Spectra7 Microsystems Inc. — Capital/Financing Update 2020

Dec 31, 2020

SPECTRA7 MICROSYSTEMS INC.

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COMPUTERSHARE TRUST COMPANY OF CANADA

FIRST SUPPLEMENTAL CONVERTIBLE DEBENTURE INDENTURE

December 23, 2020

THIS FIRST SUPPLEMENTAL CONVERTIBLE DEBENTURE INDENTURE (this “ First Supplemental Indenture ”) is dated as of the 23[rd] day of December, 2020

BETWEEN:

SPECTRA7 MICROSYSTEMS INC. , a corporation incorporated and existing under the law of Canada

(hereinafter call the “ Corporation ”)

AND:

COMPUTERSHARE TRUST COMPANY OF CANADA , a trust company existing under the laws of Canada and registered to carry on business in the Province of Ontario,

(hereinafter called the “ Trustee ”).

WHEREAS:

• A. The Corporation and the Trustee entered into a convertible debenture indenture dated as of January 9, 2018 (the “ Indenture ”) providing for the issuance of debentures in an aggregate principal amount of up to $24,000,000, designated as “7% Convertible Unsecured Debentures” and due on January 8, 2021 (the “ Debentures ”);

• B. The Corporation wishes to amend the Indenture to extend the maturity date of the Debentures, to reduce the conversion price of the principal amount of the Debentures, to include make-whole interest payment and additional make-whole interest payment provisions, and to allow the Corporation to carry out certain patent sales or patent secured debt financings without approval of the Debentureholders under specific conditions;

• C. The Corporation has agreed to pay Bonus Principal (as defined below) equal to 10% of the principal obligations of the Debentures outstanding on the date of this First Supplemental Indenture in consideration for the Debentureholders agreeing to the amendments;

• D. The TSX Venture Exchange has approved the reduction of the conversion price of the principal amount of the Debentures to $0.05 per common share in accordance with section 11.11(a) and 11.11(c) of the Indenture;

• E. The requisite Debentureholders have passed an Extraordinary Resolution in writing in accordance with sections 11.12 and 11.15 of the Indenture providing for the amendments set out in recitals B above;

• F. Section 11.11(a) of the Indenture gives the Debentureholders the power to authorize the Trustee to grant extensions of time for payment of any principal on Debentures;

• G. Section 11.11(c) of the Indenture gives the Debentureholders the power to assent any modification of or change in or addition to or omission from the provisions contained in the Indenture or any Debenture which shall be agreed to by the Corporation and to authorize the Trustee to concur in and execute any indenture supplemental thereto embodying any such modification, change, addition or omission;

• H. Section 11.11(e) of the Indenture gives the Debentureholders the power to direct or authorize the Trustee to exercise any power, right, remedy or authority given to it by this Indenture in any

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manner specified in any such Extraordinary Resolution or to refrain from exercising any such power, right, remedy or authority;

• I. Section 14.1(d) of the Indenture permits the Corporation and the Trustee to execute and deliver supplemental indentures giving effect to any Extraordinary Resolution passed in accordance with Article 11;

• J. The board of directors of the Corporation have determined that it is in the best interest of the Corporation to supplement the Indenture;

• K. The execution, acknowledgment and delivery of this First Supplemental Indenture by the Corporation has been duly authorized by a resolution of the board of directors of the Corporation; and

• L. The foregoing recitals are representations and statements of fact by the Corporation and not the Trustee

NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSES that for good and valuable consideration mutually given and received, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed and declared as follows:

ARTICLE 1 INTERPRETATION

1.1 Definitions and Interpretation

This First Supplemental Indenture is supplemental to the Indenture, and the Indenture shall henceforth be read in conjunction with this First Supplemental Indenture, and all the provisions of the Indenture, except only insofar as the same may be inconsistent with the express provisions hereof, shall apply and have the same effect as if all the provisions of the Indenture and this First Supplemental Indenture were contained in one instrument, and the capitalized terms used herein shall have the same meanings as are ascribed to the corresponding expressions in the Indenture.

