set forth herein, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by
this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting physical surrender and reissue of this Note. The Holder and the Company shall
maintain records showing the Principal and Interest converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon
conversion. 
 (iii) Disputes. In the event of a dispute between the Company and any Holders of Notes that are subject to
any such Conversion Notice or among any Holders of Notes that are subject to any such Conversion Notice as to the number of shares of Common Stock issuable to the Holder in connection with a conversion of this Note, the Company shall issue to the
Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 20. 
 (4) RIGHTS UPON
EVENT OF DEFAULT. 
 (a) Event of Default. Each of the following events shall constitute an “Event of
Default”: 
 (i) the Company’s failure to pay to the Holder of this Note or any Series A Note any amount of
Principal when and as due under this Note or such Series A Note; 
 (ii) the Company’s failure to pay to the Holder of this
Note or any Series A Note any amount of Interest when and as due under this Note or any Series A Note, if such failure continues for a period of at least ten (10) Business Days; 

  
 4 

 (iii) the Company’s failure to pay to the Holder of this Note any amount hereunder or
under the Transaction Documents when and as due, if such failure continues for a period of at least thirty (30) Business Days; 
 (iv) the Company materially breaches any covenant or agreement or materially breaches any representation or warranty in any Transaction Document, and such breach continues for a period of at least thirty
(30) days after written notice thereof from one or more Holders to the Company; 
 (v) any “Event of Default”
shall have occurred or be continuing under the Series A Notes; 
 (vi) the Principal or Interest of any Series A Note shall have
been accelerated and such acceleration shall not have been rescinded, annulled or otherwise cured within ten (10) Business Days; 
 (vii) the Company, pursuant to or within the meaning of Title 11, U.S. Code, or any similar Federal, foreign or state law for the relief of debtors (collectively, “Bankruptcy Law”),
(A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a receiver, trustee, assignee, liquidator or similar official (a
“Custodian”), (D) makes a general assignment for the benefit of its creditors or (E) admits in writing that it is generally unable to pay its debts as they become due; 

(viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that is not vacated, set aside or reversed
within sixty (60) days that (A) is for relief against the Company in an involuntary case, (B) appoints a Custodian of the Company or (C) orders the liquidation of the Company; 

(ix) the Company ceases the operation of its business without the prior written consent of the Purchaser Majority and such cessation
continues for a period of at least thirty (30) days; 
 (x) a final, non-appealable judgment which, in the aggregate with
other outstanding final judgments against the Company, exceeds Fifty Thousand United States Dollars ($50,000) shall be rendered against the Company and within sixty (60) days after entry thereof, such judgment is not discharged or execution
thereof stayed pending appeal, or within sixty (60) days after the expiration of such stay, such judgment is not discharged; 
 (xi) any of the liens, claims, encumbrances and security interests (collectively, “Liens”) created by the Security Agreement shall at any time not constitute a valid and perfected first
priority Lien on the collateral intended to be covered thereby (to the extent perfection by filing, registration, recordation or possession is required herein or therein) in favor of the Holders, free and clear of all other Liens, or any of the
security interests granted pursuant to the Security Agreement shall be determined to be void, voidable, invalid or unperfected, are subordinated or are ineffective to provide the Holder with a perfected, first priority security interest in the
collateral covered by the Security Agreement, free and clear of all other Liens, or the Security Agreement shall for whatever reason be terminated or cease to be in full force and effect, or the enforceability thereof or any other Transaction
Documents shall be contested by the Company; or 

