Document:

EX-10.2

 Exhibit 10.2 

LEASE 
 THIS LEASE
(“Lease”) is dated as of March 13, 2014 between Moffett Park Drive Owner, LLC, a Delaware limited liability company (“Landlord”), and Applied Micro Circuits Corporation, a Delaware corporation (“Tenant”). 

1. PREMISES AND COMMON AREAS. 

1.1 Premises. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, a portion of the building (the
“Building”) located at 215 Moffett Park Drive in the City of Sunnyvale, Santa Clara County, California, consisting of the complete second floor of the Building and a portion of the ground floor of the Building as depicted on Exhibit
A-1 attached hereto and incorporated herein (the “Premises”). The Building together with the land on which the Building is located is referred to herein collectively as, the “Property”. During the Term (as defined below),
Tenant shall have the exclusive right to use the generator which currently services the Building. During the Term, Tenant shall have the right to use two hundred twenty (220) parking stalls at the Property, including the exclusive right to use
twenty-one (21) parking stalls as depicted on Exhibit A-2 attached hereto and incorporated herein, which reserved spaces will be marked by Landlord “Reserved for Applied Micro”. Notwithstanding the foregoing, Landlord may at
its election upon thirty (30) days written notice to Tenant but only to the extent necessary to allow Landlord’s Construction (hereinafter defined and with the designated location as convenient as practicable to the main entrance of the
Building) designate the locations within the Property in which Tenant and Tenant’s employees and visitors may park and move (but only on a temporary basis, the location of the reserved spaces shown on Exhibit A-2 attached hereto to a
location in close proximity to the existing reserved spaces designated on Exhibit “A-2”. In addition, Tenant shall have the non-exclusive right to use those portions of the Property designated by Landlord from time to time for the general
non-exclusive use of Landlord, Tenant and other tenants of the Building, which shall include but shall not be limited to, those areas on the ground floor of the Building designated on Exhibit A-1 as “Common Area”, common entrances,
lobbies, corridors, stairwells, elevators, trash areas, roadways, walkways, driveways and landscape areas, together with the existing training room, cafeteria, fitness room and the adjacent restrooms and shower facilities (the “Common
Area”). Common Area does not include the Building’s exterior windows and walls and the roof. Tenant is currently in occupancy of the Building and Tenant shall be entitled to exclusive occupancy of the Building (including, without
limitation, the complete ground floor) through and including March 13, 2014 without additional charge or Rent. 
 1.2 AS-IS.
Tenant acknowledges and agrees that Tenant (x) was the long-term occupant of the Premises immediately prior to the Commencement Date (as defined below), and (y) is extremely familiar with the condition of the Property due to its prior
occupancy and as such has inspected the Premises and accepts the Premises as of the Commencement Date “AS IS” and “WITH ALL FAULTS”. TENANT ACKNOWLEDGES THAT LANDLORD HAS NOT MADE, AND WILL NOT MAKE, NOR SHALL LANDLORD

 
BE DEEMED TO HAVE MADE, ANY WARRANTIES TO TENANT WITH RESPECT TO THE QUALITY OF CONSTRUCTION OF ANY LEASEHOLD IMPROVEMENTS OR TENANT FINISH WITHIN THE PREMISES OR AS TO THE CONDITION OF THE
PREMISES, EITHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE
OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD’S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY,
(xii) DESCRIPTION, (xiii) DURABILITY (xiv) OPERATION, (xv) THE EXISTENCE OF ANY HAZARDOUS MATERIAL, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY OR (xvi) COMPLIANCE OF THE PREMISES WITH ANY REGULATIONS OR EASEMENT AGREEMENTS;
AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT THE PREMISES IS OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT THE PREMISES HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR
DEFICIENCY IN ANY OF THE PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, THAT IS EXISTING ON THE EFFECTIVE DATE, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES TO TENANT
(INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS SECTION 2 HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE PREMISES, ARISING
PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING OTHERWISE. 
 2. TERM. 

2.1 The term of this Lease (“Term”) shall commence on the date first set forth above (“Commencement Date”) and expire on
August 31, 2015 (“Expiration Date”); provided, however, that Tenant shall have the right (the “Early Termination Option”) to accelerate the Expiration Date to an earlier date selected by Tenant (the “Termination
Date”) upon not less than one hundred twenty (120) days’ notice to Landlord. If Tenant elects to have the Termination Date occur prior to the Expiration Date (which such notice shall be irrevocable), Landlord shall pay to Tenant an
amount equal to Seventy Five Thousand Dollars ($75,000) per month (prorated for any partial calendar month based upon the actual number of days in such month and the number of days remaining in such month after the date Tenant surrender possession
of the Premises to Landlord) that Tenant surrenders possession of the Premises prior to the Expiration Date, not to exceed Three Seventy Five Thousand Dollars ($375,000) in total (the “Early Termination Fee”), such payment to be made
within ten (10) business days following Tenant’s surrender of the Premises in the condition required herein. For purposes of Section 26 hereof, once Tenant exercises the Early Termination Option the Termination Date shall be deemed
the Expiration Date for purposes of determining liability under such Section 26. 
 2.2 On or before the Termination Date, Tenant shall
be required to surrender the Premises in its entirety to Landlord in the same condition required under this Lease for the surrender of the Premises. Tenant’s failure to so surrender the Premises to Landlord on or before the applicable
Termination Date shall be deemed to be a holdover. 

  
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 3. RENT. 

3.1 Monthly Rent; Utility Cost. As monthly rental hereunder, Tenant shall pay to Landlord the amount of Fifty Thousand Dollars
($50,000) (the “Rent”), in advance, on the first day of each calendar month, during the Term, without demand, notice, abatement (except as expressly set forth herein), deduction or set-off. Tenant shall be responsible to pay for fifty
percent (50%) of the cost of all utilities (i) consumed in the Premises and (ii) used to operate the Building’s elevators and HVAC systems within ten (10) business days following written request. 

3.2 Late Payment Charges. If any installment of Rent, or any other sum due from Tenant is not received by Landlord within ten
(10) days after the due date, Tenant shall pay to Landlord an additional sum equal to five percent (5%) of the amount overdue to compensate Landlord for reasonably foreseeable processing and accounting charges. Acceptance of any late
charge shall not constitute a waiver by Landlord of Tenant’s default with respect to the overdue amount. Notwithstanding the foregoing, Tenant shall be entitled to a ten (10) day grace period after written notice from Landlord on the first
occasion during any calendar year in which any amount due hereunder is not paid when due prior to the application of such late charge. 

3.3 PRORATIONS. Rent for any period during the Term which is for less than one (1) month shall be a prorated portion of the
monthly installment herein, based upon a thirty (30) day month. 
 3.4 PLACE OF PAYMENT. All sums payable by Tenant hereunder
shall be paid to Landlord at its address for notices hereunder or at such other addresses as may from time to time be designated by notice to Tenant. 

4. FULL SERVICE LEASE. Tenant shall provide its own janitorial service for the Premises. With this exception and except for
Tenant’s obligations expressly set forth in this Lease, this Lease shall be a full service lease and Landlord shall be responsible at Landlord’s sole cost and expense, for all operating costs of the Property, including, but not limited to,
all costs incurred by Landlord for the administration, operation, and maintenance of the Premises, Building and Common Area, including, but not limited to (i) Real property taxes and assessments, and personal property taxes on Landlord’s
personal property; (ii) the cost of all utilities supplied to the Premises and the Common Area; (iii) Landlord’s liability, property and casualty insurance; (iv) labor and costs incurred in managing the Building, Premises and
Common Area; and (v) the costs of maintenance and repair of the Building, Premises and Common Area including, but not limited to, the Building elevator, roof and HVAC systems. Landlord shall reimburse Tenant for janitorial service to the
Premises, up to an amount equal to the market rate based upon the same scope and quality of services being provided to Tenant as of the Effective Date plus five percent (5%).

5. ACCESS AND UTILITIES. 

5.1 Services. Landlord shall furnish the following services to Tenant twenty-four (24) hours a day and seven (7) days a week:
(i) hot and cold water for use in the 

  
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lavatories, kitchen, shower facilities and at all sinks; (ii) customary heat and air conditioning; (iii) elevator service; (iv) electricity; and (v) access to the Premises and
Common Area for Tenant and its employees. Except to the extent caused by the gross negligence or willful misconduct of Landlord or Landlord Parties, Tenant agrees that Landlord shall not be liable for failure to furnish or delay in furnishing any
service or utility, or for any diminution in the quality or quantity thereof, whether such failure or delay or diminution is occasioned, in whole or in part, by repairs, replacements, or improvements (subject to Landlord’s compliance with
Section 11 below), by Force Majeure (as defined below), by any strike, lockout or other labor trouble, by inability to secure electricity, gas, water, or other fuel at the Building or Property, by any accident or casualty whatsoever, by act or
default of Tenant or other parties, or by any other cause; and such failures or delays or diminution shall never be deemed to constitute an eviction or disturbance of Tenant’s use and possession of the Premises or, relieve Tenant from
performing any of its obligations under this Lease. Landlord reserves the right to temporarily stop services to the Common Areas, when necessary by reason of accident or emergency, or for reasons of security or for repairs, maintenance, alterations
or improvements, in the judgment of Landlord desirable or necessary to be made or performed, until the repairs, alterations or improvements have been completed and subject to restoration as soon as is practicable. 

5.2 No Access Control Services. Tenant recognizes that Landlord shall not be providing any access control services at the Building or
Property and Landlord shall not be responsible for, and Tenant waives any rights with respect to, providing security or other protection for Tenant or its employees, invitees or property in or about the Premises or the Property. Tenant has installed
an access control system (“Access Systems”) restricting access to the Premises. Tenant, at its sole cost and expense, shall maintain the Access System for Tenant’s benefit and Landlord shall not take any actions to dis-arm or disable
or to interfere with the operation of the Access System. Landlord shall not be liable to Tenant, and Tenant hereby waives any claim against Landlord, for, and expressly assumes the risk of (i) any unauthorized or criminal entry of third parties
into the Premises or the Property, (ii) any damage to Tenant in or about the Premises or the Property, or (iii) any loss of property in and about the Premises or the Property, by or from any unauthorized or criminal acts of third parties,
regardless of any action, inaction, failure, breakdown, malfunction and/or insufficiency of the security services provided by Landlord. 

5.3 Landlord’s Right of Entry. Notwithstanding anything to the contrary contained in this Lease, Landlord or any other
Landlord Party may enter the Premises from 8:00 a.m. to 6 p.m. on any business day after at least one (1) Business Day notice (except in the case of emergency where there is an imminent risk of material injury or damage to person or property), for
which no notice shall be required), specifying a two (2) hour window for such entry (provided, however, in the event that tenant promptly notified Landlord that the time is not convenience, Landlord and Tenant shall negotiate in good faith to arrive
at a good time) to: (a) examine and inspect the Premises (including to confirm Tenant’s compliance with its obligations under this Lease), (b) show the Premises to prospective investors, purchasers, mortgagees, lessors or (from and after the
earlier of (x) January 5, 2015 and (y) the date of delivery of Tenant’s notice to exercise the Early Termination Option) lessees, (c) make such repairs, alterations, replacements or additions to the Premises for which Landlord is
responsible pursuant to this Lease, (d) perform tenant improvements necessary to accommodate additional tenants in the Building during term, (e) comply with any applicable laws, (f) post notices of nonresponsibility and (g) to the extent
permitted by applicable laws, exercise Landlord’s remedies upon the occurrence and during the continuation of a Default; provided, however, that all Landlord Parties and any such prospective investors, purchasers, mortgagees, lessors or lessees
described above shall adhere to Tenant’s reasonable security and confidentiality standards, and any such individuals must agree to being accompanied by Tenant’s security member or personnel during any such visit; and provided further, that
Landlord shall, except in case of emergency, use commercially reasonable efforts to minimize interference with Tenant’s use of and access to the Premises. In addition, in the event that during the term Landlord performs tenant improvement
work to the Building necessary to accommodate an additional tenant in the Building, Tenant shall, upon the written request of Landlord, meet with Landlord and the general contractor performing such work to establish procedures to facilitate the
contractor’s reasonable access to the Premises in a timely manner. Subject to the foregoing, Landlord shall be allowed to take into and through the Premises any and all materials that may be required to make any such repairs, additions,
alterations or improvements. Any such entries shall be without the abatement of Rent and shall include the right to take such reasonable steps as are required to accomplish the stated purposes. In an emergency to property or the life or
safety of any person, Landlord shall have the right to use any means that Landlord may deem proper to open the doors in and to the Premises. Any entry into the Premises in the circumstances and manner described in this Section 5.3 shall not be
deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an actual or constructive eviction of Tenant from any portion of the Premises. If Tenant, upon receipt of the required notice set forth above, fails to provide
Landlord with access to the Premises, then (i) Landlord shall not be liable for failure to perform the service or repair for which Landlord’s access was intended until such time as access is provided, but Tenant shall be liable for
any damage caused by its delay and (ii) Tenant shall be required to pay Landlord One Thousand Dollars ($1,000) per incident. 