On and after the date hereof, each reference in the Indenture to the Indenture, as supplemented by this First Supplemental Indenture, “this indenture”, “herein”, “hereby” and similar references, and each reference to the Indenture in any other agreement, certificate, document or instrument relating thereto, shall mean and refer to the Indenture as amended hereby. Except as specifically amended by this First Supplemental Indenture, all other terms and conditions of the Indenture shall remain in full force and unchanged.

1.2 Gender and Number.

Unless herein otherwise expressly provided or unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders.

1.3 Interpretation not Affected by Headings, etc.

The division of this First Supplemental Indenture into Articles, Sections, Subsections and paragraphs, and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this First Supplemental Indenture.

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1.4 Time of the Essence.

Time shall be of the essence in all respects in this First Supplemental Indenture.

1.5 Severability.

In the event that any provision hereof shall be determined to be invalid or unenforceable in any respect, such determination shall not affect such provision in any other respect or any other provision hereof, all of which shall remain in full force and effect.

1.6 Conflicts.

In the event of any conflict between the provisions of this First Supplemental Indenture and the Indenture, the provisions of this First Supplemental Indenture will govern.

1.7 Requirement of Writing.

This First Supplemental Indenture may not be amended, modified or waived except by written instrument signed by the Corporation and the Trustee.

1.8 Successors and Assigns.

This First Supplemental Indenture shall enure to the benefit of and be binding upon the Corporation and the Trustee hereto and their respective successors and assigns.

1.9 Execution.

This First Supplemental Indenture may be simultaneously executed by facsimile in counterparts, each of which when so executed and delivered shall be deemed to be an original and such counterparts together shall constitute one and the same instrument and notwithstanding their date of execution they shall be deemed to be dated as of the date hereof.

ARTICLE 2 AMENDMENTS

2.1 Amendment of Maturity Date

• (a) Subsection 1.1 (aaa) of the Indenture shall be deleted it its entirety and replaced by the following:

“ Maturity Date ” means July 9, 2022 or (subject to acceleration pursuant to section 4.14) the Accelerated Maturity Date;”

• (b) Subsection 1.1 of the Indenture shall be amended to include the following definition:

“ Accelerated Maturity Date ” means January 9, 2022;”

• (c) Subsection 2.1(b) of the Indenture shall be deleted in its entirety and replaced by the following:

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“The Debentures need not be issued at the same time. The Debentures shall be dated as of the Closing Date (regardless of the actual date of issuance) and shall mature on the Maturity Date.”

• (d) Subsection 2.1(c) of the Indenture shall be deleted in its entirety and replaced by the following:

“The Debentures shall bear interest from and including the Closing Date at the rate of 7% per annum (based on a year of 360 days composed of twelve 30-day months), payable in arrears in semi-annual payments (with the exception of the first interest payment which will include interest from and including the Closing Date and the last interest payment which will include interest from and including December 31, 2021 to but excluding the Maturity Date) on June 30 and December 31 of each year, the first such payment to fall due on June 30, 2018 and the last such payment (representing interest payable from and including December 31, 2021 to but excluding the Maturity Date of the Debentures or the earlier date of repurchase or conversion of the Debentures) to fall due on the Maturity Date or an earlier date of repurchase or conversion, payable after as well as before maturity and after as well as before default, with interest on amounts in default at the same rate, compounded semi-annually, computed on the basis of a 360 day year composed of twelve 30-day months. Each payment of interest on the Debentures will include interest accrued for the period commencing on and including the immediately preceding Interest Payment Date (or, if none, the Closing Date, being the initial issuance date of the Debentures) to but excluding the next following Interest Payment Date (or conversion date). For certainty, (i) the initial interest payment will include interest accrued from and including the Closing Date to but excluding June 30, 2018, which will be equal to $33.44 for each $1,000 principal amount of Debentures; and (ii) the last interest payment will include interest accrued from and including December 31, 2021 to but excluding the Maturity Date, which will be equal to $40.43 for each $1,000 principal amount of Debentures, with such amount of interest being inclusive of the interest payment made in respect of the Bonus Principal attached to such $1,000 principal amount of Debenture (which is an amount equal to $3.68). The record dates for the payment of interest on the Debentures will be the close of business on the sixth Business Day prior to each Interest Payment Date.”