  
 5 

 (xii) the Share Increase Effective Date does not occur on or prior to the Share Increase
Deadline. 
 (b) Rights Upon Event of Default. Promptly after the occurrence of an Event of Default with respect to this
Note, the Company shall deliver written notice thereof (an “Event of Default Notice”) to the Holder. If an Event of Default with respect to the Company described in Sections 4(a)(vii)(A)-(D) or 4(a)(viii) has occurred, all the
Notes then outstanding shall automatically become immediately due and payable. If any other Event of Default has occurred and is continuing, the Purchaser Majority may at any time at its or their option, by notice or notices to the Company (an
“Event of Default Payment Notice”), declare all the Notes then outstanding to be immediately due and payable. Upon any Notes becoming due and payable under this Section 4(b), whether automatically or by declaration, such Notes
will forthwith mature and the entire unpaid Principal, plus all accrued and unpaid Interest, shall become immediately due and payable (the “Event of Default Price”). 
 (5) RIGHTS UPON FUNDAMENTAL TRANSACTION. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations of the
Company under this Note in accordance with the provisions of this Section 5 pursuant to written agreements on or prior to such Fundamental Transaction, including the agreement to deliver to each Holder of Notes in exchange for such Notes a
security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including, without limitation, having a principal amount and interest rate equal to the principal amounts and the interest
rates of the Notes held by such Holder (the “Successor Note”). Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Note referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note
with the same effect as if such Successor Entity had been named as the Company herein, until such time as the Successor Note is delivered. Upon consummation of a Reclassification or Fundamental Transaction as a result of which holders of Common
Stock shall be entitled to receive stock, securities, cash, assets or any other property with respect to or in exchange for such Common Stock, the Company or Successor Entity, as the case may be, shall deliver to the Holder confirmation that there
shall be issued upon conversion of this Note at any time after the consummation of such Reclassification or Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property) issuable upon the
conversion of the Notes prior to such Reclassification or Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would
have been entitled to receive upon the happening of such Reclassification or Fundamental Transaction had this Note been converted immediately prior to such Reclassification or Fundamental Transaction, as adjusted in accordance with the provisions of
this Note. The provisions of this Section shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion of this Note. 

  
 6 

 (6) LIQUIDATION. In the event of a liquidation, winding up or dissolution of the Company or a
Liquidation (as defined in the Company’s Certificate of Incorporation, as amended) of the Company (each, a “Liquidation Event”), all outstanding Principal and accrued and unpaid Interest on the Note shall be immediately due and
payable. The Company shall provide ten (10) days’ prior written notice of any Liquidation Event to the Holder, so that the Holder shall have a reasonable opportunity to convert the Conversion Amount into shares of Common Stock prior to the
Liquidation Event in accordance with Section 3. 
 (7) RIGHTS UPON ISSUANCE OF OTHER SECURITIES. 

(a) Adjustment of Conversion Price upon Subdivision or Combination of Common Stock; Stock Dividends. If the Company at any time,
or from time to time, subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to
such subdivision will be proportionately reduced. If the Company at any time, or from time to time, combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment under this Section 7(a) shall become effective at the close of business on the date the subdivision or combination
becomes effective or, in the case of a stock dividend or distribution, the date of such event. 
 (b) Adjustment of
Conversion Price upon Cash Dividends and Distributions. If the Company at any time, or from time to time, pays a dividend or makes a distribution in cash to the record holders of any class of Common Stock, then immediately after the close of
business on the day that the Common Stock trades ex-distribution, the Conversion Price then in effect shall be reduced to an amount equal to the product of (i) the Conversion Price in effect immediately prior to such dividend or distribution
and (ii) the quotient determined by dividing (A) the Market Price of the Common Stock on the day that the Common Stock trades ex-distribution by (B) the sum of (1) the Market Price of the Common Stock on the day that the Common
Stock trades ex-distribution plus (2) the amount per share of such dividend or distribution. The Company shall not be required to give effect to any adjustment in the Conversion Price pursuant to this Section 7(b) unless and until the net
effect of one or more adjustments (each of which shall be carried forward until counted toward an adjustment), determined in accordance with this Section 7(b), shall have resulted in a change of the Conversion Price by at least 1%, and when the
cumulative net effect of more than one adjustment so determined shall be to change the Conversion Price by at least 1%, such change in the Conversion Price shall thereon be given effect. 

(c) Adjustment of Conversion Price upon Distributions of Capital Stock, Indebtedness or Other Non-Cash Assets. If the Company at
any time, or from time to time, distributes any shares of capital stock of the Company (other than Common Stock), evidences of indebtedness or other non-cash assets (including securities of any person other than the Company but excluding
(1) dividends or distributions paid exclusively in cash or (2) dividends or distributions referred to in Section 7(a)) to the record holders of any class of Common Stock, 