  
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 6. TAXES. 

6.1 Taxes Payable by Tenant. Tenant shall pay before delinquency, any and all taxes levied or assessed and which become payable during
the Term upon Tenant’s equipment, furniture, fixtures and other personal property located in the Premises (“Personal Property Taxes”). In the event that Personal Property Taxes are imposed or assessed against Landlord, the Building or
the Property, Landlord shall furnish Tenant with all applicable tax bills, public charges and other assessments or impositions and Tenant shall forthwith pay the same either directly to the taxing authority or, at Landlord’s option, to
Landlord, in which event Landlord shall pay such amounts to the taxing authority promptly after receipt of the funds from Tenant. 
 6.2
Taxes Payable by Landlord. Landlord shall pay before delinquency all real property taxes and assessments and taxes imposed upon the Property. 

7. USE OF PREMISES. 

7.1 Use. Tenant agrees that the Premises shall be used and occupied only for office, research and development use, manufacturing and
storage, together with uses which are related to the foregoing, and for no other purpose whatever without the written consent of Landlord which consent shall not be unreasonably withheld, conditioned or delayed. Tenant will commit no nuisance or
waste on the Premises, will not unreasonably obstruct the areas outside of Tenant’s doors or any portion of the Common Area and will not cause any unreasonable odors, noise, smoke, vibration, electronic emissions or any other item to emanate
from the Premises so as to damage or interfere with any other tenant of Landlord. 
 7.2 Hazardous Materials. Tenant shall not cause
or permit to be discharged from or about the Premises or the Property any materials identified by any federal, state, or local governmental body or agency as hazardous materials (collectively, “Hazardous Materials”), except for such
Hazardous Materials which are commonly used or stored as a consequence of using the Premises for general office and administrative purposes which are used and stored in accordance with all applicable laws. Tenant shall at its sole expense comply
with all applicable governmental rules, regulations, codes, ordinances, statutes and other requirements respecting Hazardous Materials in connection with Tenant’s activities on or about the Premises or the Property. Tenant shall at its sole
cost perform all clean-up and remedial actions which may be required of Tenant by any governmental authority with respect to any discharge of such materials by Tenant. 

7.3 Compliance With Laws And Regulations. Tenant shall, at its sole cost and expense, comply fully with all laws, rules and orders of
all federal, state and municipal governments and any subdivision or agency thereof (collectively, “Governmental Requirements”) applicable to Tenant’s use and occupancy of the Premises, provided, however, that Tenant shall not be
required to make or to pay the cost of any capital improvements to the Premises, the Building or the Common Area with respect to any such Governmental Requirements unless resulting from alterations performed by Tenant or Tenant’s particular use
of 

  
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the Premises; provided that, (i) Tenant shall not be required to perform such capital improvements if such capital improvement results from Tenant’s particular use of the Premises or
alterations performed by Tenant prior to the Commencement Date if Tenant terminates this Lease and surrenders possession of the Premises to Landlord within thirty (30) days of receipt of notice of the violation of Governmental Requirements, in
which case, Tenant shall be entitled to receipt of the Early Termination Fee, if applicable and (ii) if such capital improvement results from alterations performed by Tenant on or after the Commencement Date, then Tenant may not exercise
Tenant’s Early Termination Option unless and until Tenant performs the applicable capital improvements resulting from such alterations performed by Tenant on or after the Commencement Date. If any alterations performed by Landlord to the
Building triggers a requirement to make any capital improvement to the Building under applicable Governmental Requirements, then Landlord shall at Landlord’s sole cost and expense perform such capital improvement. Tenant shall neither do nor
permit any act which will cause the premiums for insurance upon or with respect to the Building or other buildings and appurtenances in the Property to increase, or cause a cancellation of any insurance policy covering said building, or any part
thereof. Tenant shall not sell, or permit to be stored, used or sold, in or about the Premises, any article which may be prohibited by the standard form of fire insurance policy in effect from time to time. Tenant shall, at its sole cost and
expense, comply with any and all requirements and recommendations of any insurance organization or company, including, without limitation, the board of fire underwriters, pertaining to the use or occupancy of the Premises by Tenant, if compliance
with such requirements or recommendations is necessary for the maintenance of reasonable fire and public liability insurance covering said Building. 

8. MAINTENANCE AND REPAIR DUTIES. 

8.1 Tenant Repair. By entry hereunder, Tenant acknowledges that the Premises and appurtenances are in good, clean and sanitary order
and repair. Except as set forth in Section 8.2 below, Tenant shall be solely responsible to repair the HVAC systems located within the Building. If Tenant determines the HVAC system cannot be repaired, Tenant may install, at Tenant’s sole
expense, temporary HVAC units. Additionally, Tenant shall be responsible for the expense of installation, operation, and maintenance of its telephone and other communications cabling from the point of entry into the Property to the Premises and
throughout the Premises. 
 8.2 Landlord Repair. Except as expressly set forth herein, Landlord, at its expense, shall maintain the
Property (including the Premises) and all components thereof, including, but not limited to the elevator, Building systems (including but not limited to, the HVAC system, the roof and roof membrane), the foundation and structural elements of the
Building (including structural load bearing walls and roof structure), the Property’s parking facilities, the Common Areas of the Property and the landscaped areas in the same condition as on the Commencement Date. Landlord’s obligation
with respect to the HVAC system shall solely be to perform routine maintenance; any repairs shall be the responsibility of Tenant at Tenant’s sole cost. Landlord shall have no obligation to make any capital repairs to the HVAC, roof or roof
membrane and shall not be obligated to replace any of the foregoing; provided that, should Landlord elect to replace the HVAC system during the Term in its sole discretion, such replacement shall be at Landlord’s sole expense notwithstanding
Tenant’s repair obligation with respect thereto, and shall be performed in such manner as to not materially interfere with 

  
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Tenant’s use or occupancy of and/or access to the Premises, the Building and the Common Area, or the provision of any utilities or services to be provided to the Premises and the Common
Areas by Landlord hereunder, as provided in Section 11. Notwithstanding the foregoing, Landlord shall not be required to make any repair to the Premises the cost of which is estimated to exceed $5,000.00 individually or the cost of which when
aggregated with all other repairs to the Premises or the Property previously made by Landlord during the Term is estimated to exceed $50,000.00. If any repair to the Premises is required the estimated cost of which exceeds the amounts set forth in
the preceding sentence, then Landlord shall notify Tenant, Tenant may, but shall have no obligation, to make such repair and, if Tenant elects to make such repair, then Landlord shall reimburse Tenant for the first $5,000.00 of the cost of such
repair within thirty (30) days after receipt of invoice together with reasonable supporting evidence provided that Landlord’s total aggregate liability for all repairs to the Premises or the Property during the Term shall not exceed
$50,000.00, and any remaining cost shall be borne exclusively by Tenant. If any repair to the Premises is required the estimated cost of which would exceed the amounts set forth in this Section 8.2, then, except as expressly set forth in the
preceding sentence, Landlord shall have no liability to Tenant whatsoever for failure to make such repair. 
 9. REMOVAL OF
FIXTURES AND PERSONAL PROPERTY. On the last day of the Term, Tenant will remove its trade fixtures (including, but not limited to, all lab equipment) from the Premises and the Common Areas, remove all of its furniture, equipment and other
personal property from the Premises and will surrender the Premises to Landlord in the condition existing on the Commencement Date, reasonable wear and tear, obsolescence and damage by casualty, act of God or the elements, or damage by insured
perils covered by Landlord’s insurance excepted. In addition, if during the Term Landlord leases any portion of the ground floor of the Building east of the main entry lobby of the Building to a third-party, then, upon Landlord’s request,
Tenant shall promptly remove Tenant’s paintings from the eastern wall of the main entry lobby of the Building. The generator and the HVAC System which service the Building shall be surrendered to Landlord on the last day of the Term in their
then current condition. If Tenant fails to remove Tenant’s trade fixtures (including, but not limited to, all lab equipment), furniture, equipment and other personal property from the Premises prior to the expiration or earlier termination of
this Lease, Landlord shall also have the right, subject to applicable law, to re-enter the Premises and remove all such property from the Premises; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the
account of Tenant for such period of time as may be required by applicable law after which time Landlord may dispose of such property in accordance with applicable law. 

10. TENANT IMPROVEMENTS. 

10.1 Demised Premises. If the Premises as demised as shown on Exhibit “A” are not permitted by laws, Tenant shall be
responsible at Tenant’s sole cost and expense to reconfigure the Premises, subject to Landlord’s reasonable approval; provided that Landlord may reasonably object, without limitation, to any revised configuration which increases the
rentable square footage of the Premises or which adversely affects Landlord’s ability to lease or renovate the remainder of the Building as compared to the configuration of the Premises shown on Exhibit “A” hereto. At Landlord’s
election, upon at least thirty (30) days prior written notice to Tenant, Tenant shall, at Tenant’s sole cost and expense, construct a chain link fence in the warehouse portion of the Building in the locations show on Exhibit “A”
hereto. 

  
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 10.2 Alterations. Tenant shall not make, or suffer to be made, any alterations of the
Premises, or any part thereof, without the prior written consent of Landlord, which consent will not be unreasonably withheld, conditioned or delayed (but, in the case of alterations which will affect the structural portions of the Building, may be
granted or withheld in Landlord’s sole and absolute discretion), and any Tenant improvements, additions to or alterations of the Premises shall become a part of the realty and belong to Landlord; provided, however, Tenant shall retain title to
all equipment, furniture, fixtures and other personal property placed in the Premises (whether before or after the Commencement Date) by Tenant excepting only personal property used by Tenant solely in connection with the maintenance or repair of
the Property (expressly excluding any personal property used by Tenant in the conduct of its business as an occupant of the Property as opposed to the maintenance or repair of the Property) which has been conveyed to Landlord. Notwithstanding the
foregoing, Tenant may paint the Premises and install carpet in the Premises without Landlord’s consent. Landlord’s consent shall be conditioned upon Tenant’s acquiring all applicable governmental permits, and all Tenant’s
alterations shall be performed in a workmanlike manner with good and sufficient materials. If Landlord has consented to any proposed alterations by Tenant, Tenant shall advise Landlord in writing, in advance, of the date upon which such alterations
will commence in order to permit Landlord to post a notice of non-responsibility. Except for such as it may be contesting in good faith in a manner not prejudicial to Landlord, Tenant will promptly pay and discharge all claims for work or labor
done, supplies furnished or services rendered at the request of Tenant. Tenant will keep the Premises free and clear of all mechanic’s and materialmen’s liens in connection herewith, and Tenant covenants to indemnify and hold Landlord free
and harmless from any and all liability, claim, damage, loss, cost or expense (including but not limited to reasonable attorneys’ fees) in connection with any labor, material or service supplied or rum/shed in or about the Premises at the
request of Landlord or its assignees or sub-tenants to those for whom it is responsible. Upon demand, Tenant shall reimburse Landlord for all reasonable, out-of-pocket costs incurred by Landlord in connection with any alterations performed by
Tenant, including, without limitation, the costs of any third-party architects, engineers or consultants reasonably required by Landlord to review drawings for such alterations. 