• (e) Subsection 2.1(d) of the Indenture shall be deleted in its entirety and replaced by the following:

“Upon and subject to the terms and conditions of this Indenture, including Article 4, the principal amount of each Debenture, excluding the Bonus Principal, will be convertible into Freely Tradable Shares, at the option of the Debentureholder, at any time prior to the close of business on the Business Day immediately preceding the Maturity Date of the Debentures (the “Time of Expiry” for the purposes of this Section 2.1(d) and Article 4 in respect of the Debentures) at a price per Share equal to the Conversion Price, subject to adjustments for fractional interests in accordance with Section 4.4. Upon a voluntary conversion by a Debentureholder, the Corporation may offer and such Debentureholder (in the Debentureholder’s discretion) may agree to the delivery of cash for all or a portion of the Debentures converted in lieu of Shares in accordance with Section 4.13. Debentureholders converting their Debentures will be entitled to receive, in addition to the applicable number of Shares (or cash in lieu), accrued and unpaid interest (less any taxes required to be deducted in accordance with Section 2.13) on such Debentures, payable in cash for the period from and including the last Interest Payment Date (or the

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Closing Date if there has not yet been an Interest Payment Date) up to, but excluding, the Date of Conversion. The Conversion Notice for the Debentures shall be substantially in the form of Schedule B. To the extent a conversion is a conversion in part only of the Debentures as contemplated by Section 4.2, such right to convert, if not exercised prior to the applicable Time of Expiry, shall survive as to any Debentures not converted and be applicable to the next succeeding Time of Expiry. Notwithstanding any other provision of this Indenture, in the event that a Debentureholder exercises its conversion rights contemplated by this Section 2.1(d) and Article 4 less than five Business Days in advance of the Time of Expiry, the Trustee and the Corporation shall use their respective commercially reasonable efforts to deliver cash and/or Shares, as the case may be, to such Debentureholder as soon as reasonably practicable following receipt of the Conversion Notice.

A Debenture in respect of which a holder has accepted a notice in respect of a Change of Control Offer pursuant to the provisions of Section 2.1(f) may be surrendered for conversion only upon the withdrawal of such notice in accordance with this Indenture.”

• (f) Schedule A of the Indenture shall be amended so that all references to “January 9, 2021” are amended to read “July 9, 2022”.

2.2 Amendments to Conversion Price

• (a) Subsection 1.1 (u) of the Indenture shall be deleted it its entirety and replaced by the following:

“ Conversion Price ” means the dollar amount for which each Share may be issued from time to time upon the conversion of Debentures in accordance with the provisions of Article 4, and without limiting the generality of the foregoing, the Conversion Price in effect on the date hereof to January 8, 2022 for each Share to be issued on conversion of the Debentures is $0.05 (subject to adjustment as provided herein) and the Conversion Price in effect from January 9, 2022 until the Maturity Date is $0.10 (subject to adjustment as provided herein);

(b) The Indenture is hereby amended by adding the following as Section 4.14:

“ 4.14 Application to Amend Conversion Price

The Corporation shall make an application to the Exchange, no later than 60 days prior to January 9, 2022, for Exchange approval of an amendment to the applicable Conversion Price during the period from January 9, 2022 to the Maturity Date from $0.10 to $0.05 (subject to adjustment as provided herein) (the “ 2022 Amendment ”) and shall make commercially reasonable efforts to attain Exchange approval for the 2022 Amendment. If Exchange approval for the 2022 Amendment has not been received by the Corporation by December 9, 2021, then the Debentureholders shall have a right to accelerate the Maturity Date by Ordinary Resolution to the Accelerated Maturity Date, provided that a certified copy of the Ordinary Resolution is delivered to the Corporation by the Debentureholders no later than December 31, 2021.”