  
 7 

 
then the Conversion Price then in effect shall be reduced to an amount equal to the product of (A) the Conversion Price then in effect and (B) a fraction of which the numerator shall be
the Market Price share of the Common Stock on the record date fixed for determination of stockholders entitled to receive such distribution less the fair market value on such record date (as determined by the Board of Directors) of the portion of
the capital stock, evidences of indebtedness or other non-cash assets so distributed applicable to one share of Common Stock (determined on the basis of the number of shares of Common Stock outstanding on the record date) and of which the
denominator shall be the Market Price per share of the Common Stock on such record date. 
 (d) Notice of Adjustment.
Whenever the Conversion Price is adjusted pursuant to this Section 7, the Company shall promptly mail notice of such adjustment to each Holder, which notice shall set forth the Conversion Price after adjustment, the date on which such
adjustment became effective and a brief statement of the facts resulting in such adjustment. 
 (8) COMPANY’S RIGHT TO PREPAYMENT.
The Company may prepay this Note on or after November 28, 2014 at the sole election of the Company, upon thirty (30) days prior written notice to the holders of the Notes setting forth the prepayment date (the “Prepayment
Date”). Any such prepayment shall be made without penalty or premium provided that the Company makes, or offers to make, a similar payment with respect to each of the Notes then outstanding in a pro rata amount based on the aggregate
Principal amounts, plus accrued but unpaid Interest, on all of the Notes then outstanding. 
 (9) NONCIRCUMVENTION. The Company hereby
covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or
any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the
rights of the Holder of this Note. 
 (10) RESERVATION OF AUTHORIZED SHARES. 

(a) Reservation. So long as any of the Notes are outstanding, the Company shall use best efforts to reserve and keep available out
of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Notes, the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Notes then
outstanding (the “Required Reserve Amount”). The Holder acknowledges that as of the Closing Date, the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligations to
reserve for issuance upon the conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserved Amount. 
 (b) Insufficient Authorized Shares. The Company shall use best efforts to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the
Required Reserve Amount for the Notes then outstanding. Without 

  
 8 

 
limiting the generality of the foregoing sentence, the Company shall promptly hold a meeting of its stockholders or solicit the written consent of the stockholders for the approval of an increase
in the number of authorized shares of Common Stock. The Company shall use best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause the Board of Directors of the Company to recommend
to the stockholders that they approve such proposal. 
  

	(11)	[RESERVED]. 

 (12) VOTING RIGHTS.
The Holder shall have no voting rights as the Holder of this Note, except as required by law, including, but not limited to, the General Corporation Law of the State of Delaware, and as expressly provided in this Note, the Company’s Certificate
of Incorporation or any other Transaction Documents. 
 (13) VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. Provisions of the Notes may be
amended, modified or waived only by the written consent of the Company and the Purchaser Majority; provided that the Principal and Interest with respect to this Note may not be amended, waived or modified without the written consent of the Holder.
Neither the Company nor any of its Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration, whether by way of Interest, fees or otherwise, to any Holder for or as inducement to any consent, waiver or amendment of any of
the terms or provisions of the Notes unless such consideration is offered to be paid or is paid to all Holders (on a pro rata basis in accordance with each Holder’s percentage ownership of then outstanding Notes). So long as any Notes remain
outstanding, at no time shall the Company or any of its Subsidiaries, directly or indirectly, purchase or offer to purchase any of the outstanding Notes or exchange or offer to exchange for any consideration (including, without limitation, for cash,
securities, property or otherwise) any outstanding Notes unless the Company or such Subsidiary, as applicable, purchases, offers to purchase, exchanges or offers to exchange the outstanding Notes of all of the Holders for the same consideration (on
a pro rata basis in accordance with each Holder’s percentage ownership of then outstanding Notes) and on identical terms. 
 (14)
TRANSFER. This Note and the shares of Common Stock issuable upon conversion of this Note may not be offered for sale, sold, transferred or assigned (i) in the absence of (a) an effective registration statement for this Note or the
shares of Common Stock issuable upon conversion of this Note, or (b) an opinion of counsel (selected by the Holder and reasonably acceptable to the Company), in a form reasonable acceptable to the Company, that this Note and the shares of
Common Stock issuable upon conversion of this Note may be offered for sale, sold, assigned or transferred pursuant to an exemption from registration; provided that such opinion of counsel shall not be required in connection with any such
sale, assignment or transfer to an institutional accredited investor that is prior to such sale, assignment or transfer is a holder of Notes or an affiliate of the Holder, or (ii) the Holder provides the Company with customary assurance
(reasonably satisfactory to the Company) that such Note or the shares of Common Stock issuable upon the conversion of this Note can be sold, assigned or transferred pursuant to Rule 144. 

  
 9 

	(15)	REISSUANCE OF THIS NOTE. 