10.3 Signs. Tenant shall have the right to maintain its interior and exterior signage existing as of the Commencement Date
(“Tenant’s Signage”) throughout the Term. Tenant shall not have the right to install any additional signage on the exterior or interior of the Building, or to place any marquee, awning, decoration or other attachment on or to the
storefront, windows (inside or outside), or exterior walls of the Building without the prior written approval of Landlord, which approval may be withheld in Landlord’s sole and absolute discretion. Tenant shall remove all of Tenant’s
Signage upon expiration or sooner termination of the Term (“Lease Termination”), and any signage not removed within sixty (60) days after the Lease Termination shall be deemed abandoned by Tenant and may be disposed of by Landlord at
Tenant’s cost. Tenant’s right to maintain Tenant’s Signage on the Building is personal to the Tenant originally named in this Lease and may not be transferred or assigned to any party. Notwithstanding the foregoing, Tenant shall have
the right to place banners and similar decorations in the interior of the Premises. 
 11. LANDLORD’S CONSTRUCTION. All
construction, remodeling, renovation and other work performed by or on behalf of Landlord (including, but without limitation, work performed by other tenants of the Building) (“Landlord’s Construction”) shall be performed in

  
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such manner as to not materially interfere with Tenant’s use or occupancy of and/or access to the Premises, the Building and the Common Area, or the provision of any utilities or services to
be provided to the Premises and the Common Areas by Landlord hereunder. Other than tenant improvement work of other tenants in the Building within the premises of such other tenants, Landlord’s Construction shall be limited during the Term to
(i) constructing exterior test fits and exterior mock ups which shall not be adjacent to the main front entry of the Building and (ii) performing demolition in the other tenant areas of the Building and minor demolition for investigative
purposes in the interior Common Areas. Landlord’s Construction shall not include the ability to replace the roof of the Building during the Term unless agreed to by Landlord and Tenant in writing. Landlord covenants and agrees that upon Tenant
paying the Rent and complying with the terms hereof within the expiration of all applicable notice and cure periods, Tenant may peaceably and quietly enjoy the Premises. Landlord reserves the right to enter into and record against the Property
easement agreements, covenants, restrictions and conditions, declarations and licenses or to apply for entitlements, subdivision maps, seek rezoning, or otherwise negotiate agreements with the governmental entities having jurisdiction over the
Property; provided, that, none of the same have a material adverse effect on the operation of Tenant’s business at the Premises. 

12. INSURANCE. 

12.1 Tenant’s General Liability Insurance. Tenant shall, at its own cost and expense, keep and maintain in full force during the
Term, a policy of comprehensive general liability insurance insuring Landlord and Tenant against any liability arising out of the operation of Tenant’s business and the condition, use, occupancy or maintenance of the Premises including
contractual liability coverage (or with contractual liability endorsement). Such insurance policy shall have a general aggregate limit for personal injury and property damage in an amount of not less than Five Million Dollars ($5,000,000) and a per
occurrence limit of not less than Five Million Dollars ($5,000,000). Landlord shall be named as an additional insured on such policy. 

12.2 Tenant’s Property. Tenant shall, at its own cost and expense, maintain “all risk” property insurance on a
“special causes of loss” basis (including boiler and machinery (if applicable); sprinkler damage, vandalism and malicious mischief) on Tenant’s personal property, leasehold improvements and Alterations in an amount equal to the full
replacement cost thereof. 
 12.3 Workers Compensation. Tenant shall, at its sole cost and expenses, keep and maintain workers
compensation insurance, statutory and employer’s liability coverage at a limit of $1,000,000 bodily injury each accident. 
 12.4
General Requirements. All of Tenant’s insurance policies required under this Section 12 shall be issued by carriers licensed to do business in the State of California each with a Best’s Insurance Reports policy holder’s
rating of not less than A- and a financial size category of not less than Class VII, shall be written on an “occurrence basis,” which shall afford coverage for all claims based on acts, omissions, injury and damage, which occurred or arose
(or the onset of which occurred or arose) in whole or in part during the policy period and shall be non-cancellable and not subject to material change except after thirty (30)

  
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days written notice to Landlord and any mortgagee or underlying ground lessor of Landlord. Tenant shall deliver policies of such insurance or certificates thereof to Landlord prior to the
Commencement Date, and evidence of renewals of such policies shall be delivered to Landlord at least ten (10) days prior to the expiration of each respective policy term. In the event Tenant shall fail to procure and keep such insurance in full
force and effect during the Term, or to deliver such policies or certificates within said time frame, Landlord may, at its option, procure same for the account of Tenant, and the cost thereof shall be paid to Landlord as additional rent within five
(5) business days after delivery to Tenant of bills therefor. Tenant shall have the right to satisfy the foregoing insurance requirements pursuant to so-called “umbrella” or “blanket” insurance coverage so long as the
minimum coverages described above are applicable to the Premises, Landlord and the Property, as applicable. 
 12.5 Landlord’s
Insurance. Landlord shall at its own cost and expense, keep and maintain throughout the Term insurance on the Building against fire and risks covered by “special causes of loss” form (excluding earthquake and flood) on a 100%
“replacement cost” basis. Landlord’s insurance shall: (i) cover the Building; and (ii) not cover any Alterations, leasehold improvements or personal property installed in the Premises by or on behalf of Tenant. Landlord
shall also maintain at its expense commercial general liability insurance including contractual liability coverage (or with contractual liability endorsement) on an occurrence basis in amounts not less than Five Million Dollars ($5,000,000) per
occurrence and general aggregate limit of Five Million Dollars ($5,000,000) with respect to bodily injury or death and property damage. Any insurance required or permitted to be carried by Landlord hereunder may be carried under blanket policies
covering other properties of Landlord and/or its partners and/or their respective related or affiliated corporations so long as such blanket policies provide insurance at all times for the Property as required by this Lease. 

12.6 Waiver of Subrogation. Landlord and Tenant hereby agree that no insurer of any interest of either shall have any right of
subrogation against the other under any property insurance policies carried by either on the Premises or any part thereof and that an appropriate waiver of subrogation shall be placed in such policies. Notwithstanding anything to the contrary in
this Lease, to the extent that this waiver does not invalidate or impair their respective insurance policies, the parties hereto release each other and their respective agents, employees, successors, assignees and subtenants from all liability for
injury to any person or damage to any property that is caused by or results from a risk (i) which is actually insured against, to the extent of receipt of payment under such policy (unless the failure to receive payment under any such policy
results from a failure of the insured party to comply with or observe the terms and conditions of the insurance policy covering such liability, in which event, such release shall not be so limited), (ii) which is required to be insured against
under this Lease, or (iii) which would normally be covered by the standard “special causes of loss” form of property insurance, without regard to the negligence or willful misconduct of the entity so released. Landlord and Tenant
shall each obtain from their respective insurers under all policies of fire, theft, and other property insurance maintained by either of them at any time during the Term insuring or covering the Property or any portion thereof of its contents
therein, a waiver of all rights of subrogation which the insurer of one party might otherwise, if at all, have against the other party, and Landlord and Tenant shall each indemnify the other against any loss or expense, including reasonable
attorneys’ fees, resulting from the failure to obtain such waiver. 

  
 10 

 13. INSPECTION OF PREMISES. Tenant shall permit Landlord and its agents to enter
into and upon the Premises at all reasonable times, following reasonable notice (and solely in accordance with the terms of Section 5.2 above), for the purposes of protecting owner’s property, inspecting the Premises, maintaining the
Building, making repairs, alternations or additions to any other portion of the Building or for the purpose of posting notices of non-responsibility for alterations, additions, or repairs. 

14. DESTRUCTION. In the event of total or partial destruction of the Premises or to the Building and Common Area which prevents
Tenant’s beneficial use of the Premises caused by a loss required to be insured under Landlord’s property insurance pursuant to Section 12.6 hereof, Landlord shall forthwith repair the same; provided, however, that if the repairs
cannot be made within ninety (90) days after the date of destruction, under the then applicable laws and regulations of Federal, State, County and Municipal authorities and in the light of the extent of damage and the then condition of the
labor market and availability of materials and supplies, as reasonably and in good faith estimated by an architect retained by Landlord, then either party may elect to terminate this Lease by written notice to the other given within ten
(10) days after Landlord provides Tenant with written notice of the estimated time to complete the repairs. Landlord shall retain the architect as soon as is practicable after the occurrence of the damage and shall provide the architect’s
estimate of the time to complete the repairs. If Landlord is required to make repairs, this Lease shall continue in full force and effect and the rent shall be proportionately reduced while repairs are being made, such reduction shall be based upon
the extent to which the damage and making of repairs shall interfere with the business carried on by Tenant in the Premises. If Landlord should elect or be obligated pursuant to this Section 14 to repair because of any damage or destruction,
Landlord’s obligation shall be limited solely to restoration of the Building to the condition provided to Tenant on the Commencement Date and shall not extend to any leasehold improvements or alterations in the Premises made by Tenant during
the Term, furniture, equipment, supplies, trade fixtures or other personal property owned or leased by Tenant, its employees, contractors, invitees or licensees. The provisions of this Lease, including this Section, constitute an express agreement
between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, the Building or any other portion of the Property. Any statute or regulation of the state in which the Building is located
including, without limitation, Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations concerning damage or destruction in the absence of an express agreement between the parties, shall have no
application to this Lease or any damage or destruction to all or any part of the Premises, the Building or any other portion of the Property. 

15. EMINENT DOMAIN. 

15.1 Total Or Substantial Taking. If title to all the Premises is taken for any public or quasi-public use or under any statute or by
right of eminent domain or by private purchase in lieu of eminent domain or if title to so much of the Premises is taken or if the Premises be damaged by taking so that a reasonable amount of reconstruction of the Premises will not result in the
Premises being a practical improvement with adequate access and reasonably suitable for Tenant’s continued occupancy or for the conduct of Tenant’s business in a manner consistent with the conduct of said business prior to said taking,
then in either event this Lease shall terminate on the date that the possession of the Premises or part of the Premises is taken or on the date such damage occurs. 