• (c) The Indenture is hereby amended by adding the following as Section 4.15:

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“ 4.15 Limitation on Conversion

Notwithstanding any other provision of the Indenture, in no event shall any Debentureholder be entitled to convert Debentures held by such holder to the extent that (a) such conversion would result in such holder, its joint actors and affiliates holding, directly or indirectly, a number of Shares greater than 9.9% of the issued and outstanding Shares until such time as the holder has filed and the TSXV has cleared for acceptance a personal information form in the prescribed form or (b) such conversion would result in such holder, its joint actors and affiliates holding, directly or indirectly, a number of Shares greater than 19.9% of the issued and outstanding Shares. The Trustee shall not be affect by any notice or knowledge to the contrary or incur any liability or responsibility whatsoever or be in any way responsible for the consequences of any breach of this Section 4.15 by a Debentureholder.”

2.3 Amendment of Principal Amount

• (a) Subsection 1.1 of the Indenture shall be amended to include the following definition:

“ Bonus Principal ” has the meaning ascribed thereto in Section 2.15;”

“ Bonus Principal Register ” is the register maintained by the Trustee evidencing the Debentureholders as of the date of this First Supplemental Indenture and their Bonus Principal entitlement;”

• (b) The Indenture is hereby amended by adding the following as Section 2.15:

“ 2.15 Bonus Principal

• (a) The Corporation shall pay an additional $100 to the Debentureholder on the Maturity Date in respect of each $1,000 principal amount of Debentures held by the Debentureholder on the First Supplemental Indenture (the “ Bonus Principal ”);

• (b) The Bonus Principal shall be paid on each $1,000 principal amount of Debentures outstanding on the date of the First Supplemental Indenture. For clarity, no Bonus Principal shall be payable on Debentures converted before the date of the First Supplemental Indenture is signed. On the date the First Supplemental Indenture is signed, the Debentureholders’ names will be entered on the Bonus Principal Register;

• (c) The Bonus Principal shall accrue interest from and including the date of the First Supplemental Indenture to but excluding the Maturity Date on the same terms as the Debentures (as if the Bonus Principal had been added to the principal amount of the Debentures) but shall not be convertible. Interest on the Bonus Principal shall be paid on the regular Interest Payment Date for the Debentures;

• (d) Notwithstanding any other provision of the Indenture, the Bonus Principal may not be converted into Shares, except as may be approved by the Exchange at the Maturity Date and by written agreement between the Corporation and the Debentureholder; and

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(e)

• the Bonus Principal shall be paid to the Debentureholder whose name appears on the Bonus Principal Register on the Maturity Date in accordance with (a) of this Section 2.15. For clarity, the Bonus Principal shall not be transferrable or convertible.”

2.4 Addition of Make-Whole Amount

• (a) Subsection 1.1 of the Indenture shall be amended to include the following definition:

“ Make-Whole Amount ” means an amount payable in (a) cash or (b) Shares at the Current Market Price on the Date of Conversion, or (c) a combination of cash and Shares at the Current Market Price on the Date of Conversion, at the option of the Corporation, equal to the interest payments that would have been made in respect of the principal amount outstanding under the Debenture converted pursuant to the provisions of Article 4, if the principal amount remained outstanding from the Date of Conversion to the Accelerated Maturity Date (less any taxes required to be deducted in accordance with Section 2.13);”

(b) Subsection 1.1 of the Indenture shall be amended to include the following definition:

“ Additional Make-Whole Amount ” means an amount payable in (a) cash or (b) Shares at the Current Market Price on the Date of Conversion, or (c) a combination of cash and Shares at the Current Market Price on the Date of Conversion, at the option of the Corporation, equal to the interest payments that would have been made in respect of the principal amount outstanding under the Debenture converted pursuant to the provisions of Article 4, if the principal amount remained outstanding from the Accelerated Maturity Date to the Maturity Date (less any taxes required to be deducted in accordance with Section 2.13);”

(c) Section 4.3 of the Indenture shall be deleted it its entirety and replaced by the following:

“ 4.3 Manner of Exercise of Right to Convert

(a) The holder of a Debenture desiring to convert such Debenture in whole or in part into Shares shall surrender such Debenture to the Trustee at its principal office in the City of Toronto together with the conversion notice attached hereto as Schedule B or any other written notice in a form satisfactory to the Trustee, in either case duly executed by the holder or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Trustee, exercising his right to convert such Debenture in accordance with the provisions of this Article 4; provided that with respect to a Global Debenture or Book Based Only Debenture, subject to certificating Debentures pursuant to Section 3.2(f) and Section 3.10(b), the obligation to surrender a Debenture to the Trustee shall be satisfied if the Trustee makes notation on the Global Debenture or otherwise in its records (in the case of a Book Based Only Debenture) of the principal amount thereof so converted and the Trustee is provided with all other documentation which it may request. Thereupon such Debentureholder or, subject to payment of all applicable stamp or security transfer taxes or other governmental charges and compliance with all reasonable requirements of the Trustee, his nominee(s) or assignee(s) shall be entitled to (a) be entered in the books of the Corporation as at the Date of Conversion (or such later date as is specified in Section 4.3(b)) as the holder of the number of Shares into which such

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Debenture is convertible in accordance with the provisions of this Article 4 and, as soon as practicable thereafter, the Corporation shall deliver to such Debentureholder or, subject as aforesaid, his nominee(s) or assignee(s), certificates or book entry system customer confirmations for such Shares and make or cause to be made any payment of interest to which such holder is entitled in accordance with Section 4.3(e) hereof or in respect of fractional Shares as provided in Section 4.5 and (b) if the Date of Conversion is a date prior to the Accelerated Maturity Date, to receive the Make-Whole Amount or, if the Date of Conversion is a date between the Accelerated Maturity Date and the Maturity Date, to receive the Make-Whole Amount and the Additional Make-Whole Amount.

Further to Section 3.2(f) and Section 3.10(b), a Beneficial Holder of Global Debenture or Book Based Only Debenture by a security entitlement in respect of Debentures in the book entry registration system who desires to convert his or her Debentures must do so by causing a Depository Participant to deliver to the Depository on behalf of the entitlement holder, notice of the owner’s intention to convert Debentures in a manner acceptable to the Depository. Forthwith upon receipt by the Depository of such notice, the Depository shall deliver to the Trustee confirmation of its intention to convert Debentures in a manner acceptable to the Trustee, including by electronic means through a book based registration system. An electronic withdrawal of the Debentures initiated by the Depository Participant through a book based registration system shall constitute a representation to both the Corporation and the Trustee that the beneficial owner at the time of exercise of such Debentures (a) is not in the United States; (b) is not a United States Person and is not exercising such Debentures on behalf of a United States Person or a Person in the United States; and (c) did not execute or deliver the notice of the owner’s intention to exercise such Debentures in the United States. If the Depository Participant is not able to make or deliver the foregoing representations by initiating the electronic exercise of the Debentures, then such Debentures shall be withdrawn from the book based registration system by the Depository and the Participant and an individually registered Debenture certificate shall be issued by the Trustee to such Beneficial Holder or Depository Participant and the exercise procedures set forth above in Section 4.3(a) shall be followed.

(b) For the purposes of this Article 4, a Debenture shall be deemed to be surrendered for conversion on the date (herein called the “Date of Conversion”) on which it is so surrendered when the register of the Trustee is open and in accordance with the provisions of this Article 4 or, in the case of a Global Debenture or Book Based Only Debenture, on the date which the Trustee received notice of and all necessary documentation in respect of the exercise of the conversion rights and, in the case of a Debenture so surrendered by post or other means of transmission, on the date on which it is received by the Trustee at its offices specified in Section 4.3(a); provided that if a Debenture is surrendered for conversion on a day on which the register of Shares is closed, the Person or Persons entitled to receive Shares shall be deemed to become the holder or holders of record of such Shares as at the date on which such registers are next reopened. A holder surrendering Debentures as aforementioned shall be treated as the holder of record of the Shares to be issued effective immediately before the close of business on the Date of Conversion, and shall be entitled to all substitutions therefor, all income earned thereon or accretions thereto and all dividends or distributions (dividends or distributions in kind) thereon and arising as of such date, and in the event that the Trustee receives the same, it shall hold the same in trust for the benefit of such holder.