(a) Transfer. The Note may be transferred or otherwise assigned only by surrender of this Note and issuance of a new Note in
accordance with this Section 15, and neither this Note nor any interests therein may be sold, transferred or assigned to any Person except upon satisfaction of the conditions specified in this Section 15. If this Note is to be transferred
or assigned, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 15(d)), registered as the Holder may request,
representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new Note (in accordance with Section 15(d)) to the Holder representing the outstanding Principal
not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(ii) following conversion of any portion of this Note, the outstanding Principal represented
by this Note may be less than the Principal stated on the face of this Note. 
 (b) Lost, Stolen or Mutilated Note. Upon
receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in
customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 15(d)) representing the outstanding Principal. 

(c) Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Note or Notes (in accordance with Section 15(d) and in Principal amounts of at least $1,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent
such portion of such outstanding Principal as is designated by the Holder at the time of such surrender. 
 (d) Issuance of
New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal
remaining outstanding (or in the case of a new Note being issued pursuant to Section 15(a) or Section 15(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection
with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the
Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued Interest on the Principal of this Note, from the Issuance Date. 

(16) REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s
right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be
the amounts to be received by the Holder and shall not, except as expressly provided herein, be 

  
 10 

 
subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder
and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. 
 (17) PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect
amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this
Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, reasonable
attorneys’ fees and disbursements. 
 (18) CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Company
and the initial Holders of this Note and shall not be construed against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. 

(19) FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. 

(20) DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Market Price or the arithmetic calculation of the Conversion
Rate, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within three (3) Business Days of receipt, or deemed receipt, of the Conversion Notice or other event giving rise to such dispute, as the case
may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation within five (5) Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the
Company shall, within one Business Day submit via facsimile (a) the disputed determination of the Market Price to an independent, reputable investment bank selected by the Company and reasonably satisfactory to the Purchaser Majority or
(b) the disputed arithmetic calculation of the Conversion Rate to the Company’s independent, outside accountant. The Company, at the Company’s expense, shall cause the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error. 

  
 11 

 (21) NOTICES; PAYMENTS. 
 (a) Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with the Settlement Agreement. The Company shall
provide the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore. Without limiting the generality of the foregoing, the Company will give
written notice to the Holder of any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment. 
 (b) Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, such payment shall be made in lawful money of the United States of America by a check
drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing (which address, in the case of each of the initial Holders of this Note, shall initially be as
set forth in the Settlement Agreement). Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day;
provided that the extension of the due date thereof shall not be taken into account for purposes of determining the amount of Interest due on such date. 
 (22) CANCELLATION. After all Principal, accrued Interest and other amounts at any time owed on this Note have been irrevocably paid in full, this Note shall automatically be deemed canceled, shall
be surrendered to the Company for cancellation and shall not be reissued. 
 (23) WAIVER OF NOTICE. To the extent permitted by law, the
Company hereby waives demand, notice, presentment, protest and all other demands and notices (other than the notices expressly provided for in this Note) in connection with the delivery, acceptance, default or enforcement of this Note and the Note
and Warrant Purchase Agreement. 
 (24) GOVERNING LAW. This Note shall be governed by, and construed in accordance with, the
internal laws of the State of New York, without reference to the choice of law provisions thereof. The Company and, by accepting this Warrant, the Holder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of New York
located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Note and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Note. The Company and, by accepting this
Note, the Holder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The Company and, by accepting this Note, the Holder, each irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF
THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS NOTE AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER. 

  
 12 

 (25) CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following
meanings: 
 (i) “Business Day” means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to remain closed. 
 (ii) “Common Stock” means
the shares of the Company’s common stock, par value $0.0001 per share, and any other securities of the Company which may be issued or issuable with respect to, in exchange for, or in substitution of, such shares of common stock (including
without limitation, by way of recapitalization, reclassification, reorganization, merger or otherwise). 
 (iii)
“Fundamental Transaction” means that the Company shall, directly or indirectly, in one or more related transactions, (a) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person
or Subsidiary of another Person, or (b) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (c) be the subject of a purchase, tender or exchange
offer that is accepted by the holders of more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or
party to, such purchase, tender or exchange offer), or (d) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another
Person as a result of which such other Person or parent of such other Person (together with their respective affiliates) would beneficially own more than the 50% of the outstanding shares of Common Stock. 