  
 11 

 15.2 Partial Taking. If any part of the Premises shall be so taken and the remaining part
of the Premises (after the reconstruction of the then existing Building and improvements) is reasonably suitable for Tenant’s continued occupancy for the purposes and uses for which the Premises are leased and Landlord elects, by notice to
Tenant with five (5) days of such taking, to cause such reconstruction, this Lease shall, as to the part so taken, terminate as of the date that possession of such part is taken, and the rental shall be reduced in the same proportion that the
floor areas of the portion of the Premises so taken (less any additions to the Premises by reconstruction) bears to the original floor area of the Premises. In the event of such election, Landlord shall, at its own cost and expenses, make all
necessary repairs or alterations to the Premises to as to constitute a portion thereof not taken a complete architectural unit and the remaining Premises a complete facility for the conduct of the business of Tenant. During such period of repair and
restoration, rental shall be abated on a proportionate basis as it would be if the Premises had been damaged or destroyed pursuant to the provisions of this Lease. Otherwise, this Lease shall terminate on the date that the possession of the part of
the Premises is taken. 
 15.3 Damages. That portion of the compensation awarded or paid upon any such taking or purchase
which is allocable to Tenant’s business losses and/or to improvements and fixtures in, upon or forming a part of the Premises which are the property of, or which were paid for by, Tenant hereunder shall be paid to Tenant. The remainder of the
award or payment shall belong to Landlord and Tenant waives any right to any part of such remainder. 
 16. TENANT’S
DEFAULT. The occurrence of any of the following events (an “Event of Default”) shall constitute a default and breach of this Lease by Tenant: 

a. The failure by Tenant to make any payment of Rent, or any other required payment, as and when due, and such failure shall not have been
cured within ten (10) days after written notice specifying the default with particularity thereof from Landlord. 
 b. Tenant’s
failure to perform any other term, covenant or condition contained in this Lease and such failure shall have continued for thirty (30) days after written notice of such failure specifying the default with particularity is given to Tenant;
provided that where such failure cannot reasonably be cured within said thirty (30) day period, Tenant shall not be in default if Tenant commences such cure within said thirty (30) day period and thereafter diligently pursues all
reasonable efforts to complete said cure until completion thereof; 
 c. Tenant’s assignment of its assets for the benefit of its
creditors, the filing of a petition by or against Tenant (where such petition against Tenant is not dismissed within thirty (30) days), seeking adjudication or reorganization under the Bankruptcy Code; the appointment of a receiver to take
possession of, or a levy by way of attachment or execution upon, substantially all of Tenant’s assets at the Premises; 

  
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 d. Tenant shall do or permit to be done anything which creates a lien upon the Premises or the
Property and such lien is not removed or discharged within thirty (30) days after the filing thereof; 
 e. Tenant shall fail to return
a properly executed instrument to Landlord in accordance with Section 22 hereof within the time period provided therein; 
 f. Tenant
shall fail to return a properly executed estoppel certificate to Landlord in accordance with Section 21 hereof within the time period provided therein; and 

g. Notwithstanding the foregoing, Tenant shall not be deemed in default under Section 16(d), (e) or (f) unless Landlord has
provided Tenant with written notice setting forth the default with particularity and such claimed default shall not have been cured within five (5) business days after delivery of such notice 

17. REMEDIES. Upon any Event of Default, Landlord shall have the following remedies, in addition to all other remedies now or
hereafter provided by law or equity: 
 17.1 Lease In Full Force and Effect. Landlord shall be entitled to keep this Lease in full
force and effect and Landlord may enforce all of its rights and remedies under this Lease, including the right to recover rent and other sums as they become due, plus interest at the highest rate then allowed by law, from the due date of each
installment of rent or other sum until paid. Landlord shall have the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee’s breach and abandonment and recover rent as it becomes due, if
lessee has the right to sublet or assign, subject only to reasonable limitations). 
 17.2 Termination. Landlord may terminate
Tenant’s right to possession by giving Tenant written notice of termination, whereupon this Lease and all of Tenant’s rights in the Premises shall terminate. Any termination under this Paragraph shall not release Tenant from the payment of
any sum then due Landlord or from any claim for damages or rent accrued. In the event this Lease is terminated pursuant to this Paragraph, Landlord may recover from Tenant all damages incurred by Landlord by reason of Tenant’s default,
including but not limited to: (i) the cost of recovering possession of the Premises; (ii) reasonable attorneys’ fees, any real estate commissions actually paid and that portion of any leasing commission paid by Landlord applicable to
the unexpired Term of this Lease; (iii) the worth at the time of award of the unpaid rent which had been earned at the time of termination; (iv) the worth at the time of award of the amount by which the unpaid rent which would have been
earned after termination until the time of award exceeds the amount of such rental loss for the same period that Tenant proves could have been reasonably avoided; (v) the worth at the time of award of the amount by which the unpaid rent for the
balance of the Term after the time of award exceeds the amount of such rental loss for the same period that Tenant proves could be reasonably avoided; and (vi) any other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform Tenant’s obligations under this Lease, or which in the ordinary course of things would be likely to result therefrom; provided, however, that the total damages recoverable on account of clauses
(iv) and (v) of this Section 17.2 shall not exceed the sum of three (3) months’ Rent. The “worth at the time of award” of the 

  
 13 

 
amounts referred to in subparagraphs (iii) and (iv) of this Paragraph shall be computed by allowing interest at the maximum rate then permitted by law. The “worth at the time of
award” of the amount referred to in subparagraphs (v) of this Paragraph shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). 

17.3 NO RELIEF FROM FORFEITURE AFTER DEFAULT. Tenant waives all rights of redemption or relief from forfeiture under California Civil
Code section 3275 and California Code of Civil Procedure sections 1174(c) and 1179, and under any other present or future law, in the event Tenant is evicted or Landlord otherwise lawfully takes possession of the Premises by reason of any Event of
Default. 
 18. LANDLORD’S DEFAULT. In the event of any failure by Landlord to perform any of Landlord’s obligations
under this Lease, Tenant will give Landlord written notice specifying such default with particularity, and Landlord shall thereupon have thirty (30) days in which to cure any such default. Unless and until Landlord fails to so cure any default
after such notice, Tenant shall not have any remedy or cause of action by reason thereof. If a default by Landlord remains uncured after the expiration of the thirty (30) day period (except for obligations of Landlord which reasonably require
greater than thirty (30) days to fulfill, in which event Landlord shall not be in default so long as Landlord initiates performance of any such obligation within such thirty (30) day period and thereafter diligently acts to fulfill any
such obligation), then Tenant shall have the right, as Tenant’s sole and exclusive remedies, to either (i) bring an action for damages or (ii) seek specific performance. 

19. ASSIGNMENT AND SUBLETTING. 

19.1 General. No assignment, subletting or hypothecation of this Lease by Tenant (including by operation of law) (each, a
“Transfer”) shall be permitted without the written consent of Landlord. Whether or not Landlord grants consent to a Transfer, Tenant shall pay Landlord’s review and processing fees for such Transfer, as well as any reasonable legal
fees incurred by Landlord, within thirty (30) days after written request by Landlord. Any attempt to Transfer this Lease by Tenant without Landlord’s consent shall be null and void. In the event that Landlord consents to a Transfer, such
consent shall not constitute a waiver of the provision of this Paragraph with respect to any subsequent attempt to Transfer this Lease. Notwithstanding the foregoing, Tenant shall have the right to share portions of the Premises with employees of
its wholly or majority-owned subsidiaries and other companies with which Tenant has entered into joint development agreements or similar arrangements (all of such subsidiaries, companies and the employees thereof being “Tenant Parties”
hereunder). Sublessees or transferees of the Premises shall become directly liable to Landlord for all obligations of Tenant hereunder pertaining to that portion of the Premises covered by their subleases or other instruments of transfer (e.g., an
assignment) without relieving Tenant of any liability therefor, and Tenant shall remain obligated for all liability to Landlord arising under this Lease during the entire remaining Term. 

19.2 Permitted Transfer. A change or series of changes in ownership of stock or other ownership interests of Tenant (other than a sale
on a public stock exchange) which would result in direct or indirect change in ownership of more than fifty percent (50%) of 

  
 14 

 
the outstanding stock of or other ownership interests in Tenant as of the Commencement Date shall be considered a Transfer of this Lease. Notwithstanding the foregoing, Landlord’s consent
shall not be required to an assignment of this Lease or a subletting of any portion of the Premises to (i) any entity controlling, controlled by or under common control with Tenant or (ii) to a corporation or other entity which is a
successor-in-interest to Tenant, by way of merger, consolidation or corporate reorganization, or by the purchase of all or substantially all of the assets or the ownership interests of Tenant provided that (A) Tenant provides thirty
(30) days advance written notice of any such transfer, (B) such merger or consolidation, or such acquisition or assumption, as the case may be, is for a good business purpose and not principally for the purpose of transferring the Lease,
and (C) such assignee or subtenant shall agree in writing to assume all of the terms, covenants and conditions of this Lease (or, in the case of a sublease, all of the terms, covenants and conditions of this Lease applicable to the applicable
sublet space) arising after the effective date of the assignment. 
 19.3 Transfer Premium. Fifty percent (50%) of any
consideration, net of Tenant’s reasonable, out-of-pocket costs on a straight-line basis incurred in the assignment or subletting (including Tenant’s reasonable expenses in constructing improvements specifically for the subtenant or
assignee and reasonable brokerage commissions in connection with the assignment or subletting), which is in excess of the Rent and other amounts due and payable by Tenant under this Lease, and which is due to Tenant by any assignee of this Lease or
successor to Tenant for its assignment, or by any sublessee under or in connection with its sublease, or otherwise due to Tenant by another party for use and occupancy of the Premises or any portion thereof, on a per-rentable-square foot basis
if less than all of the Premises is transferred, shall be promptly remitted by Tenant to Landlord as additional rental hereunder and Tenant shall have no right or claim thereto as against Landlord. 

19.4 Recapture. Notwithstanding anything to the contrary contained in this Section 19, upon receipt of any notice which
contemplates an assignment of Tenant’s interest in this Lease or subletting of any portion of the Premises, Landlord shall have the option exercisable by written notice to Tenant given within ten (10) business days after receipt of such
notice, to recapture the space proposed to be sublet or assigned (“Transfer Space”). If Landlord exercises its option to recapture, the Lease shall terminate with respect to the Transfer Space on the commencement date specified in
Tenant’s notice, and if there is no such date then thirty (30) days after Landlord sends its written notice of recapture. In the event of a recapture by Landlord, if this Lease shall be canceled with respect to less than the entire
Premises, Landlord and Tenant shall enter into an appropriate amendment to this Lease confirming such partial termination of this Lease, providing for a prorata reduction in and apportionment of Base Rental on a straight square footage basis, and
Landlord shall have the right to use or relet the Transfer Space for any legal purpose in its sole discretion. If Landlord elects to recapture the Transfer Space, then Tenant shall separately demise the portion of the Premises so recaptured by
Landlord from the balance of the Premises, including, without limitation, capping, re-routing or reconfiguring all mechanical, electrical, plumbing, life-safety and other systems and equipment serving the affected portions of the Premises and
construct such other improvements as may be required by law or which Landlord reasonably deems to be necessary or appropriate to so demise the portion of the Premises so recaptured and the cost of such work shall be paid by Tenant. If Landlord
declines, or fails to elect in a timely manner to recapture the Transfer Space within such thirty (30) day period, then, provided Landlord has consented or is deemed to have consented to the 

  
 15 

 
proposed Transfer, Tenant shall be entitled to proceed to transfer the Transfer Space to the proposed Transferee, subject to the provisions of the last sentence of this grammatical paragraph. Any
subsequent proposed Transfer of the applicable space shall be subject to this Section. If a proposed Transfer is not consummated within six (6) months after the date of the relevant notice, Tenant shall be required to submit a new notice to
Landlord with respect to any contemplated Transfer of the Transfer Space described in the first notice 
 20. CONVEYANCE BY
LANDLORD. Landlord (or its successors or assigns) may, at any time during the Term, convey its interest in the Premises, provided that, as a condition to any such conveyance, the transferee or assignee of such interest assumes in writing all of
Landlord’s obligations and liabilities under this Lease, which shall thereupon continue in full force and effect. From and after the effective date of the conveyance, Landlord (or, in the case of successive conveyance, its successors or
assigns) shall be released and discharged from any and all obligations under this Lease, except those already accrued. 
 21.
ESTOPPELS. Tenant shall, at any time and from time to time upon not less than ten (10) business days’ prior written request by Landlord, execute, acknowledge and deliver to Landlord an estoppel statement in writing certifying
the date of commencement of this Lease, that this Lease is unmodified and full force and effect if such is the fact (or if there has been a modification thereof that the Lease is in full force and effect as modified and stating the modifications),
the dates to which the rentals and other charges have been paid in advance, if any, and any other information as may be reasonably requested. It is expressly understood and agreed that any such statement delivered pursuant to this Paragraph may be
relied upon by any prospective purchaser of the estate of Landlord or the mortgagee or assignee of any mortgagee of any mortgage or the trustee or beneficiary of any deed of trust constituting a lien upon the Premises or upon the Property. If Tenant
refuses to provide said estoppel statement within five (5) business days after the giving of the notice pursuant to Paragraph 16(g) as provided herein, it shall be considered an event of default under this Lease. 