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(c) Any part, being $1,000 or an integral multiple thereof, of a Debenture may be converted as provided in this Article 4 and all references in this Indenture to conversion of Debentures shall be deemed to include conversion of such parts.

(d) The holder of any Debenture of which only a part is converted shall, upon the exercise of his right of conversion surrender such Debenture to the Trustee in accordance with Section 4.3(a), and the Trustee shall cancel the same and shall without charge forthwith certify and deliver to the holder a new Debenture or Debentures in an aggregate principal amount equal to the unconverted part of the principal amount of the Debenture so surrendered or, with respect to a Global Debenture, the Depository shall make notations on the Global Debentures, if applicable, of the principal amount thereof so converted.

(e) The holder of a Debenture surrendered for conversion in accordance with this Section 4.3 shall be entitled to receive, in addition to the applicable number of Shares (or cash in lieu thereof in accordance with Section 4.13) in respect of principal amounts:

(i) accrued and unpaid interest payable at the option of the Corporation in cash or Shares (less any taxes required to be deducted in accordance with Section 2.13) in accordance with Section 2.1(d) in respect thereof from the immediately preceding Interest Payment Date (or the Closing Date if there has not yet been an Interest Payment Date) up to, but excluding, the Date of Conversion, and

(ii) (A) if the Date of Conversion is a date prior to the Accelerated Maturity Date, the Make-Whole Amount at the time of conversion for the period from and including the Date of Conversion to but excluding the Accelerated Maturity Date, or (B) if the Date of Conversion is a date between the Accelerated Maturity Date and the Maturity Date, the Additional Make-Whole Amount at the time of conversion for the period from and including the Date of Conversion to but excluding the Maturity Date.

If the Date of Conversion is a date prior to the Accelerated Maturity Date, the Corporation shall deposit with the Trustee the Additional Make-Whole Amount for the period from the Accelerated Maturity Date to the Maturity Date in accordance with Section 4.3(g) herein.

In addition, for clarity, Debentures surrendered for conversion following the close of business on any interest payment record date and before the close of business on the corresponding Interest Payment Date will receive the full semi-annual interest payable to the Holders of record on the corresponding Interest Payment Date, payable in cash or Shares on such Debentures on the corresponding Interest Payment Date notwithstanding the conversion. For clarity, any Debenture submitted for conversion during the period when the register is closed shall be converted on the Business Day following such Interest Payment Date when the registers are reopened.

(f) In the event of a conversion of Debentures into Shares where the holder is subject to withholding taxes, the Corporation for the account of the holder, shall sell, or cause to be sold through the investment banks, brokers or dealers selected by the Corporation, and approved by the Trustee, out of the Shares issued by the Corporation for this purpose, such number of Shares that together with any cash payment in lieu of fractional Shares, if any, is sufficient to yield net proceeds (after payment of all costs) to cover the amount of

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taxes required to be withheld or deducted, and the Trustee shall on Written Direction of the Corporation deduct or withhold such net proceeds and remit such amounts to the appropriate governmental authority, as and when required. Any amounts of net proceeds (after payment of all costs) in excess of the amount required to cover applicable tax required by Applicable Law to be withheld or deducted will be remitted to the Debentureholder.”

(g) In the event that a Debentureholder has exercised the right to convert pursuant to this Section 4.3 and the Date of Conversion is on a date prior to the Accelerated Maturity Date, the Corporation shall pay the Additional Make-Whole Amount in respect of the converted principal to the Trustee to be held in escrow by the Trustee for the benefit of the Debentureholder. If the Maturity Date has not been accelerated to the Accelerated Maturity Date, pursuant to Section 4.14, by January 9, 2022, the Trustee shall release the Additional Make-Whole Amount to the Debentureholder. If the Accelerated Maturity Date is approved pursuant to Section 4.14., the Corporation shall deliver a copy of the Ordinary Resolution accelerating the Maturity Date to the Trustee and, on receipt of that notice, the Trustee shall return any Additional Make-Whole Amount held in escrow to the Corporation.”