(iv) “GAAP” means United States generally accepted accounting principles, consistently applied or successor
conventions. 
 (v) “Interest Rate” means two percent (2.0%) per annum; provided that in the event the
Company is unsuccessful in obtaining stockholder approval by March 15, 2013 to increase the Company’s authorized shares of Common Stock to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding pursuant to
Section 10(b), then the Interest Rate shall be automatically increased to twelve percent (12.0%) per annum as of March 16, 2013; provided further that no such increase in the Interest Rate shall occur with respect to any Note held by
a Holder which Holder fails to vote in support of or consent to such approval; provided further that following such increase in the Interest Rate, once a sufficient number of authorized shares of Common Stock equal to the Required Reserved Amount
are available for the conversion of the Notes, the Interest Rate shall be automatically decreased to two percent (2.0%) per annum for periods commencing on or after the date on which the additional authorized shares of Common Stock become
available. 

  
 13 

 (vi) “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof. 
 (vii) “Reclassification” means any reclassification or change of shares of Common Stock issuable upon conversion of the Notes (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of a subdivision or combination). 
 (viii) “Purchaser
Majority” means the Holders of Notes representing at least a majority of the aggregate Principal amount of the Notes then outstanding. 
 (ix) “Registration Rights Agreement” means the Registration Rights Agreement dated as of February 6, 2013, by and between the Company and certain Holders, as the same may be amended
and/or restated from time to time. 
 (x) “Security Agreement” means the Security Agreement dated as of
November 30, 2012, by and between the Company and the Collateral Agent (as defined in the Security Agreement), as the same may be amended and/or restated from time to time. 

(xi) “Settlement Agreement” means that certain Settlement Agreement dated as of February 6, 2013 by and among the
Company and the parties thereto, as the same may be amended and/or restated from time to time. 
 (xii)
“Subsidiary” means with respect to any Person, any corporation, association or other business entity of which more than 50% of the total voting power of equity entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees or other governing body thereof is at the time owned or controlled by such Person (regardless of whether such equity is owned directly or through one or more other Subsidiaries of such Person or a
combination thereof). 
 (xiii) “Successor Entity” means the Person, which may be the Company, formed
by, resulting from or surviving any Fundamental Transaction or the person with which such Fundamental Transaction shall have been made. In the event that the Person resulting from or surviving any Fundamental Transaction is a Subsidiary, Successor
Entity shall be the parent of such Subsidiary. 
 (xiv) “Transaction Documents” means the Note, the Settlement
Agreement, the Security Agreement, the Registration Rights Agreement, the Warrant, and any other documents or agreements executed in connection with the transactions contemplated hereunder or thereunder, as the same may be amended and/or restated
from time to time. 
 (xv) “Warrant” means the Warrant to Purchase Shares of Common Stock issued pursuant to
the Settlement Agreement, as the same may be amended and/or restated from time to time. 

  
 14 

 (26) ANTIDILUTION. 
 (a) Adjustments to Conversion Price for Diluting Issues. 
 (i) Special
Definitions. For purposes of this Section 26(a), the following definitions shall apply: 
 (A)
“Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities. 
 (B) “Convertible Securities” shall mean any evidences of indebtedness, shares, or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding
Options. 
 (C) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant
to Section 26(a)(ii), deemed to be issued) by the Company after the date hereof, other than the following (collectively, “Excluded Shares”): 
  

	 	(1)	shares of Common Stock issued or issuable to officers, employees or directors of, or consultants to, the Company pursuant to a stock purchase or option plan or other
compensatory stock arrangements approved by the Board of Directors of the Company; 

  

	 	(2)	grants or issuances of Common Stock, Options or Convertible Securities to lenders, equipment lessors or other financing sources in connection with providing the Company
with financing and the shares of Common Stock issued or issuable upon conversion of any such Convertible Securities or exercise of any Options; 

  

	 	(3)	shares of Common Stock issued or issuable upon conversion of any Convertible Securities or exercise of any Options in each case outstanding on the date hereof, on the
terms existing on the date hereof; 

  

	 	(4)	shares of Common Stock issued solely in consideration for the acquisition (by merger or otherwise) of assets of, or equity interests in, another entity;

  

	 	(5)	any other shares of Common Stock, which shares are expressly determined to be Excluded Shares by the Holder; 

 

	 	(6)	 any shares of Common Stock and warrants issued pursuant to the Restricted Stock Agreement by and between the Company and affiliates of Lorne Weil dated
as of September 28, 2012, 

  
 15 

	 	
as amended from time to time including without limitation Amendment No. 1 thereto, and any shares of Common Stock issuable upon exercise of such warrants; 

 

	 	(7)	the Amended and Restated Warrant dated as of September 28, 2012 issued to Lorne Weil, as amended from time to time including without limitation Amendment
No. 1 to Amended and Restated Warrant (as so amended, the “LW Warrant”), and any shares of Common Stock issuable upon exercise of the LW Warrant; 

 

	 	(8)	any Notes and Warrants issued under the Note and Warrant Purchase Agreement or shares of Common Stock issuable upon conversion or exercise thereof and any convertible
notes having a conversion price that is greater than or equal to the Conversion Price, the shares of Common Stock issuable upon conversion of such convertible notes, any warrants having an exercise price that is greater than or equal to the Exercise
Price (as defined in the Warrants), and the shares of Common Stock issuable upon exercise of such warrants; 

  

	 	(9)	shares of Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by
Section 7; and 

  

	 	(10)	grants or issuances of Common Stock, Options or Convertible Securities to suppliers or third party service providers in connection with the provision of goods or
services pursuant to transactions approved by the Board of Directors of the Company. 

 (ii) Issue of Securities
Deemed Issue of Additional Shares of Common Stock. 
 (A) Options and Convertible Securities. If the Company at any time
or from time to time after the date hereof shall issue any Options or Convertible Securities (excluding any Options or Convertible Securities which are Excluded Shares) or shall fix a record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issuance or, in case such a record date shall have been fixed, as of the close of business on such record date; provided, however, that Additional Shares of Common Stock shall not be

  
 16 

 
deemed to have been issued unless the consideration per share (determined pursuant to Section 26(a)(iv) hereof) of such Additional Shares of Common Stock would be less than 75% of the
applicable Conversion Price in effect on the date of and immediately prior to such issuance (the “Anti-dilution Threshold”), or such record date, as the case may be; provided, further, that in any such case in which
Additional Shares of Common Stock are deemed to be issued: 
  

	 	(1)	no further adjustment in the applicable Conversion Price shall be made upon the subsequent issuance of Convertible Securities or shares of Common Stock upon the
exercise of such Options or conversion or exchange of such Convertible Securities; 

  

	 	(2)	if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to
the Company, or any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion or exchange thereof, the applicable Conversion Price computed upon the original issuance thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities; 

  

	 	(3)	upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the applicable
Conversion Price computed upon the original issuance thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if: 

 

	 	(I)	In the case of Convertible Securities convertible into or exchange for, or Options to purchase, Common Stock, the only Additional Shares of Common Stock issued were the
shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Company for the
issuance of all such Options, whether or not exercised, plus the consideration actually received by the Company upon such exercise, or for the issuance of all such Convertible Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the Company upon such conversion or exchange; and 

  

	 	(II)	 In the case of Options for Convertible Securities only the Convertible Securities, if any, actually issued upon the exercise thereof that were issued
at the time of issuance of such Options, and the consideration received by the Company for the Additional Shares of Common Stock 

  
 17 

	 	
deemed to have been then issued was the consideration actually received by the Company for the issuance of all such Options, whether or not exercised, plus the consideration deemed to have been
received by the Company (determined pursuant to Section 26(a)(iv) upon the issuance of the Convertible Securities with respect to which such Options were actually exercised); 

 

	 	(4)	no readjustment pursuant to clause (2) or (3) above shall have the effect of increasing the applicable Conversion Price to an amount which exceeds the lower
of (I) the applicable Conversion Price on the original adjustment date or (II) the applicable Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such
readjustment date; 

  

	 	(5)	in the case of any Options which expire by their terms not more than thirty (30) days after the date of issuance thereof, no adjustment of the applicable
Conversion Price shall be made until the expiration or exercise of all such Options, whereupon such adjustment shall be made in the same manner provided in clause (3) above; and 

 

	 	(6)	if such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment previously made in the
applicable Conversion Price which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the applicable Conversion Price shall be adjusted pursuant to this Section 26(a) as of the
actual date of their issuance. 

 (iii) Adjustment of Conversion Price Upon Issuance of Additional Shares of
Common Stock. 
 (A) If the Company shall issue Additional Shares of Common Stock (including, without limitation, Additional
Shares of Common Stock deemed to be issued pursuant to Section 26(a)(ii) but excluding Additional Shares of Common Stock deemed to be issued pursuant to Section 26(a)(iii)(B)(I)), without consideration or for a consideration per share less
than the applicable Anti-dilution Threshold in effect on the date of and immediately prior to such issuance, then and in such event, such applicable Conversion Price shall be reduced, concurrently with such issuance, to a price (calculated to the
nearest cent) determined by multiplying such applicable Conversion Price by a fraction which is equal to (I) the sum of (a) the number of shares of Common Stock outstanding immediately prior to such issue plus (b) the number of shares
of Common Stock which the aggregate consideration received or deemed to have been received by the Company for the total number of Additional Shares of Common Stock so issued would purchase at such applicable Anti-dilution Threshold divided by (II)
the sum of (x) number of shares of Common Stock outstanding immediately prior to such issuance plus (y) the number of Additional Shares of Common Stock so issued or deemed to be issued. 

  
 18 

 (B) For the purposes of Section 26(a)(iii) hereof, (I) all shares of Common Stock
issuable upon conversion of the Company’s preferred stock (“Convertible Preferred Stock”) and upon exercise of Options or conversion or exchange of Convertible Securities which are part of the Excluded Shares, outstanding
immediately prior to any issuance of Additional Shares of Common Stock, or any event with respect to which Additional Shares of Common Stock shall be deemed to be issued, shall be deemed to be outstanding; and (II) immediately after any Additional
Shares of Common Stock are deemed issued pursuant to Section 26(a)(ii), such Additional Shares of Common Stock shall be deemed to be outstanding. 
 (C) Notwithstanding anything to the contrary contained herein, the applicable Conversion Price in effect at the time Additional Shares of Common Stock are issued or deemed to be issued shall not be
reduced pursuant to Section 26(a)(iii) hereof at such time if the amount of such reduction would be an amount less than $0.01, but any such amount shall be carried forward and reduction with respect thereto made at the time of and together with
any subsequent reduction which, together with such amount and any other amount or amounts so carried forward, shall aggregate $0.01 or more. 
 (iv) Determination of Consideration. For purposes of this Section 26(a), the consideration received by the Company for the issuance of any Additional Shares of Common Stock shall be computed
as follows: 
 (A) Cash and Property. Such consideration shall: 

 

	 	(1)	insofar as it consists of cash, be computed at the aggregate amounts of cash received by the Company excluding amounts paid or payable for accrued interest or accrued
dividends; 

  

	 	(2)	insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of
Directors; and 

  

	 	(3)	if Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the
proportion of such consideration so received, computed as provided in clauses (1) and (2) above, as determined in good faith by the Board of Directors. 

 (B) Options and Convertible Securities. The consideration per share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Section 26(a)(ii),
relating to Options and Convertible Securities, shall be determined by dividing (1) the total amount, if any, received or receivable by the Company as consideration for the issuance of such Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such
Options or the conversion or exchange of such Convertible 

  
 19 

 
Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by
(2) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities. 
 (v) No Adjustment of Conversion Price. No adjustment shall be
made to the applicable Conversion Price pursuant to this Section 26 if prior to such issuance, the Company receives written notice from the Holder agreeing that no such adjustment shall be made as the result of the issuance of such Additional
Shares of Common Stock. 
 (vi) Changes to Conversion Price. Upon any adjustment to the Conversion Price pursuant to
Section 7 hereof, any previous anti-dilution adjustments made pursuant to this Section 26 shall be reflected in the new Conversion Price in the manner set forth in Section 7. 

[Signature Page Follows] 

  
 20 

 IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance
Date set out above. 
  

			
	AVANTAIR, INC.
		
	By:	 	 /s/ Stephen M. Wagman

	Name:	 	Stephen M. Wagman
	Title:	 	President

 EXHIBIT I 
 AVANTAIR, INC. 
 CONVERSION NOTICE 

Reference is made to the Convertible Note (the “Note”) issued to the undersigned by Avantair, Inc. (the “Company”). In accordance
with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the Note indicated below into shares of Common Stock par value $0.0001 per share (the “Common Stock”) of the Company,
as of the date specified below. 
 Date of Conversion: 
 Aggregate Conversion Amount to be converted: 
 Please confirm the following information:

 Conversion Price: 
 Number of shares of Common Stock to be issued: 
 Please issue the Common Stock into which the Note
is being converted in the following name and to the following address: 
 Issue to: 

Facsimile Number: 

Authorization: 
  

									
	Dated:	 	  
	 		 	By:	 	  

		 		 		 	Name:	 	
		 		 		 	Title:	 	

 Account Number: 

(if electronic book entry transfer) 
 Transaction
Code Number: 
 (if electronic book entry transfer)

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