22. LEASEHOLD PRIORITY AND SUBORDINATION. 

22.1 Subordination. Tenant agrees that this Lease is and shall be subordinate to any mortgage which has been or which hereafter may be
placed upon the Premises or the land or Building of which they are a part, by Landlord; provided, that, as a condition to such subordination, Landlord agrees that it will obtain a commercially reasonable nondisturbance agreement from any mortgagee
or trust deed beneficiary as to whom Tenant’s rights hereunder are or hereafter may become subordinate. Within five (5) business days after Landlord’s request, Tenant agrees to execute, acknowledge, and deliver any and all instruments
which are necessary or proper to effect the subordination of this Lease to any mortgage, and hereby irrevocably appoints Landlord as Tenant’s attorney-in-fact to make, execute, acknowledge and deliver any such instruments in the name an on
behalf of Tenant. Tenant hereby attorns and agrees to attorn to such person. The word “mortgage” includes any mortgage, deed of trust, or security instrument given to secure a loan or loans against the real property of which the Premises
are a part of (any and all modifications, extensions, renewals, and replacements thereof, any and all advances thereunder.). Tenant shall not be deemed to be in default under this Section 22.1, unless Tenant fails to deliver such instruments
within five (5) business days after Landlord has given Tenant the Notice provided under Section 16.g. 

  
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 22.2 Lender Protection. In the event any proceedings are brought for the foreclosure of,
or in the event of exercise of the power of sale under, any mortgage covering the Premises or the Property, or in the event the interests of Landlord under this Lease shall be transferred by reason of deed in lieu of foreclosure or other legal
proceedings, or in the event of termination of any lease under which Landlord may hold title, Tenant shall attorn to the transferee or purchaser at foreclosure or under power of sale, or the lessor of Landlord upon such lease termination, as the
case may be (sometimes hereinafter called “such person”), without any deductions or off set whatsoever, and shall recognize and be bound and obligated hereunder to such person as the Landlord under this Lease; provided, however,
that no such person shall be (i) bound by any payment of Rent for more than one (1) month in advance, except prepayments in the nature of security for the performance by Tenant of its obligations under this Lease (and then only if such
prepayments have been deposited with and are under the control of such person); (ii) bound by any amendment or modification of this Lease made without the express written consent of the mortgagee or lessor of the Landlord, as the case may be;
(iii) obligated to cure any defaults under this Lease of any prior landlord (including Landlord); provided, however, that such person shall be responsible for ongoing maintenance and repair obligations of the Landlord; (iv) liable for any
act or omission of any prior landlord (including Landlord); (v) subject to any offsets or defenses which Tenant might have against any prior landlord (including Landlord); or (vi) bound by any warranty or representation of any prior
landlord (including Landlord) relating to work performed by any prior landlord (including Landlord) under this Lease. 
 23.
ATTORNEY’S FEES. In the event that any dispute between the Landlord and the Tenant should result in litigation (including a judicial reference pursuant or arbitration), the prevailing party in such dispute shall be entitled to
recover from the other party all reasonable fees, costs and expenses of enforcing any right of the prevailing party, including without limitation, reasonable attorneys’ fees and expenses. 

24. WAIVER. No waiver by either party of any default or breach of any covenant hereunder shall be implied from any omission by
either party to take action on account of such default if such default persists or is repeated. No express waiver shall affect any default other than the default specified in the waiver, and then said waiver shall be operative only for the time and
to the extent therein stated. Waivers by either party of any covenant, term or condition contained herein shall not be construed as a waiver of any subsequent breach of the same covenant, term or condition. The consent or approval by either party to
or of any act by either party requiring further consent or approval shall not be deemed to waiver or render unnecessary consent or approval to or of any subsequent similar acts. 

25. NOTICES. All notices shall be sent addressed to Tenant at the Premises as follows: 

 

			
		 	 Applied Micro Circuits Corporation
 215
Moffett Park Drive
 Sunnyvale, CA 94089

		 	Attn: L. William Caraccio

  
 17 

			
	with a copy to:	 	Miller, Morton, Caillat & Nevis, LLP
		 	25 Metro Drive, 7th Floor
		 	San Jose, California 95110
		 	Attn: Peter A. Kline
	
	and to Landlord as follows:
		
		 	 Moffett Park Drive Owner, LLC
 c /o Four
Corners Properties, LLC

		 	One Embarcadero Center, 37th Floor
		 	San Francisco, CA 94111
		 	Attn: Bruce Burkard
		
	with a copy to:	 	Rockwood Capital, LLC
		 	2 Embarcadero Center, Suite 2360
		 	 San Francisco, CA 94110
 Attn: Jason Oberman
and Jennifer Levy

		
	and a copy to:	 	Rockwood Capital, LLC
		 	10 Bank Street, 11th Floor
		 	 White Plains, New York 10606
 Attn: David
Becker

		
	and a copy to:	 	 Paul Hastings LLP
 55 Second Street, 24th
Floor
 San Francisco, California 94105
 Attn: Stephen I.
Berkman

 or at such other place as either Landlord or Tenant may, from time to time, respectively designate in a written notice given
to the other. Any notice to be given or to be served must be in writing and will be deemed to have been given and received as follows: certified or first-class mail notices will be presumed to be received three (3) business days after deposited
in the United States Mail; and notices sent by overnight courier service will be presumed to be received one (1) business day after delivery to the overnight courier service. 

26. HOLDING OVER. If Tenant remains in possession after expiration or termination of the Term with or without the
Landlord’s written consent, Tenant shall become a tenant-at-sufferance, and there shall be no renewal or extension of this Lease by operation of law. Landlord hereby expressly reserves the right to require Tenant to surrender possession of the
Premises to Landlord as provided in this Lease upon the expiration or other termination of this Lease. TENANT ACKNOWLEDGES THAT LANDLORD INTENDS TO RENOVATE THE PREMISES FOLLOWING TENANT’S VACATION OF THE PREMISES AND THAT IT IS EXTREMELY
DIFFICULT AND IMPRACTICABLE TO ASCERTAIN THE EXTENT OF DETRIMENT TO LANDLORD CAUSED BY THE HOLDOVER BY TENANT UNDER 

  
 18 

 
THIS LEASE OR THE AMOUNT OF COMPENSATION LANDLORD SHOULD RECEIVE AS A RESULT OF TENANT’S HOLDOVER. During the period of any such holding over, all provisions of this Lease shall be and
remain in effect except that the monthly Rent shall be Three Hundred Fifty Thousand Dollars ($350,000) (whether or not Tenant surrenders a portion of the Premises upon expiration of the Term). The inclusion of the preceding sentence in this Lease
shall not be construed as the Landlord’s consent for Tenant to hold over. If Tenant fails to surrender the Premises upon the termination or expiration of this Lease, in addition to any other liabilities to Landlord accruing therefrom, Tenant
shall protect, defend, indemnify and hold Landlord harmless from all loss, costs (including reasonable attorneys’ fees) and liability resulting from such failure, including, without limiting the generality of the foregoing, any claims made by
any succeeding tenant founded upon such failure to surrender, any consequential damages and any lost profits resulting therefrom. The provisions of this Section 26 shall not be deemed to limit or constitute a waiver of any other rights or
remedies of Landlord provided herein or at law. 
 27. SUCCESSORS. All the terms, covenants and conditions hereof shall be
binding upon and inure to the benefit of the heirs, executors, administrators, successors and assigns of the parties hereto; provided, however, that nothing in this Paragraph shall be deemed to permit any assignment, subletting, occupancy or use
contrary to the provisions of Paragraph 20. 
 28. COMPLETE AGREEMENT. This Lease contains all terms, covenants, conditions,
warranties and agreements of the parties relating in any manner to the rental and use and occupancy of the Premises. No prior agreement or understanding pertaining to the same shall be valid or of any force and effect. 

29. WAIVER OF JURY TRIAL. LANDLORD AND TENANT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LEASE OR ANY DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ANY ACTIONS OF EITHER PARTY ARISING OUT OF OR RELATED IN ANY MANNER WITH THIS LEASE. THIS WAIVER IS A MATERIAL INDUCEMENT FOR LANDLORD AND TENANT TO ENTER INTO THIS LEASE, AND SHALL SURVIVE THE CLOSING OR TERMINATION OF THIS LEASE. Each party
hereby authorizes and empowers the other to file this Section 29 with the clerk or judge of any court of competent jurisdiction as a written consent to waiver of jury trial. Landlord and Tenant agree and intend that this paragraph
constitutes a written consent to waiver of trial by jury within the meaning of California Code of Civil Procedure Section 631(a)(2). 

30. TIME. Time is of the essence of this Lease and each of its provisions and whenever a certain day is stated for payment or
performance of any obligation of Tenant or Landlord, the same enters into and becomes a part of the consideration hereof. 

  
 19 

 31. MISCELLANEOUS. 

31.1 Captions. The captions in this Lease are for convenience only and shall not in any way limit or be deemed to construe or interpret
the terms and provisions hereof. 
 31.2 Words. The words “Landlord” and “Tenant”, as used herein, shall include
the plural as well as the singular. Words used in the neuter gender include the masculine and feminine. If there be more than one Landlord or Tenant, the obligations hereunder imposed upon Landlord or Tenant shall be joint and several. 

31.3 Choice Of Law. This Lease shall be construed and enforced in accordance with the laws of the State of California. 

31.4 Amendment. This Lease cannot be amended, altered or modified in any way except in writing signed by the parties hereto. 

31.5 Certified Access Specialist. Tenant acknowledges that Landlord has not engaged a Certificate Access Specialist, as such term is
defined in California Civil Code Section 55.52, to inspect the Property. 
 32. LIABILITY OF LANDLORD AND TENANT. 

32.1 Waiver. Except to the extent caused by the intentional or willful misconduct or negligence of Landlord, its employees, agents and
contractors, Tenant hereby assumes all risk of damage to property and injury to persons, in, on, or about the Premises from any cause whatsoever including without limiting the generality of the foregoing, whether caused by water leakage of any
character from the roof, walls, or other portion of the Premises, the Building or the Property, or caused by gas, fire, oil, electricity, or any cause whatsoever , in, on, or about the Premises, the Building, the Property or any part thereof and
agrees that Landlord, and its partners, joint venturers, members, shareholders, lenders and mortgagees, and their respective officers, agents, property managers, servants, employees, and independent contractors (collectively, “Landlord
Parties”) shall not be liable for, and are hereby released from any responsibility for, any damage to property or injury to persons or resulting from the loss of use thereof, which damage or injury is sustained by Tenant or by other persons
claiming through Tenant. 
 32.2 Indemnity. Except to the extent caused by (a) Landlord’s Construction or (b) the
intentional or willful misconduct or negligence of Landlord, its employees, agents and contractors, Tenant shall indemnify and hold the Landlord Parties harmless from and defend Landlord and the other Landlord Parties against any and all loss, cost,
damage, injury, expense and liability, including, without limitation, court costs and reasonable attorneys’ fees (collectively, “Claims”): (i) incurred in connection with or arising from any cause in or on the Premises
(including, without limitation, Tenant’s installation, placement and removal of Tenant Improvements, Alterations, fixtures and/or equipment in, on or about the Premises); (ii) occurring in, on, or about any other portion of the Property to
the extent such injury or damage shall be caused by the intentional or willful misconduct or negligence of Tenant or of the contractors, agents, servants, directors, officers, employees, licensees or invitees

  
 20 

 
of Tenant (collectively, the “Tenant Parties”) in, on or about the Premises, Building and Property, or (iii) arising from any breach of this Lease by Tenant. Tenant further agrees
to indemnify and hold the Landlord Parties harmless from, and defend the Landlord Parties against, any and all Claims arising from the conduct of any work or business of Tenant Parties in or about the Property, including any release, discharge,
storage or use by Tenant Parties of any Hazardous Material, hazardous waste, toxic substance, oil, explosives, asbestos, or similar material. In the event of a discrepancy between the terms of this Section and the terms of Section 7.2
(concerning Hazardous Material liability), the latter shall control. 
 33. FORCE MAJEURE. Any prevention, delay or stoppage
due to strikes, lockouts, labor disputes, acts of God, acts of war, terrorist acts, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, moratorium, adverse weather, delays in
receipt of permits, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform, except with respect to the obligations imposed with regard to Rent and other charges to be paid by Tenant pursuant to this
Lease (collectively, a “Force Majeure”), notwithstanding anything to the contrary contained in this Lease, shall excuse the performance of such party for a period equal to any such prevention, delay or stoppage and, therefore, if this
Lease specifies a time period for performance of an obligation of either party, that time period shall be extended by the period of any delay in such party’s performance caused by a Force Majeure. The foregoing shall in no event be deemed to
cause an extension of the Lease Commencement Date or Expiration Date, or in any way eliminate or defer any obligation of Tenant to pay Rent for the period in which a Force Majeure event occurs. 

34. LANDLORD’S COVENANT OF QUIET ENJOYMENT. Provided Tenant performs the terms, conditions and covenants of this Lease, and
subject to the terms and provisions hereof and the rights of any lenders or ground lessors of the Property, Landlord covenants and agrees to maintain for the benefit of Tenant the quiet and peaceful access to and possession of the Premises and
access to and use of the Common Areas for the Lease Term, without hindrance, claim or molestation by Landlord or any other person lawfully claiming under Landlord. The foregoing covenant is in lieu of any other covenant, express or implied.
Notwithstanding the foregoing, Landlord shall have the right to perform Landlord’s Construction to the Building (excluding the Premises) and the Property during the Term. Notwithstanding the foregoing, upon at least thirty (30) days
advance notice to Tenant, Landlord may install a test section of exterior glass in the portion of the Premises located on the second floor of the Building and not above or immediately adjacent to the recessed portion of the main entrance to the
Building (defined as the approximate 70 foot section of the Building between the metal guard rails set on either side of the front entrance). 

35. BROKERS’ OR FINDERS’ FEE. Each of the parties represents and warrants that there are no claims for brokerage
commissions or finder’s fees in connection with the execution of this Lease and each of the parties agree to indemnify the other against and hold it harmless from, all liabilities arising from any such claim (including, without limitation, the
cost of counsel fees in connection therewith). 
 36. PARTIES REPRESENTED. This Lease has been jointly prepared by the parties
with the advice of independent legal counsel of their choice. Neither party shall be entitled to have this Lease interpreted more strongly against the other party by reason of any presumption which arises from the drafting of this Lease. 

  
 21 

 37. RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall be deemed or
construed by the parties hereto or by any third party to create the relationship of principal and agent or of partnership or of joint venture or of any association whatsoever between Landlord and Tenant, it being expressly understood and agreed that
neither the method of computation of rent nor any of the other provisions contained in this Lease nor any act or acts of the parties hereto shall be deemed to create any relationship between Landlord and Tenant other than the relationship of
Landlord and Tenant. 
 38. OFAC. Tenant is currently (a) in compliance with and shall at all times during the Term
remain in compliance with the regulations of the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury and any statute, executive order, or regulation relating thereto (collectively, the “OFAC Rules”),
(b) not listed on, and shall not during the Term be listed on, the Specially Designated Nationals and Blocked Persons List maintained by OFAC and/or on any other similar list maintained by OFAC or other governmental authority pursuant to any
authorizing statute, executive order, or regulation, and (c) not a person or entity with whom a U.S. person is prohibited from conducting business under the OFAC Rules. 

39. SEVERABILITY If any part or portion of this Lease is held by a court of competent jurisdiction to be invalid, void or
unenforceable, all of the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way. 

40. MULTIPLE COUNTERPARTS. This Lease may be executed in two or more counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same instrument. 
 41. RULES. Landlord shall have the right at all times during
the Term to establish and enforce such reasonable rules and regulations as it deems necessary in its reasonable discretion in conformance with rules and regulations in comparable buildings to the Building to protect the tenantability, safety,
operation, and welfare of the Premises and the Property (the “Rules and Regulations”). In the event of any inconsistency between the Lease and the Rules and Regulations, the Lease shall prevail. 

42. LIMITATIONS ON LIABILITY. Landlord and the Landlord Parties shall have no personal liability with respect to any of the
provisions of this Lease. If Landlord is in default with respect to its obligations under this Lease, Tenant shall look solely to the equity of Landlord in and to the Property for satisfaction of Tenant’s remedies, if any. It is expressly
understood and agreed that Landlord’s liability under the terms of this Lease shall in no event exceed the amount of its interest in and to said Property. In no event shall any of the Landlord Parties be personally liable with respect to any of
the provisions of this Lease and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. In no event shall any of the Tenant Parties be personally liable with
respect to any of the provisions of this Lease and Landlord hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Landlord. Neither Landlord nor any Landlord Party shall be
liable to Tenant or any other person for any 

  
 22 

 
consequential damages, special or punitive damages, or for loss of business, revenue, income or profits even if caused by the active or passive negligence, or intentional or willful misconduct,
of any Landlord Party, and Tenant hereby waives any and all claims for any such damages. Neither Tenant nor any Tenant Party shall be liable to Landlord or any other person for any consequential damages, special or punitive damages, except as set
forth in Section 26 hereof, even if caused by the active or passive negligence, or intentional or willful misconduct, of any Tenant Party, and Landlord hereby waives any and all claims for any such damages. Notwithstanding the foregoing,
however, the terms of this Section 42 shall in no way be construed to limit Landlord’s rights and remedies against Tenant for loss of rent, including but not limited to rent recoverable under California Civil Code Section 1951.2 or
1951.4. 
 43. AUTHORITY. The undersigned represent and warrant that the individuals signing this Lease have the full
authority to so execute this Lease. 
 [Signatures On Following Page] 

  
 23 

 IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed the day and date
first above written. 
  

					
	LANDLORD:	 		  	TENANT:
			
	 MOFFETT PARK DRIVE OWNER, LLC,
 a Delaware
limited liability company
  

By:                         
                                         
                                    

Name:
 Title:
	 		  	 APPLIED MICRO CIRCUITS CORPORATION,
 a
Delaware corporation
  

By:                         
                                         
                               

Name:  
 Title:

  
 24f8k012114ex4i_magnegas.htm

Exhibit 4.1

 

EXHIBIT A

MAGNEGAS CORPORATION

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES B CONVERTIBLE PREFERRED STOCK

PURSUANT TO SECTION 151 OF THE

DELAWARE GENERAL CORPORATION LAW

The undersigned, __________ and ____________, do hereby certify that:

1. They are the President and Secretary, respectively, of MagneGas Corporation, a Delaware corporation (the “Corporation”).

2. The Corporation is authorized to issue 10,000,000 shares of preferred stock, 1,000,000 of which have been issued.

3. The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”):

WHEREAS, the certificate of incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, consisting of 10,000,000 shares, $0.001 par value per share, issuable from time to time in one or more series;

WHEREAS, the Board of Directors is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting any series and the designation thereof, of any of them; and

  

1

  

 

WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other matters relating to a series of the preferred stock, which shall consist of, except as otherwise set forth in the Purchase Agreement, up to 2,142 shares of the preferred stock which the Corporation has the authority to issue, as follows:

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for cash or exchange of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters relating to such series of preferred stock as follows:

TERMS OF PREFERRED STOCK

Section 1. Definitions. For the purposes hereof, the following terms shall have the following meanings:

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

“Alternate Consideration” shall have the meaning set forth in Section 7(e).

 

“Base Conversion Price” shall have the meaning set forth in Section 7(b).

“Beneficial Ownership Limitation” shall have the meaning set forth in Section 6(d).

 

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

“Buy-In” shall have the meaning set forth in Section 6(c)(iv).

“Change of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise) of in excess of 33% of the voting securities of the Corporation (other than by means of conversion or exercise of Preferred Stock and the Securities issued together with the Preferred Stock), (b) the Corporation merges into or consolidates with any other Person, or any Person merges into or consolidates with the Corporation and, after giving effect to such transaction, the stockholders of the Corporation immediately prior to such transaction own less than 66% of the aggregate voting power of the Corporation or the successor entity of such transaction, (c) the Corporation sells or transfers all or substantially all of its assets to another Person and the stockholders of the Corporation immediately prior to such transaction own less than 66% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a one year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the Original Issue Date), or (e) the execution by the Corporation of an agreement to which the Corporation  is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.

  

2

  

 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1 of the Purchase Agreement.

“Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto and all conditions precedent to (i) each Holder’s obligations to pay the Subscription Amount and (ii) the Corporation’s obligations to deliver the Securities have been satisfied or waived.

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

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

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

“Conversion Amount” means the sum of the Stated Value at issue.

“Conversion Date” shall have the meaning set forth in Section 6(a).

“Conversion Price” shall have the meaning set forth in Section 6(b).

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in accordance with the terms hereof.

“Conversion Shares Registration Statement” means a registration statement that registers the resale of all Conversion Shares of the Holders, who shall be named as “selling stockholders” therein and meets the requirements of the Registration Rights Agreement.

 

“Dilutive Issuance” shall have the meaning set forth in Section 7(b).

“Dilutive Issuance Notice” shall have the meaning set forth in Section 7(b).

  

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“Effective Date” means the earliest of the date that (a) the Registration Statement has been declared effective by the Commission, (b) all of the Registrable Securities (as defined in the Registration Rights Agreement) have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Corporation to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions or (c) following the one year anniversary of the Closing Date provided that a holder of Registrable Securities is not an Affiliate of the Corporation, all of the Registrable Securities may be sold pursuant to an exemption from registration under Section 4(1) of the Securities Act without volume or manner-of-sale restrictions and Corporation counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such holders of the Registrable Securities pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders.

 

“Equity Conditions” means, during the period in question, (a) the Corporation shall have duly honored all conversions scheduled to occur or occurring by virtue of one or more Notices of Conversion of the applicable Holder on or prior to the dates so requested or required, if any, (b) the Corporation shall have paid all liquidated damages and other amounts owing to the applicable Holder in respect of the Preferred Stock, (c)(i) there is an effective Conversion Shares Registration Statement pursuant to which the Holders are permitted to utilize the prospectus thereunder to resell all of the shares of Common Stock issuable pursuant to the Transaction Documents (and the Corporation believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future) or (ii) all of the Conversion Shares issuable pursuant to the Transaction Documents may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions or current public information requirements as determined by the counsel to the Corporation as set forth in a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders, (d) the Common Stock is trading on a Trading Market and all of the shares issuable pursuant to the Transaction Documents are listed or quoted for trading on such Trading Market (and the Corporation believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (e) there is a sufficient number of authorized, but unissued and otherwise unreserved, shares of Common Stock for the issuance of all of the shares then issuable pursuant to the Transaction Documents, (f) there is no existing Triggering Event and no existing event which, with the passage of time or the giving of notice, would constitute a Triggering Event, (g) the issuance of the shares in question (or, in the case of a redemption, the shares issuable upon conversion in full of the redemption amount) to the applicable Holder would not violate the limitations set forth in Section 6(d) and Section 6(e) herein, (h) there has been no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated, (i) the applicable Holder is not in possession of any information provided by the Corporation that constitutes, or may constitute, material non-public information, and (j) for at least 17 Trading Days in a period of 20 consecutive Trading Days prior to the applicable date in question, the daily dollar trading volume for the Common Stock on the principal Trading Market exceeds (1) $350,000 or (2) $350,000 in the case of an Optional Redemption pursuant to Section 8 herein.

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

  

4

  

 

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Corporation pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Corporation or a majority of the members of a committee of non-employee directors established for such purpose, (b) up to 1,000,000 shares of Common Stock (subject to adjustment for forward and reverse stock splits and the like), in the aggregate, to professional service providers pursuant to a written agreement, provided that such shares of Common Stock are not registered and carry no registration rights, (c) securities upon the exercise or exchange of or conversion of any securities issued pursuant to the Purchase Agreement and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of the Purchase Agreement, provided that such securities have not been amended since the date of the Purchase Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of any such securities, and (d) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Corporation, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Corporation and shall provide to the Corporation additional benefits in addition to the investment of funds, but shall not include a transaction in which the Corporation is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

“Forced Conversion Amount” means the sum of (a) 100% of the aggregate Stated Value then outstanding, (b) accrued but unpaid dividends and (c) all liquidated damages and other amounts due in respect of the Preferred Stock.

“Forced Conversion Date” shall have the meaning set forth in Section 8(a).

“Forced Conversion Notice” shall have the meaning set forth in Section 8(a).

 “Forced Conversion Notice Date” shall have the meaning set forth in Section 8(a).

“Fundamental Transaction” shall have the meaning set forth in Section 7(e).

“GAAP” means United States generally accepted accounting principles.

“Holder” shall have the meaning given such term in Section 2.

“Indebtedness” means (a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Corporation’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, and (c) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP.

 

  

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“Issuable Maximum” shall have the meaning set forth in Section 6(e).

“Junior Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities which are explicitly senior or pari passu to the Preferred Stock in dividend rights or liquidation preference.

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

 

“Liquidation” shall have the meaning set forth in Section 5.

“New York Courts” shall have the meaning set forth in Section 9(d).

“Notice of Conversion” shall have the meaning set forth in Section 6(a).

“Optional Redemption” shall have the meaning set forth in Section 8(b).

“Optional Redemption Amount” means the sum of (a) 150% of the aggregate Stated Value then outstanding, (b) accrued but unpaid dividends and (c) all liquidated damages and other amounts due in respect of the Preferred Stock.

“Optional Redemption Date” shall have the meaning set forth in Section 8(b).

“Optional Redemption Notice” shall have the meaning set forth in Section 8(b).

“Optional Redemption Notice Date” shall have the meaning set forth in Section 8(b).

“Original Issue Date” means the date of the first issuance of any shares of the Preferred Stock regardless of the number of transfers of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such Preferred Stock.

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

 

“Preferred Stock” shall have the meaning set forth in Section 2.

 

  

6

  

 

“Purchase Agreement” means the Securities Purchase Agreement, dated as of the Original Issue Date, among the Corporation and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.

 

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the Corporation and the original Holders, in the form of Exhibit B attached to the Purchase Agreement.

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

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

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“Securities” means the Preferred Stock, the Warrants, the Warrant Shares and the Underlying Shares.

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

“Share Delivery Date” shall have the meaning set forth in Section 6(c).

“Shares” means the shares of Common Stock issued or issuable to each Purchaser pursuant to the Purchase Agreement.

“Stated Value” shall have the meaning set forth in Section 2, as the same may be increased pursuant to Section 3.

“Shareholder Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any successor entity) from the shareholders of the Corporation with respect to the transactions contemplated by the Transaction Documents, including the issuance of all of the Conversion Shares and Shares in excess of 19.99% of the issued and outstanding Common Stock on the Closing Date.

“Subscription Amount” shall mean, as to each Holder, the aggregate amount to be paid for the Preferred Stock, Shares and Warrants purchased pursuant to the Purchase Agreement as specified below such Holder’s name on the signature page of the Purchase Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

 

  

7

  

 

“Subsidiary” means any subsidiary of the Corporation as set forth on Schedule 3.1(a) of the Purchase Agreement and shall, where applicable, also include any direct or indirect subsidiary of the Corporation formed or acquired after the date of the Purchase Agreement.

 

“Successor Entity” shall have the meaning set forth in Section 7(e).

“Threshold Period” shall have the meaning set forth in Section 8(a).

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

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

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

 

“Transfer Agent” means _____________________, the current transfer agent of the Corporation with a mailing address of ___________________ and a facsimile number of _______________, and any successor transfer agent of the Corporation.

 

“Underlying Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Preferred Stock in accordance with the terms of this Certificate of Designation and upon exercise of the Warrants.

 

“Variable Rate Transaction” shall have the meaning ascribed to such term in Section 4.13(b) of the Purchase Agreement.

 

“Voting Agreement” means the written agreement, in the form of Exhibit _ attached to the Purchase Agreement, of all of the officers, directors and stockholders holding more than 5% of the issued and outstanding shares of Common Stock on the date of the Purchase Agreement to vote all Common Stock over which such Persons have voting control as of the record date for the meeting of stockholders of the Corporation, amounting to, in the aggregate, at least 50.1% of the issued and outstanding Common Stock.

 

  

8

  

 

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

“Warrants” means, collectively, the Common Stock purchase warrants delivered to the Holder at the Closing in accordance with Section 2.2(a) of the Purchase Agreement, which Warrants shall be exercisable 6 months from the date of issuance and have a term of exercise equal to 5 years from the initial exercise date, in the form of Exhibit C attached to the Purchase Agreement.

 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

 

Section 2.  Designation, Amount and Par Value. The series of preferred stock shall be designated as its Series B Convertible Preferred Stock (the “Preferred Stock”) and the number of shares so designated shall be up to 2.142 (which shall not be subject to increase without the written consent of all of the holders of the Preferred Stock (each, a “Holder” and collectively, the “Holders”)). Each share of Preferred Stock shall have a par value of $____ per share and a stated value equal to $1,000, subject to increase set forth in Section 3 below (the “Stated Value”).

 

Section 3.  Dividends.  Except for stock dividends or distributions for which adjustments are to be made pursuant to Section 7, Holders shall be entitled to receive, and the Corporation shall pay, dividends on shares of Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock.  No other dividends shall be paid on shares of Preferred Stock.

 

  

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Section 4.  Voting Rights. Except as otherwise provided herein or as otherwise required by law, the Preferred Stock shall have no voting rights. However, as long as any shares of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of 67% of the then outstanding shares of the Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Preferred Stock or alter or amend this Certificate of Designation or (b) enter into any agreement with respect to any of the foregoing.

 

Section 5.  Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon under this Certificate of Designation, for each share of Preferred Stock before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.  The Corporation shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.

Section 6.   Conversion.

a)           Conversions at Option of Holder. Each share of Preferred Stock shall be convertible, at any time and from time to time from and after the Original Issue Date at the option of the Holder thereof, into that number of shares of Common Stock (subject to the limitations set forth in Section 6(d) and Section 6(e)) determined by dividing the Stated Value of such share of Preferred Stock by the Conversion Price. Holders shall effect conversions by providing the Corporation with the form of conversion notice attached hereto as Annex A (a “Notice of Conversion”). Each Notice of Conversion shall specify the number of shares of Preferred Stock to be converted, the number of shares of Preferred Stock owned prior to the conversion at issue, the number of shares of Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Holder delivers by facsimile such Notice of Conversion to the Corporation (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error.  To effect conversions of shares of Preferred Stock, a Holder shall not be required to surrender the certificate(s) representing the shares of Preferred Stock to the Corporation unless all of the shares of Preferred Stock represented thereby are so converted, in which case such Holder shall deliver the certificate representing such shares of Preferred Stock promptly following the Conversion Date at issue.  Shares of Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be canceled and shall not be reissued.

b)           Conversion Price.  The conversion price for the Preferred Stock shall equal $0.80, subject to adjustment herein (the “Conversion Price”).

 

  

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c)           Mechanics of Conversion

 

i.         Delivery of Conversion Shares Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the converting Holder (A) the number of Conversion Shares being acquired upon the conversion of the Preferred Stock which, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement), and (B) a bank check in the amount of accrued and unpaid dividends (if any). On or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, the Corporation shall deliver the Conversion Shares required to be delivered by the Corporation under this Section 6 electronically through the Depository Trust Company or another established clearing corporation performing similar functions.

ii.        Failure to Deliver Conversion Shares.  If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Corporation at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the Corporation shall promptly return to the Holder any original Preferred Stock certificate delivered to the Corporation and the Holder shall promptly return to the Corporation the Conversion Shares issued to such Holder pursuant to the rescinded Conversion Notice.

 

iii.       Obligation Absolute; Partial Liquidated Damages.  The Corporation’s obligation to issue and deliver the Conversion Shares upon conversion of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such Holder.  In the event a Holder shall elect to convert any or all of the Stated Value of its Preferred Stock, the Corporation may not refuse conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of the Preferred Stock of such Holder shall have been sought and obtained, and the Corporation posts a surety bond for the benefit of such Holder in the amount of 150% of the Stated Value of Preferred Stock which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment.  In the absence of such injunction, the Corporation shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion. If the Corporation fails to deliver to a Holder such Conversion Shares pursuant to Section 6(c)(i) on the second Trading Day after the Share Delivery Date applicable to such conversion, the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $5,000 of Stated Value of Preferred Stock being converted, $50 per Trading Day (increasing to $100 per Trading Day on the third Trading Day and increasing to $200 per Trading Day on the sixth Trading Day after such damages begin to accrue) for each Trading Day after such second Trading Day after the Share Delivery Date until such Conversion Shares are delivered or Holder rescinds such conversion.  Nothing herein shall limit a Holder’s right to pursue actual damages or declare a Triggering Event pursuant to Section 10 hereof for the Corporation’s failure to deliver Conversion Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.  The exercise of any such rights shall not prohibit a Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

 

  

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iv.       Compensation for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion. In addition to any other rights available to the Holder, if the Corporation fails for any reason to deliver to a Holder the applicable Conversion Shares by the Share Delivery Date pursuant to Section 6(c)(i), and if after such Share Delivery Date such Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Corporation shall (A) pay in cash to such Holder (in addition to any other remedies available to or elected by such Holder) the amount, if any, by which (x) such Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of such Holder, either reissue (if surrendered) the shares of Preferred Stock equal to the number of shares of Preferred Stock submitted for conversion (in which case, such conversion shall be deemed rescinded) or deliver to such Holder the number of shares of Common Stock that would have been issued if the Corporation had timely complied with its delivery requirements under Section 6(c)(i). For example, if a Holder purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Preferred Stock with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay such Holder $1,000. The Holder shall provide the Corporation written notice indicating the amounts payable to such Holder in respect of the Buy-In and, upon request of the Corporation, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Corporation’s failure to timely deliver the Conversion Shares upon conversion of the shares of Preferred Stock as required pursuant to the terms hereof.

 

  

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v.        Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Preferred Stock, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Preferred Stock), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 7) upon the conversion of the then outstanding shares of Preferred Stock.  The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable and, if the Conversion Shares Registration Statement is then effective under the Securities Act, shall be registered for public resale in accordance with such Conversion Shares Registration Statement (subject to such Holder’s compliance with its obligations under the Registration Rights Agreement).

vi.       Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Preferred Stock.   As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Corporation shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.

vii.      Transfer Taxes and Expenses.  The issuance of Conversion Shares on conversion of this Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holders of such shares of Preferred Stock and the Corporation shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.  The Corporation shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.

  

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d)          Beneficial Ownership Limitation. The Corporation shall not effect any conversion of the Preferred Stock, and a Holder shall not have the right to convert any portion of the Preferred Stock, to the extent that, after giving effect to the conversion set forth on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of the Preferred Stock with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted Stated Value of Preferred Stock beneficially owned by such Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation  subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, the Preferred Stock or the Warrants) beneficially owned by such Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 6(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  To the extent that the limitation contained in this Section 6(d) applies, the determination of whether the Preferred Stock is convertible (in relation to other securities owned by such Holder together with any Affiliates) and of how many shares of Preferred Stock are convertible shall be in the sole discretion of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder’s determination of whether the shares of Preferred Stock may be converted (in relation to other securities owned by such Holder together with any Affiliates) and how many shares of the Preferred Stock are convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, each Holder will be deemed to represent to the Corporation each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Corporation shall have no obligation to verify or confirm the accuracy of such determination.  In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 6(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Corporation’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Corporation or (iii) a more recent written notice by the Corporation or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Corporation shall within two Trading Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Corporation, including the Preferred Stock, by such Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of Preferred Stock held by the applicable Holder.  A Holder, upon not less than 61 days’ prior notice to the Corporation, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 6(d) applicable to its Preferred Stock provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Preferred Stock held by the Holder and the provisions of this Section 6(d) shall continue to apply.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Corporation and shall only apply to such Holder and no other Holder.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 6(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of Preferred Stock.

  

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e)          Issuance Limitations.  Notwithstanding anything herein to the contrary, if the Corporation has not obtained Shareholder Approval, then the Corporation may not issue, upon conversion of the Preferred Stock, a number of shares of Common Stock which, when aggregated with any shares of Common Stock issued on or after the Original Issue Date and prior to such Conversion Date (i) in connection with any conversion of Preferred Stock issued pursuant to the Purchase Agreement, (ii) in connection with the Shares issued pursuant to the Purchase Agreement and (iii) in connection with the exercise of any warrants issued to any registered broker-dealer as a fee in connection with the issuance of the Securities pursuant to the Purchase Agreement, would exceed 4,649,495 shares of Common Stock (subject to adjustment for forward and reverse stock splits, recapitalizations and the like) (such number of shares, the “Issuable Maximum”).  Each Holder shall be entitled to a portion of the Issuable Maximum equal to the quotient obtained by dividing (x) the original Stated Value of such Holder’s Preferred Stock by (y) the aggregate Stated Value of all Preferred Stock issued on the Original Issue Date to all Holders.  For avoidance of doubt, unless and until any required Shareholder Approval is obtained and effective, warrants issued to any registered broker-dealer as a fee in connection with the Securities issued pursuant to the Purchase Agreement as described in clause (iii) above shall provide that such warrants shall not be allocated any portion of the Issuable Maximum and shall be unexercisable unless and until such Shareholder Approval is obtained and effective.

  

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Section 7.    Certain Adjustments.

a)           Stock Dividends and Stock Splits.  If the Corporation, at any time while this Preferred Stock is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of, or payment of a dividend on, this Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Corporation, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b)           Subsequent Equity Sales.  If, at any time while this Preferred Stock is outstanding, the Corporation or any Subsidiary, as applicable sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price.  Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustment will be made under this Section 7(b) in respect of an Exempt Issuance.  If the Corporation enters into a Variable Rate Transaction, despite the prohibition set forth in the Purchase Agreement, the Corporation shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion price at which such securities may be converted or exercised.  The Corporation shall notify the Holders in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 7(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”).  For purposes of clarification, whether or not the Corporation provides a Dilutive Issuance Notice pursuant to this Section 7(b), upon the occurrence of any Dilutive Issuance, the Holders are entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether a Holder accurately refers to the Base Conversion Price in the Notice of Conversion.

 

  

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c)           Subsequent Rights Offerings.  In addition to any adjustments pursuant to Section 7(a) above, if at any time the Corporation grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s Preferred Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

d)           Pro Rata Distributions. Subject to Section 3, during such time as this Preferred Stock is outstanding, if the Corporation declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"), at any time after the issuance of this Preferred Stock, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete Conversion of this Preferred Stock (without regard to any limitations on Conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

  

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e)           Fundamental Transaction.  If, at any time while this Preferred Stock is outstanding, (i) the Corporation, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the Corporation, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Corporation, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Corporation, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Preferred Stock, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 6(d) and Section 6(e) on the conversion of this Preferred Stock), the number of shares of Common Stock of the successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Preferred Stock is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 6(d) and Section 6(e) on the conversion of this Preferred Stock).  For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Preferred Stock following such Fundamental Transaction.  To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new Certificate of Designation with the same terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions and evidencing the Holders’ right to convert such preferred stock into Alternate Consideration.  The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 7(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Preferred Stock, deliver to the Holder in exchange for this Preferred Stock a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Preferred Stock which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Preferred Stock (without regard to any limitations on the conversion of this Preferred Stock) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Preferred Stock immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such 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 Certificate of Designation and the other Transaction Documents referring to the “Corporation” shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation herein.

 

  

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f)           Calculations.  All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.  For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.

 

g)           Notice to the Holders.

i.           Adjustment to Conversion Price.  Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

ii.           Notice to Allow Conversion by Holder.  If (A) the Corporation shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Corporation shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation shall cause to be filed at each office or agency maintained for the purpose of conversion of this Preferred Stock, and shall cause to be delivered to each Holder at its last address as it shall appear upon the stock books of the Corporation, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.  To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Corporation or any of the Subsidiaries, the Corporation shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.  The Holder shall remain entitled to convert the Conversion Amount of this Preferred Stock (or any part hereof) during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

  

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Section 8.       Forced Conversion and Optional Redemption.

a)          Forced Conversion.  Notwithstanding anything herein to the contrary, if after the later of the Shareholder Approval Date (as defined in the Purchase Agreement) and 30 Trading Days following the Effective Date (i) the VWAP for each of any 20 consecutive Trading Day period, which 20 consecutive Trading Day period shall have commenced only after the later of the Shareholder Approval Date and the 10th day following the Effective Date (“Threshold Period”), exceeds $1.20 (subject to adjustment for forward and reverse stock splits and the like) and (ii) the volume for at least 17 Trading Days during any Threshold Period exceeds $350,000, the Corporation may, within five Trading Days after the end of any such Threshold Period, deliver a written notice to all Holders (a “Forced Conversion Notice” and the date such notice is delivered to all Holders, the “Forced Conversion Notice Date”) to cause each Holder to convert all or part of such Holder’s Preferred Stock (as specified in such Forced Conversion Notice) plus all accrued but unpaid dividends thereon and all liquidated damages and other amounts due in respect of the Preferred Stock pursuant to Section 6, it being agreed that the “Conversion Date” for purposes of Section 6 shall be deemed to occur on the third Trading Day following the Forced Conversion Notice Date (such third Trading Day, the “Forced Conversion Date”).  The Corporation may not deliver a Forced Conversion Notice, and any Forced Conversion Notice delivered by the Corporation shall not be effective, unless all of the Equity Conditions have been met on each Trading Day during the applicable Threshold Period through and including the later of the Forced Conversion Date and the Trading Day after the date that the Conversion Shares issuable pursuant to such conversion are actually delivered to the Holders pursuant to the Forced Conversion Notice.   Any Forced Conversion Notices shall be applied ratably to all of the Holders based on each Holder’s initial purchases of Preferred Stock hereunder, provided that any voluntary conversions by a Holder shall be applied against such Holder’s pro rata allocation, thereby decreasing the aggregate amount forcibly converted hereunder if less than all shares of the Preferred Stock are forcibly converted.  For purposes of clarification, a Forced Conversion shall be subject to all of the provisions of Section 6, including, without limitation, the provisions requiring payment of liquidated damages and limitations on conversions.

 

b)          Optional Redemption at Election of Corporation.  Subject to the provisions of this Section 8, at any time after the six (6) month anniversary date of the Closing Date until the twelve (12) month anniversary  date of the Closing Date, the Corporation may deliver a notice to the Holders (an “Optional Redemption Notice” and the date such notice is deemed delivered hereunder, the “Optional Redemption Notice Date”) of its irrevocable election to redeem some or all of the then outstanding Preferred Stock, for cash in an amount equal to the Optional Redemption Amount on the 5th Trading Day following the Optional Redemption Notice Date (such date, the “Optional Redemption Date” and such redemption, the “Optional Redemption”).  The Optional Redemption Amount is payable in full on the Optional Redemption Date.  The Corporation may only effect an Optional Redemption if each of the Equity Conditions shall have been met on each Trading Day occurring during the period commencing on the Optional Redemption Notice Date through to the Optional Redemption Date and through and including the date payment of the Optional Redemption Amount is actually made.  If any of the Equity Conditions shall cease to be satisfied at any time during the 5 Trading Day period, then a Holder may elect to nullify the Optional Redemption Notice as to such Holder by notice to the Corporation within 3 Trading Days after the first day on which any such Equity Condition has not been met (provided that if, by a provision of the Transaction Documents, the Corporation is obligated to notify the Holders of the non-existence of an Equity Condition, such notice period shall be extended to the third Trading Day after proper notice from the Corporation) in which case the Optional Redemption Notice shall be null and void, abinitio.  The Corporation covenants and agrees that it will honor all Notices of Conversion tendered from the time of delivery of the Optional Redemption Notice through the date the Optional Redemption Amount is paid in full. If any portion of the cash payment for an Optional Redemption has not been paid by the Corporation on the Optional Redemption Date, interest shall accrue thereon until such amount is paid in full at a rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law.

  

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Section 9.      Miscellaneous.

a)           Notices.  Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Corporation, at the address set forth above Attention: _________________, facsimile number _______________, or such other facsimile number or address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section 11.  Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of such Holder appearing on the books of the Corporation, or if no such facsimile number or address appears on the books of the Corporation, at the principal place of business of such Holder, as set forth in the Purchase Agreement.  Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

b)           Absolute Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alter or impair the obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends and accrued interest, as applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, herein prescribed.

 

  

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c)           Lost or Mutilated Preferred Stock Certificate.  If a Holder’s Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.

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

 

  

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e)           Waiver.  Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders.  The failure of the Corporation or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation on any other occasion.  Any waiver by the Corporation or a Holder must be in writing.

 

f)           Severability.  If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.

g)           Next Business Day.  Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

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

i)           Status of Converted or Redeemed Preferred Stock.  Shares of Preferred Stock may only be issued pursuant to the Purchase Agreement.  If any shares of Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series B Convertible Preferred Stock.

 

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RESOLVED, FURTHER, that the Chairman, the president or any vice-president,   and the secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and file this Certificate of Designation of Preferences, Rights and Limitations in accordance with the foregoing resolution and the provisions of Delaware law.

IN WITNESS WHEREOF, the undersigned have executed this Certificate this ___ day of _____ 2014.

	  	  	  
	
Name:

Title:

	  	
Name:

Title:

 

  

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ANNEX A

NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF PREFERRED STOCK)

The undersigned hereby elects to convert the number of shares of Series B Convertible Preferred Stock indicated below into shares of common stock, par value $0.001 per share (the “Common Stock”), of MagneGas Corporation, a Delaware corporation (the “Corporation”), according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as may be required by the Corporation in accordance with the Purchase Agreement. No fee will be charged to the Holders for any conversion, except for any such transfer taxes.

Conversion calculations:

Date to Effect Conversion:                                                                                                                                                                   

Number of shares of Preferred Stock owned prior to Conversion:                                                                                                

Number of shares of Preferred Stock to be Converted:                                                                                                                   

Stated Value of shares of Preferred Stock to be Converted:                                                                                                           

Number of shares of Common Stock to be Issued:                                                                                                                           

Applicable Conversion Price:                                                                                                                                                                

Number of shares of Preferred Stock subsequent to Conversion:                                                                                                   

Address for Delivery:                                                                           

or

DWAC Instructions:                                                                              

Broker no:                                                                                                

Account no:                                                                                             

	 	
[HOLDER]

	 	  	  
	 	
By:

	  
	 	  	
Name:

	 	  	
Title:

 

 

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