(h) Notwithstanding anything contained herein to the contrary, the Corporation will not be obliged to make any payment of the Make-Whole Amount or the Additional Make-Whole Amount payable to a Debenutreholder hereunder in excess of the amount or rate that would be permitted by Applicable Laws or would result in the receipt by the Debentureholder of interest at a criminal rate (as such terms are construed under the Criminal Code (Canada)). If the making of any payment by the Corporation would result in a payment being made that is in excess of such amount or rate, the particular Debentureholder will determine the payment or payments that are to be reduced or refunded, as the case may be, so that such result does not occur.

2.5 Addition of Financing Covenant

• (a) Section 6.2 of the Indenture shall be deleted it its entirety and replaced by the following:

“6.2 Additional Indebtedness

Subject to Section 6.16, while any Debentures remain outstanding, the Corporation shall not, and shall not permit any of its Subsidiaries to, (i) incur, assume or permit to exist any indebtedness for borrowed money or other obligations or liabilities other than Permitted Indebtedness; or (ii) directly or indirectly, create, assume, incur or permit to exist any Lien, other than Permitted Liens, on any asset or property now owned or hereafter acquired by the Corporation or any Subsidiary.”

• (b) The Indenture is hereby amended by adding the following as Section 6.16:

“6.16 Financing Covenant

The Corporation shall not, without the prior consent of Debentureholders by Extraordinary Resolution, enter into any agreement or transaction with any party with respect to any financing, funding, non-recourse funding, or other off-balance sheet transaction, any sale, disposition, assignment, licencing or other monetization or any of the Corporation’s assets or rights, including without limitation, any intellectual property,

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or patent based financing, other than an equity financing or the sale or license of the Corporation’s products in the ordinary course of business.

Notwithstanding the foregoing and the restrictions against additional indebtedness in Section 6.2, the Corporation shall be entitled, without requiring the prior consent of Debentureholders by Extraordinary Resolution, to conduct any patent sales or patent secured debt financings, provided that the Corporation shall pay an amount equal to 50% of the net proceeds received from such sales or debt financings (the “ Financing Repayment Amount ”) towards the pro rata repayment of the principal amount of the Debentures outstanding on the date of the closing of such patents sales or patent secured debt financing and accrued and unpaid interest on such amount with the remaining 50% applied to the working capital of the Corporation.

The Corporation shall, provide a Notice of Repayment to the Debentureholders not less than 5 Business Days prior to receiving any Financing Repayment Amount. The Notice shall include the Record Date for the Debentureholders entitled to receive the Financing Repayment Amount, which date shall be the date the Financing Repayment Amount is received by the Corporation (the “ Financing Repayment Amount Record Date ”). The Corporation shall provide an Officer’s Certificate confirming the amount being paid out and the calculation breakdown of principal and interest which the Trustee may rely upon without any independent obligation to verify the accuracy of information set out therein. For clarity, only the principal that is not Bonus Principal can be repaid in this way.

(c) The Indenture is hereby amended by adding the following as Section 6.17:

6.17 Notice of Repayment

Notice of Repayment of the Debentures shall be given by the Corporation to the Trustee and Debentureholders in the form set forth in Schedule A (the “ Notice of Repayment ”) hereto in the manner provided for in Sections 12.2 and 12.3 of the Indenture and shall include the Repayment Date, the places of payment, confirmation that the Debentureholders can convert between the date the Notice of Repayment is sent and the date the Financing Repayment Amount is paid, and that interest on the principal amount of Debentures called for repayment shall cease to be payable from and after the date the Financing Repayment Amount is paid (the “ Financing Repayment Amount Payment Date” ). Any Financing Repayment Amount Notice of Repayment shall be binding and irrevocable.

(d) The Indenture is hereby amended by adding the following as Section 6.18:

6.18 Debentures due on Financing Repayment Amount Payment Date

Upon the Notice of Repayment being given in accordance with Section 6.17, the Financing Repayment Amount shall become due and payable on the Financing Repayment Amount Payment Date specified in such notice and the Debentures shall cease to be outstanding on the register of the Trustee. All rights of the Debentureholders will terminate other than the right to receive the Financing Repayment Amount in respect of the Debentures called for pro rata repayment upon presentation for surrender of such Debentures at the place specified in the Notice of Repayment.

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6.19 Deposit of Financing Repayment Amount

The Corporation shall cause the Financing Repayment Amount to be deposited with the Trustee not less than one (1) Business Day prior to the Financing Repayment Amount Payment Date in clear funds. Such deposit shall be made be made no later than the close of business on the tenth (10[th] ) Business Day after closing of such a patent sales or patent secured debt financing. From the sums so deposited, the Trustee shall pay or cause to be paid to the Debentureholders, upon surrender of the Debentures, the Financing Repayment Amount.”

ARTICLE 3 MISCELLANEOUS PROVISIONS

3.1 Confirmation of Indenture

On the date hereof, the Indenture shall be supplemented in accordance with this First Supplemental Indenture, and this First Supplemental Indenture shall form part of the Indenture for all purposes, and the holder of every Debentures heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. The Indenture, as supplemented by this First Supplemental Indenture, shall remain in full force and effect as supplemented by this First Supplemental Indenture and is in all respects ratified and confirmed.

3.2 Acceptance

The Corporation hereby accepts the Indenture, as amended and supplemented by this First Supplemental Indenture, and agrees to perform the same upon the terms and conditions and subject to the provisions set forth in the Indenture as supplemented by this First Supplemental Indenture.

3.3 Counterparts and Formal Date

This First Supplemental Indenture may be executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument and notwithstanding their date of execution shall be deemed to be dated as of the day and year first above written.

3.4 Applicable Law

This First Supplemental Indenture shall be construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein and treated in all respects as an Ontario contract and shall be binding upon the parties hereto and their respective successors and assigns.

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IN WITNESS WHEREOF the parties hereto have executed this First Supplemental Convertible Indenture as of the day and year first above written.

SPECTRA7 MICROSYSTEMS INC.

By: (signed) "Raouf Halim" Name: Raouf Halim Title: Chief Executive Officer

By: (signed) "Dave Mier" Name: Dave Mier Title: Chief Financial Officer

COMPUTERSHARE TRUST COMPANY OF CANADA

By: (signed) "Danny Snider" Name: Danny Snider Title: Corporate Trust Officer

By: (signed) "Lisa Kudo" Name: Lisa Kudo Title: Corporate Trust Officer

SCHEDULE A

FORM OF NOTICE OF REPAYMENT

ISIN CA84761TAA75

7% CONVERTIBLE UNSECURED DEBENTURES

DUE JULY 9, 2022

REPAYMENT NOTICE

To: Holders of 7% Convertible Unsecured Debentures due July 9, 2022 (the “ Debentures ”) of Spectra7 Microsystems Inc. (the “ Corporation ”)

All capitalized terms used herein have the meaning ascribed thereto in the Indenture mentioned below, unless otherwise indicated.

Notice is hereby given pursuant to Section 6.17 of the Indenture between the Corporation and Computershare Trust Company of Canada as trustee (the “ Trustee ”), dated January 9, 2018, as amended (the “ Indenture ”), that $● principal amount of Debentures outstanding and $● of accrued and unpaid interest theron will be repaid as of ● (the “ Financing Repayment Amount Payment Date ”), being an amount equal to: (i) $● for each $1,000 principal amount of Debentures and (ii) all accrued and unpaid interest thereon to but excluding the Financing Repayment Amount Payment Date.

The Repayment Amount will be payable upon presentation and surrender of the Debentures presented for repayment at the following corporate trust office:

●

The interest upon the principal amount of Debentures presented for redemption shall cease to be payable from and after the Financing Repayment Amount Payment Date, unless payment of the Repayment Amount shall not be made on presentation for surrender of such Debentures at the above-mentioned corporate trust office on or after the Financing Repayment Amount Payment Date.

Debentureholders are reminded that they have the right to convert their Debentures pursuant to Article 4 of the Indenture up to the date immediately prior to the Financing Repayment Amount Payment Date.

Dated: ●

SPECTRA7 MICROSYSTEMS INC.

By: Name: Title: By: Name: Title: