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UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event
reported): August 16, 2024 (August 14,
2024)
Aclarion,
Inc.
(Exact name of registrant as specified in its charter)
Delaware |
001-41358 |
47-3324725 |
(State or other jurisdiction |
(Commission |
(IRS Employer |
of incorporation) |
File Number) |
Identification No.) |
8181 Arista Place, Suite 100 |
|
Broomfield, Colorado |
80021 |
(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (833) 275-2266
Not
Applicable
(Former name or former address, if changed since last report)
Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
|
Trading |
|
Title of each class |
Symbol(s) |
Name of each exchange on which registered |
Common Stock |
ACON |
Nasdaq Stock Market |
Common
Stock Warrants |
ACONW |
Nasdaq Stock Market |
Indicate by check mark whether
the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule
12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01 Entry into a Material Definitive
Agreement.
Background
As previously disclosed,
on September 1, 2023, Aclarion, Inc. (the “Company”, “we” and “us”) closed a financing for $862,500
of unsecured non-convertible notes due September 1, 2024.
Exchange Agreement
On August 14, 2024, the
Company entered into an exchange agreement (the “Exchange Agreement”) with the note holders accredited investors to exchange
approximately $930,000 of principal and accrued interest on the notes for 930 shares of newly issued Series B convertible preferred stock
(“Series B Preferred Stock”) at a purchase price of $1,000 per share of Series B Preferred Stock. The Series B Preferred
Stock is convertible into Common Stock at an initial conversion price (“Conversion Price”) of $0.234 per share of Common Stock.
Terms of the Series
B Preferred Stock
The Company has filed
a Certificate of Designations of Preferences, Rights and Limitations of Series B Preferred Stock (“Certificate of Designations”)
with the Secretary of State of the State of Delaware.
Rank
The Certificate of Designations
provides that the Series B Preferred Stock ranks senior to the Common Stock with respect to dividends and rights upon liquidation.
Voting Rights
Except as otherwise required
by law (or with respect to approval of certain actions), the Series B Preferred Stock will not have voting rights.
Dividends
Holders of the Series
B Preferred Stock will be entitled to dividends in the amount of 10% per annum, payable quarterly.
The Company has the option
to pay dividends on the Series B Preferred Stock in additional shares of Common Stock, provided that no equity conditions failure (as
defined in the Certificate of Designations) then exists. If the Company elects to pay in the form of Common Stock, the number of dividend
shares to be issued shall be calculated by using a “Dividend Conversion Price” equal to the lower of (i) the then applicable
Series B Conversion Price as in effect on the applicable dividend date, or (ii) 90% of the lowest volume weighted average price of the
Common Stock during the five (5) consecutive trading day period ending and including the trading day immediately preceding the applicable
dividend date.
The Company also has
the option to cumulate or “capitalize” the dividends, in which case the accrued dividend amount shall be added to the stated
value of each share of Series B Preferred Stock.
Conversion Rights;
Anti-Dilution Adjustments
The stated value of each
share of Series B Preferred Stock (including all the unpaid dividends and other amounts payable on the Series B Preferred Stock) will
be convertible into Common Stock at an initial fixed Conversion Price of $0.234 per share of Common Stock. The Series B Preferred Stock
may be converted into shares of Common Stock at any time at the option of the holder. The Series B Preferred Stock may also be converted
into shares of Common Stock at the option of the Company if the closing price of the Common Stock equals at least 300% of the Conversion
Price for 20 consecutive trading days, provided that no equity conditions failure (as defined in the Certificate of Designations) then
exists.
The Conversion Price
of the Series B Preferred Stock is subject to certain anti-dilution adjustments, including in the event of any stock splits or combinations,
certain dividends and distributions, reclassification, exchange or substitution of the Company’s Common Stock or in the event that
the Company grants, issues or sells (or enters into any agreement to grant, issue or sell), or is deemed to have granted, issued or sold,
any shares of Common Stock for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion
Price in effect immediately prior to such granting, issuance or sale or deemed granting, issuance or sale (the foregoing a “Dilutive
Issuance”). Immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an amount equal to
the New Issuance Price.
Limitations on Conversion
Exchange Cap Limitation.
The holders will not be able to receive shares upon conversion of the Series B Preferred Stock, unless prior stockholder approval is obtained,
if (i) the number of shares to be issued would exceed 20% of the Company’s outstanding number of shares at a discount to the applicable
Nasdaq Minimum Price or (ii) the number of shares to be issued to any holder would result in in a Change of Control within the meaning
of Nasdaq Rule 5635(b).
Beneficial Ownership
Limitation. The Company shall not effect the conversion of any of the Series B Preferred Stock held by a holder, and such holder shall
not have the right to convert any of the Series B Preferred Stock to the extent that after giving effect to such conversion or exercise,
such holder would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding
immediately after giving effect to such conversion or exercise (which percentage is subject to increase to 9.99% or decrease, at the option
of such holder, except that any raise will only be effective upon 61-days’ prior notice to us).
Defaults; Triggering
Events; Alternate Conversion Price
The Certificate of Designations
contains customary events of default, or “Triggering Events”, including, among others, (i) certain events of bankruptcy, insolvency
or reorganization; (ii) failure to comply with the listing rules of Nasdaq; (iii) certain breaches of the transaction agreements related
to this financing; and (iv) any of the shares of the Series B Preferred Stock remaining outstanding on or after August 14, 2026.
Upon the occurrence of
a Triggering Event, (i) the dividend rate on the Series B Preferred Stock will increase to 18%, and (ii) the Conversion Price then in
effect will be adjusted to an “Alternate Conversion Price” equal to the lowest of (i) the applicable Conversion Price as then
in effect, and (ii) the greater of (x) the “Floor Price” of $0.0468 and (y) 80% of the lowest volume weighted average price
of the Common Stock during the five (5) consecutive trading day period immediately preceding the delivery or deemed delivery of the applicable
conversion notice.
Redemption
At any time, the Company
shall have the right to redeem all, but not less than all, of the Series B Preferred Shares then outstanding in cash at a price equal
to at a 25% premium to the greater of (i) the applicable redemption amount and (ii) the equity value of the shares of our Common Stock
underlying the Series B Preferred Shares included in the applicable redemption amount. The equity value of our Common Stock is calculated
is calculated using the greatest closing sale price of our Common Stock during the period commencing on the date immediately preceding
our notice of such redemption and ending the we make the entire payment required.
Liquidation Value
Upon our liquidation,
dissolution or winding up, holders of Series B Preferred Stock shall be entitled to receive in cash out of the assets of the Company,
before any amount shall be paid to the holders of any of shares of Common Stock, an amount per Series B Preferred Share equal to the
greater of (A) 125% of the applicable liquidation value and (B) the amount per share such holder would receive if such holder converted
such share of Series B Preferred Stock into Common Stock immediately prior to the date of such payment.
******
The foregoing summaries
of the Exchange Agreement and the Certificate of Designations do not purport to be complete and are subject to, and qualified in their
entirety by, such documents attached as exhibits to this Current Report on Form 8-K, which are incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 of this Current Report on Form
8-K is incorporated herein by reference.
The securities described above have not been registered under the Securities
Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and sold in reliance
on the exemption from registration under the Securities Act afforded by Section 3(a)(9) thereof.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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ACLARION, INC. |
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August 14, 2024 |
By: | /s/ John Lorbiecki |
|
Name: |
John Lorbiecki |
|
Title: |
Chief Financial Officer |
Exhibit 3.1
|
Delaware |
|
Page 1 |
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The First State |
|
|
I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF DESIGNATION OF “ACLARION, INC.”, FILED IN THIS OFFICE ON THE FOURTEENTH DAY OF AUGUST, A.D. 2024, AT 12:47 O`CLOCK P.M.
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4492618 8100 |
Authentication: 204160860 |
SR# 20243413174 |
Date: 08-14-24 |
You may verify this certificate online at corp.delaware.gov/authver.shtml |
|
State of Delaware
Secretary of State
Division of Corporations
Delivered 12:47 PM 08/14/2024
FILED 12:47 PM 08/14/2024
SR 20243413174 - File Number 4492618 |
CERTIFICATE OF DESIGNATIONS
OF RIGHTS AND PREFERENCES OF
SERIES B CONVERTIBLE PREFERRED STOCK OF
ACLARION, INC. |
|
I, John Lorbiecki,
hereby certify that I am the Chief Financial Officer and Treasurer of Aclarion, Inc. (the "Company"), a corporation organized
and existing under the Delaware General Corporation Law (the "DGCL"), and further do hereby certify:
That pursuant to
the authority expressly conferred upon the Board of Directors of the Company (the "Board") by the Company's Certificate
of Incorporation, as amended (the "Certificate of Incorporation"), and Section 151(g) of the DGCL, the Board on August
14, 2024 adopted the following resolution determining it desirable and in the best interests of the Company and its stockholders for the
Company to create a series of One Thousand (1,000) shares of preferred stock designated as "Series B Convertible Preferred Stock",
none of which shares have been issued, to be issued pursuant to the Exchange Agreement (as defined in below), in accordance with the
terms of the Exchange Agreement, in exchange for that certain senior note, originally issued to the initial Holder (as defined below)
on September 1, 2023 and with an amount outstanding immediately prior to the Initial Issuance Date (as defined below) of $929,964.75 (consisting
of $862,500 principal and $67,464.75 accrued and unpaid interest).
RESOLVED, that
pursuant to the authority vested in the Board, in accordance with the provisions of the Certificate of Incorporation, a series of preferred
stock, par value $0.00001 per share, of the Company be and hereby is created pursuant to this certificate of designations (this "Certificate
of Designations"), and that the designation and number of shares established pursuant hereto and the voting and other powers,
preferences and relative, participating, optional or other rights of the shares of such series and the qualifications, limitations and
restrictions thereof are as follows:
TERMS OF SERIES B CONVERTIBLE PREFERRED STOCK
1.
Designation and Number of Shares. There shall hereby be created and established a series of preferred stock of the Company
designated as "Series B Convertible Preferred Stock" (the "Series B Convertible Preferred Stock"). The authorized
number of shares of Series B Convertible Preferred Stock (the "Preferred Shares") shall be One Thousand (1,000) shares.
Each Preferred Share shall have a par value of $0.00001 per share. Capitalized terms not defined herein shall have the meaning as set
forth in Section 31 below.
2.
Ranking. Except to the extent that the Required Holders (as defined in the Exchange Agreement) expressly consent to the
creation of Parity Stock (as defined below) or Senior Preferred Stock (as defined below) in accordance with Section 16, all shares of
capital stock of the Company shall be junior in rank to all Preferred Shares with respect to the preferences as to dividends, distributions
and payments upon the liquidation, dissolution and winding up of the Company (such junior stock is referred to herein collectively as
"Junior Stock"). For the avoidance of doubt, the Preferred Shares will, with respect to dividend rights and rights on
liquidation, winding-up and dissolution, rank (A) junior to the Senior Preferred Stock, (B) on parity with the Parity Stock and (C) senior
to the Junior Stock. The rights of all such shares of capital stock of the Company shall be subject to the rights, powers, preferences
and privileges of the Preferred Shares. Without limiting any other provision of this Certificate of Designations, without the prior express
consent of the Required Holders, voting separately as a single class, the Company shall not hereafter authorize or issue any additional
or other shares of capital stock that is (i) of senior rank to the Preferred Shares in respect of the preferences as to dividends, distributions
and payments upon the liquidation, dissolution and winding up of the Company (collectively, the "Senior Preferred Stock") (ii)
of pan passu rank to the Preferred Shares in respect of the preferences as to dividends, distributions and payments upon the liquidation,
dissolution and winding up of the Company (collectively, the "Parity Stock") or (iii) any Junior Stock having a maturity date
or any other date requiring redemption or repayment of such shares of Junior Stock that is prior to the second anniversary of the Initial
Issuance Date. In the event of the merger or consolidation of the Company with or into another corporation, the Preferred Shares shall
maintain their relative rights, powers, designations, privileges and preferences provided for herein and no such merger or consolidation
shall result inconsistent therewith.
3. Dividends.
(a)From and after
the first date of issuance of any Preferred Shares (the "Initial Issuance Date"), the Preferred Shares shall commence accruing
dividends ("Dividends") at the Dividend Rate computed on the basis of a 360-day year and twelve 30-day months. Dividends shall
be payable in arrears on the first Trading Day of each Fiscal Quarter (each, an "Dividend Date") with the first Dividend Date
being the first Trading Day of the initial Fiscal Quarter commencing after the Initial Issuance Date. Dividends shall be payable on each
Dividend Date, to each record holder (each, a "Holder", and collectively, the "Holders") of Preferred Shares on the
applicable Dividend Date, in shares of Common Stock ("Dividend Shares") so long as there has been no Equity Conditions Failure;
provided however, that the Company may, at its option following notice to each Holder, capitalize such Dividend by increasing the Stated
Value of each Preferred Share on such Dividend Date ("Capitalized Dividend") or in a combination of a Capitalized Dividend
and a payment in Dividend Shares. The Company shall deliver a written notice (each, an "Dividend Election Notice") to each
Holder of the Preferred Shares on or prior to the tenth (10th) Trading Day immediately prior to the applicable Dividend Date (each, an
"Dividend Notice Due Date") (the date such notice is delivered to all of the Holders, the "Dividend Notice Date")
which notice (i) either (A) confirms that Dividend to be paid on such Dividend Date shall be paid entirely in Dividend Shares or
(B) elects to effect a Capitalized Dividend or a combination of Capitalized Dividend and a payment in Dividend Shares and specifies the
amount of Dividend that shall be a Capitalized Dividend and the amount of Dividend, if any, that shall be paid in Dividend Shares and
(ii) certifies that there has been no Equity Conditions Failure. If an Equity Conditions Failure has occurred as of the Dividend Notice
Date, then unless the Company has elected to effect a Capitalized Dividend, the Dividend Election Notice shall indicate that unless such
applicable Holder waives the Equity Conditions Failure, the Dividend shall be effected as a Capitalized Dividend. Notwithstanding anything
herein to the contrary, if no Equity Conditions Failure has occurred as of the Dividend Notice Date, but an Equity Conditions Failure
occurs at any time prior to the Dividend Date, (A) the Company shall provide each Holder a subsequent notice to that effect and (B) unless
such applicable Holder waives the Equity Conditions Failure, the Dividend shall be paid to such Holder in cash. Dividend to be paid on
a Dividend Date in Dividend Shares shall be paid in a number of fully paid and nonassessable shares (rounded to the nearest whole share)
of Common Stock equal to the quotient of ( I ) the amount of Dividend payable on such Dividend Date less any Capitalized Dividend and
(2) the Dividend Conversion Price in effect on the applicable Dividend Date.
(b) When any
Dividend Shares are to be paid on an Dividend Date to a Holder, the Company shall (i) (A) provided that the Company's transfer agent
(the "Transfer Agent") is participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer Program ("FAST"), credit such aggregate number of Dividend Shares to which such Holder shall be entitled to
such Holder's or its designee's balance account with DTC through its Deposit/Withdrawal at Custodian system, or (B) if the Transfer Agent
is not participating in FAST, issue and deliver on the applicable Dividend Date, to the address set forth in the register maintained
by the Company for such purpose pursuant to the Securities Purchase Agreement or to such address as specified by such Holder in writing
to the Company at least two (2) Business Days prior to the applicable Dividend Date, a certificate, registered in the name of such Holder
or its designee, for the number of Dividend Shares to which such Holder shall be entitled and (ii) with respect to each Dividend Date,
increase the Stated Value of the Preferred Shares by the amount of any Capitalized Dividend.
(c)
Prior to the payment of Dividends on an Dividend Date, Dividends on the Preferred Shares shall accrue at the Dividend Rate and
be payable by way of inclusion of the Dividends in the Conversion Amount on each Conversion Date in accordance with Section 4(b) or upon
any redemption in accordance with Section 9 or upon any required payment upon any Bankruptcy Triggering Event. From and after the occurrence
and during the continuance of any Triggering Event, the Dividend Rate in effect with respect to such determination shall automatically
be increased to the Default Rate. In the event that such Triggering Event is subsequently cured (and no other Triggering Event then exists
(including, without limitation, for the Company's failure to pay such Dividends at the Default Rate on the applicable Dividend Date)),
the adjustment referred to in the preceding sentence shall cease to be effective as of the calendar day immediately following the date
of such cure; provided that the Dividends as calculated and unpaid at such increased rate during the continuance of such Triggering Event
shall continue to apply to the extent relating to the days after the occurrence of such Triggering Event through and including the date
of such cure of such Triggering Event.
4. Conversion. At
any time after the Initial Issuance Date, each Preferred Share shall be convertible into validly issued, fully paid and non-assessable
shares of Common Stock (the "Conversion Shares"), on the terms and conditions set forth in this Section 4.
(a)Holder's
Conversion Right. Subject to the provisions of Section 4(d), at any time or times on or after the Initial Issuance Date, each Holder
shall be entitled to convert any portion of the outstanding Preferred Shares held by such Holder into validly issued, fully paid and
non-assessable Conversion Shares in accordance with Section 4(c) at the Conversion Rate (as defined below). The Company shall not issue
any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of
Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any
and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer
Agent that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Preferred Shares).
(b)Conversion
Rate. Except as otherwise provided herein, the number of Conversion Shares issuable upon conversion of any Preferred Share pursuant
to this Section 4 shall be determined by dividing (x) the Conversion Amount of such Preferred Share by (y) the Conversion Price (the "Conversion
Rate").
(i)
For purposes of this Certificate of Designations, the term "Conversion Amount" means, with respect to each Preferred
Share, as of the applicable date of determination, the sum of (1) the Stated Value thereof Rim (2) any Additional Amount thereon as of
such date of determination phis (3) any other amounts owed to such Holder pursuant to this Certificate of Designations or any other Transaction
Document.
(ii)
For purposes of this Certificate of Designations, the term "Conversion Price" means, with respect to each Preferred
Share, as of any Conversion Date or other date of determination, $0.234, subject to adjustment as provided herein.
(c)Mechanics
of Conversion. The conversion of each Preferred Share shall be conducted in the following manner:
(i) Optional
Conversion. To convert one or more Preferred Shares into Conversion Shares on any date (a "Conversion Date"), a
Holder shall deliver (whether via electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date,
a copy of an executed notice of conversion of the Preferred Share(s) subject to such conversion in the form attached hereto as Exhibit
I (the "Conversion Notice") to the Company. If required by Section 4(c)( ii), within two (2) Trading Days following
a conversion of any such Preferred Shares as aforesaid, such Holder shall surrender to a nationally recognized overnight delivery service
for delivery to the Company the original certificates, if any, representing the Preferred Shares (the "Preferred Share Certificates")
so converted as aforesaid (or an indemnification undertaking with respect to the Preferred Shares in the case of its loss, theft
or destruction as contemplated by Section 18(b)). On the date of receipt of a Conversion Notice, the Company shall transmit by electronic
mail an acknowledgment of confirmation and representation as to whether such shares of Common Stock may then be resold pursuant to Rule
144 or an effective and available registration statement, in the form attached hereto as Exhibit II, of receipt of such
Conversion Notice to such Holder and the Transfer Agent, which confirmation shall constitute an instruction to the Transfer Agent to
process such Conversion Notice in accordance with the terms set forth herein. On or before the first (181)
Trading Day following each date on which the Company has received a Conversion Notice (or such earlier date as required pursuant to the
1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated on the applicable Conversion Date of such
Conversion Shares issuable pursuant to such Conversion Notice) (the "Share Delivery Deadline"), the Company shall (I)
provided that the Transfer Agent is participating in FAST and such shares of Common Stock (i) (A) may then be sold by the applicable
Holder pursuant to an available and effective registration statement and (B) such Holder provides such documentation or other
information evidencing the sale of the shares of Common Stock as the Company, the Transfer Agent or legal counsel to the Company shall
reasonably request (which, for the avoidance of doubt, shall not include the requirement of a medallion guarantee or a legal opinion)
or (ii) may be sold by such Holder pursuant to Rule 144 of the 1933 Act, as applicable (the "Resale Eligibility Conditions"),
credit such aggregate number of Conversion Shares to which such Holder shall be entitled pursuant to such conversion to such Holder's
or its designee's balance account with DTC through its Deposit/Withdrawal at Custodian system, or (2) if the Transfer Agent is not participating
in FAST or the Resale Eligibility Conditions are not satisfied, upon the request of such Holder, issue and deliver (via reputable overnight
courier) to the address as specified in such Conversion Notice, a certificate, registered in the name of such Holder or its designee,
for the number of Conversion Shares to which such Holder shall be entitled. If the number of Preferred Shares represented by the Preferred
Share Certificate(s) submitted for conversion pursuant to Section 4(c)(ii) is greater than the number of Preferred Shares being converted,
then the Company shall, as soon as practicable and in no event later than two (2) Trading Days after receipt of the Preferred Share Certificate(s)
and at its own expense, issue and mail to such Holder (or its designee) by overnight courier service a new Preferred Share Certificate
or a new Book-Entry (in either case, in accordance with Section I 8(d)) representing the number of Preferred Shares not converted.
The Person or Persons entitled to receive the Conversion Shares issuable upon a conversion of Preferred Shares shall be treated for all
purposes as the record holder or holders of such Conversion Shares on the Conversion Date; provided, that such Person shall be deemed
to have waived any voting rights of any such Conversion Shares that may arise during the period commencing on such Conversion Date, through,
and including, such applicable Share Delivery Deadline (each, an "Conversion Period"), as necessary, such that the aggregate
voting rights of any Common Stock (including such Conversion Shares) beneficially owned by such Person and/or any of its Attribution
Parties, collectively, on any such date of determination shall not exceed the Maximum Percentage (as defined below) as a result of any
such conversion of such applicable Preferred Shares with respect thereto. Notwithstanding the foregoing, if a Holder delivers a Conversion
Notice to the Company prior to the date of issuance of Preferred Shares to such Holder, whereby such Holder elects to convert
such Preferred Shares pursuant to such Conversion Notice, the Share Delivery Deadline with respect to any such Conversion Notice shall
be the later of (x) the date of issuance of such Preferred Shares and (y) the first (1st) Trading Day after the date of such Conversion
Notice. Notwithstanding anything to the contrary contained in this Certificate of Designations, the Company shall cause the Transfer
Agent to deliver unlegended shares of Common Stock to such Holder (or its designee) in connection with any sale of securities with respect
to which such Holder has entered into a contract for sale to the extent applicable, and for which such Holder has not yet settled.
(ii)Company's
Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery
Deadline, if the Transfer Agent is not participating in FAST or the Resale Eligibility Conditions are not satisfied, to issue and deliver
to such Holder (or its designee) a certificate for the number of Conversion Shares to which such Holder is entitled and register such
Conversion Shares on the Company's share register or, if the Transfer Agent is participating in FAST and the Resale Eligibility Conditions
are satisfied, to credit such Holder's or its designee's balance account with DTC for such number of Conversion Shares to which such
Holder is entitled upon such Holder's conversion of any Conversion Amount (as the case may be) (each, a "Conversion Failure"),
and if on or after such Share Delivery Deadline such Holder acquires (in an open market transaction, stock loan or otherwise) shares
of Common Stock corresponding to all or any portion of the number of Conversion Shares issuable upon such conversion that such Holder
is entitled to receive from the Company and has not received from the Company in connection with such Conversion Failure (a "Buy-In"),
then, in addition to all other remedies available to such Holder, the Company shall, within one (I) Business Day after receipt of
such Holder's request and in such Holder's discretion, either: (I) pay cash to such Holder in an amount equal to such Holder's
total purchase price (including brokerage commissions, stock loan costs and other out-of-pocket expenses, if any) for the shares of Common
Stock so acquired (including, without limitation, by any other Person in respect, or on behalf, of such Holder) (the "Buy-In
Price"), at which point the Company's obligation to so issue and deliver such certificate (and to issue such Conversion Shares)
or credit to the balance account of such Holder or such Holder's designee, as applicable, with DTC for the number of Conversion Shares
to which such Holder is entitled upon such Holder's conversion hereunder (as the case may be) (and to issue such Conversion Shares) shall
terminate, or (II) promptly honor its obligation to so issue and deliver to such Holder a certificate or certificates representing such
Conversion Shares or credit the balance account of such Holder or such Holder's designee, as applicable, with DTC for the number of Conversion
Shares to which such Holder is entitled upon such Holder's conversion hereunder (as the case may be) and pay cash to such Holder in an
amount equal to the excess (if any) of the Buy-In Price over the product of (x) such number of shares of Common Stock multiplied by (y)
the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Conversion
Notice and ending on the date of such issuance and payment under this clause (II) (each, a "Buy-In Payment Amount"). In
addition to the foregoing, if on or prior to the Share Delivery Deadline the Transfer Agent is not participating in FAST or the Resale
Eligibility Conditions are not satisfied, the Company shall fail to issue and deliver to such Holder (or its designee) a certificate
and register such Conversion Shares on the Company's share register or, if the Transfer Agent is participating in the FAST and the Resale
Eligibility Conditions are satisfied, the Transfer Agent shall fail to credit the balance account of such Holder or such Holder's designee,
as applicable, with DTC for the number of Conversion Shares to which such Holder is entitled upon such Holder's conversion hereunder
or pursuant to the Company's obligation pursuant to clause (ii) below, then, in addition to all other remedies available to such Holder,
(X) the Company shall pay in cash to such Holder on each day after the Share Delivery Deadline that the issuance of such Conversion Shares
is not timely effected an amount equal to 2% of the product of (A) the sum of the number of Conversion Shares not issued to such Holder
on or prior to the Share Delivery Deadline and to which such Holder is entitled, multiplied by (B) any trading price of the Common Stock
selected by such Holder in writing as in effect at any time during the period beginning on the applicable Conversion Date and ending
on the applicable Share Delivery Deadline and (Y) such Holder, upon written notice to the Company, may void its Conversion Notice with
respect to, and retain or have returned, as the case may be, all, or any portion, of such Preferred Shares that has not been converted
pursuant to such Conversion Notice; provided that the voiding of a Conversion Notice shall not affect the Company's obligations to make
any payments which have accrued prior to the date of such notice pursuant to this Section 4(c)(ii) or otherwise. 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 Company's failure to timely deliver certificates representing
Conversion Shares (or to electronically deliver such Conversion Shares) upon the conversion of the Preferred Shares as required pursuant
to the terms hereof. Notwithstanding anything herein to the contrary, with respect to any given Conversion Failure, this Section 4(c)(ii)
shall not apply to a Holder to the extent the Company has already paid such amounts in full to such Holder with respect to such Conversion
Failure pursuant to the analogous sections of the Securities Purchase Agreement.
(iii) Registration; Book-Entry.
At the time of issuance of any Preferred Shares hereunder, the applicable Holder may, by written request (including by electronic-mail)
to the Company, elect to receive such Preferred Shares in the form of one or more Preferred Share Certificates or in Book-Entry form.
The Company (or the Transfer Agent, as custodian for the Preferred Shares) shall maintain a register (the "Register") for the
recordation of the names and addresses of the Holders of each Preferred Share and the Stated Value of the Preferred Shares and whether
the Preferred Shares are held by such Holder in Preferred Share Certificates or in Book-Entry form (the "Registered Preferred Shares").
The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and each Holder of the
Preferred Shares shall treat each Person whose name is recorded in the Register as the owner of a Preferred Share for all purposes (including,
without limitation, the right to receive payments and Dividends hereunder) notwithstanding notice to the contrary. A Registered Preferred
Share may be assigned, transferred or sold only by registration of such assignment or sale on the Register. Upon its receipt of a written
request to assign, transfer or sell one or more Registered Preferred Shares by such Holder thereof, the Company
shall record the information contained therein in the Register and issue one or more new Registered Preferred Shares in the same aggregate
Stated Value as the Stated Value of the surrendered Registered Preferred Shares to the designated assignee or transferee pursuant to
Section 18, provided that if the Company does not so record an assignment, transfer or sale (as the case may be) of such Registered Preferred
Shares within two (2) Business Days of such a request, then the Register shall be automatically deemed updated to reflect such assignment,
transfer or sale (as the case may be). Notwithstanding anything to the contrary set forth in this Section 4, following conversion of
any Preferred Shares in accordance with the terms hereof, the applicable Holder shall not be required to physically surrender such Preferred
Shares held in the form of a Preferred Share Certificate to the Company
unless (A) the full or remaining number of Preferred Shares represented by the applicable Preferred
Share Certificate are being converted (in which event such certificate(s) shall be delivered
to the Company as contemplated by this Section 4(c)(ii)) or (B) such
Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance
of Preferred Shares upon physical surrender of the applicable Preferred Share Certificate. Each Holder and the Company shall maintain
records showing the Stated Value and Dividends converted and/or paid (as the case may be) and the dates of such conversions and/or payments
(as the case may be) or shall use such other method, reasonably satisfactory to such Holder and the Company, so as not to require physical
surrender of a Preferred Share Certificate upon conversion. If the Company does not update the Register to record such Stated Value and
Dividends converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) within one
(I) Business Day of such occurrence, then the Register shall be automatically deemed updated to reflect such occurrence. In the
event of any dispute or discrepancy, the records of the Company establishing the number of Preferred Shares to which the record holder
is entitled shall be controlling and determinative in the absence of manifest error. A Holder and any transferee or assignee, by acceptance
of a certificate, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of any Preferred Shares,
the number of Preferred Shares represented by such certificate may be less than the number of Preferred Shares stated on the face thereof.
Each Preferred Share Certificate shall bear the following legend:
ANY
TRANSFEREE OR ASSIGNEE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS OF THE CORPORATION'S CERTIFICATE OF DESIGNATIONS
RELATING TO THE SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE, INCLUDING SECTION 4(cXii) THEREOF. THE
NUMBER OF SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER OF SHARES OF SERIES
B CONVERTIBLE PREFERRED STOCK STATED ON THE FACE HEREOF PURSUANT TO SECTION 4(cXii) OF THE CERTIFICATE OF DESIGNATIONS RELATING TO THE
SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE.
(iv) Pro Rata
Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one Holder for the same Conversion
Date and the Company can convert some, but not all, of such Preferred Shares submitted for conversion, the Company shall convert from
each Holder electing to have Preferred Shares converted on such date a pro rata amount of such Holder's Preferred Shares submitted for
conversion on such date based on the number of Preferred Shares submitted for conversion on such date by such Holder relative to the
aggregate number of Preferred Shares submitted for conversion on such date. In the event of a dispute as to the number of Conversion
Shares issuable to a Holder in connection with a conversion of Preferred Shares, the Company shall issue to such Holder the number of
Conversion Shares not in dispute and resolve such dispute in accordance with Section 23. If a Conversion Notice delivered to the Company
would result in a breach of Section 4(d) below, and the applicable Holder does not elect in writing to withdraw, in whole, such Conversion
Notice, the Company shall hold such Conversion Notice in abeyance until such time as such Conversion Notice may be satisfied without
violating Section 4(d) below (with such calculations thereunder made as of the date such Conversion Notice was initially delivered to
the Company).
(d)Limitation
on Beneficial Ownership. The Company shall not effect the conversion of any of the Preferred Shares held by a Holder, and such Holder
shall not have the right to convert any of the Preferred Shares held by such Holder pursuant to the terms and conditions of this Certificate
of Designations and any such conversion shall be null and void and treated as if never made, to the extent that after giving effect to
such conversion, such Holder together with the other Attribution Parties collectively would beneficially own in excess of 4.99% (the
"Maximum Percentage") of the shares of Common Stock outstanding immediately after giving effect to such conversion.
For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Holder and the other
Attribution Parties shall include the number of shares of Common Stock held by such Holder and all other Attribution Parties &is
the number of shares of Common Stock issuable upon conversion of the Preferred Shares with respect to which the determination of such
sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (A) conversion of the remaining, nonconverted
Preferred Shares beneficially owned by such Holder or any of the other Attribution Parties and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any convertible notes, convertible
preferred stock or warrants, including the Preferred Shares) beneficially owned by such Holder or any other Attribution Party subject
to a limitation on conversion or exercise analogous to the limitation contained in this Section 4(d). For purposes of this Section 4(d),
beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act. For the avoidance of doubt, the calculation
of the Maximum Percentage shall take into account the concurrent exercise and/or conversion, as applicable, of the unexercised or unconverted
portion of any other securities of the Company beneficially owned by such Holder and/or any other Attribution Party, as applicable. For
purposes of determining the number of outstanding shares of Common Stock a Holder may acquire upon the conversion of such Preferred Shares
without exceeding the Maximum Percentage, such Holder may rely on the number of outstanding shares of Common Stock as reflected in (x)
the Company's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing
with the SEC, as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company
or the Transfer Agent, if any, setting forth the number of shares of Common Stock outstanding (the "Reported Outstanding Share
Number"). If the Company receives a Conversion Notice from a Holder at a time when the actual number of outstanding shares of
Common Stock is less than the Reported Outstanding Share Number, the Company shall notify such Holder in writing of the number of shares
of Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise cause such Holder's beneficial ownership,
as determined pursuant to this Section 4(d), to exceed the Maximum Percentage, such Holder must notify the Company of a reduced number
of shares of Common Stock to be purchased pursuant to such Conversion Notice. For any reason at any time, upon the written or oral request
of any Holder, the Company shall within one (1 ) Business Day confirm orally and in writing or by electronic mail 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 Company, including such Preferred Shares, by such Holder and any
other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance
of shares of Common Stock to a Holder upon conversion of such Preferred Shares results in such Holder and the other Attribution Parties
being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock
(as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which such Holder's and the other Attribution
Parties' aggregate beneficial ownership exceeds the Maximum Percentage (the "Excess Shares") shall be deemed null and void
and shall be cancelled ab initio, and such Holder shall not have the power to vote or to transfer the Excess Shares. Upon delivery of
a written notice to the Company, any Holder may from time to time increase (with such increase not effective until the sixty-first (6
PI day after delivery of such notice) or decrease the Maximum Percentage of such Holder to any other percentage not in excess of 9.99%
as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first
(6151) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to such Holder
and the other Attribution Parties and not to any other Holder that is not an Attribution Party of such Holder. For purposes of clarity,
the shares of Common Stock issuable to a Holder pursuant to the terms of this Certificate of Designations in excess of the Maximum Percentage
shall not be deemed to be beneficially owned by such Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1)
of the 1934 Act. No prior inability to convert such Preferred Shares pursuant to this paragraph shall have any effect on the applicability
of the provisions of this paragraph with respect to any subsequent determination of convertibility. The provisions of this paragraph
shall not be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to the extent
necessary to correct this paragraph (or any portion of this paragraph) which may be defective or inconsistent with the intended beneficial
ownership limitation contained in this Section 4(d) or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitation contained in this paragraph may not be amended, modified or waived and shall apply to a successor
holder of such Preferred Shares.
(e)Mandatory
Conversion.
(i)General.
If at any time (1) the Closing Sale Price of the Common Stock listed on the Principal Market equals at least 300% of the Conversion
Price for twenty (20) consecutive Trading Days (each, a "Mandatory Conversion Measuring Period"), and (ii) no Equity
Conditions Failure then exists, the Company shall have the right to require each Holder to convert all, or any number, of the Preferred
Shares, as designated in the Mandatory Conversion Notice (as defined below) into fully paid, validly issued and nonassessable shares
of Common Stock in accordance with Section 4(c) hereof at the Conversion Rate as of the Mandatory Conversion Date (as defined below)
(a "Mandatory Conversion"). The Company may exercise its right to require conversion under this Section 4(e) by delivering
within five (5) Trading Days following the end of such Mandatory Conversion Measuring Period a written notice thereof by electronic mail
and overnight courier to all, but not less than all, of the Holders and the Transfer Agent (the "Mandatory Conversion Notice"
and the date all of the Holders received such notice by electronic mail is referred to as the "Mandatory Conversion Notice
Date"). The Mandatory Conversion Notice shall be irrevocable. The Mandatory Conversion Notice shall state (i) the Trading Day
selected for the Mandatory Conversion in accordance with this Section 4(e), which Trading Day shall be no less than two (2) Trading Days
and no more than fifteen (15) Trading Days following the Mandatory Conversion Notice Date (the "Mandatory Conversion Date"),
(ii) the aggregate number of the Preferred Shares subject to mandatory conversion from each Holder pursuant to this Section 4(e),
(iii) the number of shares of Common Stock to be issued to such Holder on the Mandatory Conversion Date and (iv) that there has been
no Equity Conditions Failure. Notwithstanding the foregoing, the Company may effect only one (1) Mandatory Conversion during any twenty
(20) consecutive Trading Days. Notwithstanding anything herein to the contrary, (i) if the Closing Sale Price of the Common Stock listed
on the Principal Market fails to exceed the Conversion Price by 300% for each Trading Day commencing on the Mandatory Conversion Notice
Date and ending and including the Trading Day immediately prior to the applicable Mandatory Conversion Date (a "Mandatory Conversion
Price Failure") or an Equity Conditions Failure occurs at any time prior to the Mandatory Conversion Date, (A) the Company shall
provide each Holder a subsequent notice to that effect and (B) unless such Holder waives the applicable Equity Conditions Failure and/or
Mandatory Conversion Price Failure, as applicable, the Mandatory Conversion shall be cancelled and the applicable Mandatory Conversion
Notice of such Holder shall be null and void and (ii) at any time prior to the date of consummation of the Mandatory Conversion the Preferred
Shares subject to such Mandatory Conversion may be converted, in whole or in part, by any Holder into shares of Common Stock pursuant
to Section 4. Notwithstanding the foregoing, any Preferred Shares subject to a Mandatory Conversion may be converted by a Holder hereunder
prior to the applicable Mandatory Conversion Date and such aggregate number of Preferred Shares converted hereunder on or after the Mandatory
Conversion Notice Date and prior to such Mandatory Conversion Date shall reduce the aggregate number of Preferred Shares of such Holder
required to be converted on such Mandatory Conversion Date. For the avoidance of doubt, the Company shall have no right to effect a Mandatory
Conversion if any Triggering Event has occurred and continuing, but any Triggering Event shall have no effect upon any Holder's right
to convert Preferred Shares in its discretion.
(ii)Pro
Rata Conversion Requirement. If the Company elects to cause a Mandatory Conversion of any Preferred Shares pursuant to this Section
4(e), then it must simultaneously take the same action in the same proportion with respect to all Holders of Preferred Shares.
(f)Right of Alternate
Conversion Upon a Triggering Event.
(i) General.
Subject to Section 4(d), at any time after the earlier of a Holder's receipt of a Triggering Event Notice (as defined below) and
such Holder becoming aware of a Triggering Event (such earlier date, the "Alternate Conversion Right Commencement Date") and
ending (such ending date, the "Alternate Conversion Right Expiration Date", and each such period, an "Alternate Conversion
Right Period") on the twentieth (20th) Trading Day after the later of (x) the date such Triggering Event is cured and (y)
such Holder's receipt of a Triggering Event Notice that includes (I) a reasonable description of the applicable Triggering Event, (II)
a certification as to whether, in the reasonable opinion of the Company, such Triggering Event is capable of being cured and, if applicable,
a reasonable description of any existing plans of the Company to cure such Triggering Event and (III) a certification as to the date
the Triggering Event occurred and, if cured on or prior to the date of such Triggering Event Notice, the applicable Alternate Conversion
Right Expiration Date, such Holder may, at such Holder's option, by delivery of a Conversion Notice to the Company (the date of any such
Conversion Notice, each an "Alternate Conversion Date"), convert all, or any number of Preferred Shares held by such
Holder into shares of Common Stock at the Alternate Conversion Price (each, an "Alternate Conversion").
(ii) Mechanics
of Alternate Conversion. On any Alternate Conversion Date, a Holder may voluntarily convert any number of Preferred Shares held by
such Holder pursuant to Section 4(c) (with "Alternate Conversion Price" replacing "Conversion Price" for all purposes
hereunder with respect to such Alternate Conversion and with "the applicable Required Premium multiplied by the Conversion Amount"
replacing "Conversion Amount" in clause (x) of the definition of Conversion Rate in Section 4(b) above with respect to such
Alternate Conversion) by designating in the Conversion Notice delivered pursuant to this Section 4(000 of this Certificate of Designations
that such Holder is electing to use the Alternate Conversion Price for such conversion; provided that in the event of the Conversion
Floor Price Condition, on the applicable Alternate Conversion Date the Stated Value of the remaining Preferred Shares of such Holder
shall automatically increase, pro rata, by the applicable Alternate Conversion Floor Amount or, at the Company's option, the Company
shall deliver the applicable Alternate Conversion Floor Amount to such applicable Holder on the applicable Alternate Conversion Date.
Notwithstanding anything to the contrary in this Section 400), but subject to Section 4(d), until the Company delivers to such Holder
the shares of Common Stock to which such Holder is entitled pursuant to the applicable Alternate Conversion of such Holder's Preferred
Shares, such Preferred Shares may be converted by such Holder into shares of Common Stock pursuant to Section 4(c) without regard to
this Section 4(000. In the event of an Alternate Conversion pursuant to this Section 4(t)(ii) of all, or any portion, of any Preferred
Shares of a Holder, such Holder's damages would be uncertain and difficult to estimate because of the parties' inability to predict future
interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for such Holder. Accordingly,
any redemption premium due under this Section 4(t)(ii), together the Alternate Conversion Price used in such Alternate Conversion, as
applicable, is intended by the parties to be, and shall be deemed, a reasonable estimate of, such Holder's actual loss of its investment
opportunity and not as a penalty.
5. Triggering Events.
(a)General.
Each of the following events shall constitute a "Triggering Event" and each of the events in clauses 5(a)(x), 5(aXxi),
and 5(aXxii), shall constitute a "Bankruptcy Triggering Event":
(i)
[Reserved];
(ii)
[Reserved];
(iii) the suspension
from trading or the failure of the Common Stock to be trading or listed (as applicable) on an Eligible Market for a period of five (5)
consecutive Trading Days;
(iv) the Company's
(A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within five (5) Trading Days after
the applicable Conversion Date or exercise date (as the case may be) or (B) notice, written or oral, to any holder of Preferred Shares,
including, without limitation, by way of public announcement or through any of its agents, at any time, of its intention not to comply,
as required, with a request for conversion of any Preferred Shares into shares of Common Stock that is requested in accordance with the
provisions of this Certificate of Designations, other than pursuant to Section 4(c)(iv) hereof;
(v)
except to the extent the Company is in compliance with Section 11(b) below, at any time following the tenth (10th) consecutive day that
a Holder's Authorized Share Allocation (as defined in Section 11(a) below) is less than 250% of the number of shares of Common Stock that
such Holder would be entitled to receive upon a conversion, in full, of all of the Preferred Shares then held by such Holder (assuming
conversions at the Floor Price then in effect without regard to any limitations on conversion set forth in this Certificate of Designations);
(vi)
the Board fails to declare any Dividend to be paid on the applicable Dividend Date in accordance with Section 3;
(vii)
the Company's failure to pay to any Holder any Dividend on any Dividend Date (whether or not declared by the Board) or any other amount
when and as due under this Certificate of Designations (including, without limitation, the Company's failure to pay any redemption payments
or amounts hereunder), the Securities Purchase Agreement or any other Transaction Document or any other agreement, document, certificate
or other instrument delivered in connection with the transactions contemplated hereby and thereby (in each case, whether or not permitted
pursuant to the DGCL), except, in the case of a failure to pay Dividends when and as due, in each such case only if such failure remains
uncured for a period of at least two (2) Trading Days;
(viii)
the Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the applicable Holder upon
conversion or exercise (as the case may be) of any Securities (as defined in the Securities Purchase Agreement) acquired by such Holder
under the Transaction Documents as and when required by such Securities or the Securities Purchase Agreement, as applicable, unless otherwise
then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five (5) days;
(ix)
the occurrence of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $500,000 of Indebtedness
(as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries;
(x)
bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by
or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed
within thirty (30) days of their initiation;
(xi)
the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy,
insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company or any Subsidiary in an involuntary
case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal, state or foreign law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of
creditors, or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or
the admission by it in writing of its inability to pay its debts generally as they become due, the taking of corporate action by the
Company or any Subsidiary in furtherance of any such action or the taking of any action by any Person to commence a Uniform Commercial
Code foreclosure sale or any other similar action under federal, state or foreign law;
(xii)
the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of
a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or
other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or insolvent,
or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect
of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order, judgment or other similar
document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any
Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of
any such decree, order, judgment or other similar document or any such other decree, order, judgment or other similar document unstayed
and in effect for a period of thirty (30) consecutive days;
(xiii)
a final judgment or judgments for the payment of money aggregating in excess of $500,000 are rendered against the Company and/or
any of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled or
stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment
which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $500,000 amount set
forth above so long as the Company provides each Holder a written statement from such insurer or indemnity provider (which written statement
shall be reasonably satisfactory to each Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company
or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance
of such judgment;
(xiv)
the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace
period, any payment with respect to any Indebtedness in excess of $250,000 due to any third party (other than, with respect to unsecured
Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper proceedings and
with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is otherwise in breach
or violation of any agreement for monies owed or owing in an amount in excess of $250,000, which breach or violation permits the other
party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event
that would, with or without the passage of time or the giving of notice, result in a default or event of default under any agreement binding
the Company or any Subsidiary, which default or event of default would or is likely to have a material adverse effect on the business,
assets, operations (including results thereof), liabilities, properties, condition (including financial condition) or prospects of the
Company or any of its Subsidiaries, individually or in the aggregate;
(xv)
other than as specifically set forth in another clause of this Section 5(a), the Company or any Subsidiary breaches any representation
or warranty in any material respect (other than representations or warranties subject to material adverse effect or materiality, which
may not be breached in any respect) or any covenant or other term or condition of any Transaction Document, except, in the case of a breach
of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of two (2) consecutive Trading
Days;
(xvi)
a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that either (A) the Equity Conditions
are satisfied, (B) there has been no Equity Conditions Failure, or (C) as to whether any Triggering Event has occurred;
(xvii)
any breach or failure in any respect by the Company or any Subsidiary to comply with any provision of Section 13 of this Certificate of
Designations;
(xviii)
any Preferred Shares remain outstanding on or after August 14, 2026;
(xix)
any Change of Control occurs without the prior written consent of the Required Holders, which consent shall not be unreasonably withheld,
conditioned or delayed;
(xx)
any Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs; or
(xxi) any provision
of any Transaction Document shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and
binding on or enforceable against the Company, or the validity or enforceability thereof shall be contested, directly or indirectly, by
the Company or any Subsidiary, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having
jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof or the Company or any of its Subsidiaries
shall deny in writing that it has any liability or obligation purported to be created under one or more Transaction Documents.
(b)Notice
of a Triggering Event. Upon the occurrence of a Triggering Event with respect to the Preferred Shares, the Company shall within two
(2) Business Days deliver written notice thereof via electronic mail and overnight courier (with next day delivery specified) (a "Triggering
Event Notice") to each Holder.
6.
Rights Upon Fundamental Transactions.
(a)Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations
of the Company under this Certificate of Designations and the other Transaction Documents in accordance with the provisions of this Section
6 pursuant to written agreements in form and substance reasonably satisfactory to the Required Holders, including agreements to deliver
to each holder of Preferred Shares in exchange for such Preferred Shares a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Certificate of Designations, including, without limitation, having a stated value
and dividend rate equal to the stated value and dividend rate of the Preferred Shares held by the Holders and having similar ranking
to the Preferred Shares, and reasonably satisfactory to the Required Holders. Upon the occurrence of any Fundamental Transaction, the
Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions
of this Certificate of Designations and the other Transaction Documents referring to the "Company" shall refer instead to the
Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under
this Certificate of Designations and the other Transaction Documents with the same effect as if such Successor Entity had been named
as the Company herein and therein. In addition to the foregoing, upon consummation of a Fundamental Transaction, the Successor Entity
shall deliver to each Holder confirmation that there shall be issued upon conversion or redemption of the Preferred Shares at any time
after the consummation of such Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other
property (except such items still issuable under Sections 7 and 15, which shall continue to be receivable thereafter)) issuable upon
the conversion or redemption of the Preferred Shares prior to such Fundamental Transaction, such shares of the publicly traded common
stock (or their equivalent) of the Successor Entity (including its Parent Entity) which each Holder would have been entitled to receive
upon the happening of such Fundamental Transaction had all the Preferred Shares held by each Holder been converted immediately prior
to such Fundamental Transaction (without regard to any limitations on the conversion of the Preferred Shares contained in this Certificate
of Designations), as adjusted in accordance with the provisions of this Certificate of Designations. Notwithstanding the foregoing, such
Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 6 to permit the Fundamental
Transaction without the assumption of the Preferred Shares. The provisions of this Section 6 shall apply similarly and equally to successive
Fundamental Transactions and shall be applied without regard to any limitations on the conversion or redemption of the Preferred Shares.
(b)Notice of
a Change of Control; Change of Control Election Notice. No sooner than the earlier of (x) twenty (20) Trading Days prior to the consummation
of a Change of Control or (y) the public announcement of the entry into an agreement with respect to a Change of Control, nor later than
ten (10) Trading Days prior to the consummation of a Change of Control (the "Change of Control Date"), the Company shall
deliver written notice thereof via electronic mail and overnight courier to each Holder (a "Change of Control Notice").
At any time during the period beginning after a Holder's receipt of a Change of Control Notice or such Holder becoming aware of a
Change of Control if a Change of Control Notice is not delivered to such Holder in accordance with the immediately preceding sentence
(as applicable) and ending on twenty (20) Trading Days after the later of (A) the date of consummation of such Change of Control or (B)
the date of receipt of such Change of Control Notice or (C) the date of the announcement of such Change of Control, such Holder may
require, by delivering written notice thereof ("Change of Control Election Notice") to the Company (which Change of
Control Election Notice shall indicate the number of Preferred Shares subject to such election), to have the Company exchange such Holder's
Preferred Shares designated in such Change of Control Election Notice for consideration equal to the Change of Control Election Price
(as defined below), to be satisfied at the Company's election (such election to pay in cash or by delivery of the Rights (as defined
below), a "Consideration Election"), in either (I) rights (with a beneficial ownership limitation in the form
of Section 4(d) hereof, mutatis mutandis) (collectively, the "Rights"), convertible in whole, or in part, at
any time, without the requirement to pay any additional consideration, at the option of the Required Holders, into such Corporate Event
Consideration (as defined below) applicable to such Change of Control equal in value to the Change of Control Election Price (as determined
with the fair market value of the aggregate number of Successor Shares (as defined below) issuable upon conversion of the Rights to be
determined in increments of 10% (or such greater percentage as the applicable Holder may notify the Company from time to time) of the
portion of the Change of Control Election Price attributable to such Successor Shares (the "Successor Share Value Increment"),
with the aggregate number of Successor Shares issuable upon exercise of the Rights with respect to the first Successor Share Value
Increment determined based on 70% of the VWAP of the Successor Shares on the date the Rights are issued and on each of the nine (9) subsequent
Trading Days, in each case, the aggregate number of additional Successor Shares issuable upon exercise of the Rights shall be determined
based upon a Successor Share Value Increment at 70% of the VWAP of the Successor Shares in effect for such corresponding Trading Day
(such ten (10) Trading Day period commencing on, and including, the date the Rights are issued, the "Rights Measuring Period")),
or (II) in cash; provided, that the Company shall not consummate a Change of Control if the Corporate Event Consideration includes
capital stock or other equity interest (the "Successor Shares") either in an entity that is not listed on an Eligible Market
or an entity in which the daily share volume for the applicable Successor Shares for each of the twenty (20) Trading Days prior to the
date of consummation of such Change of Control is less than the aggregate number of Successor Shares issuable to all Holders upon conversion
in full of the applicable Rights (without regard to any limitations on conversion therein, assuming the exercise in full of the Rights
on the date of issuance of the Rights and assuming the VWAP of the Successor Shares for each Trading Day in the Rights Measuring Period
is the VWAP on the Trading Day ended immediately prior to the time of consummation of the Change of Control). The Company shall give
each Holder written notice of each Consideration Election at least twenty (20) Trading Days prior to the time of consummation of such
Change of Control. Payment of such amounts or delivery of the Rights, as applicable, shall be made by the Company (or at the Company's
direction) to each Holder on the later of (x) the second (2nd) Trading Day after the date of such request and (y) the date of consummation
of such Change of Control (or, with respect to any Right, if applicable, such later time that holders of shares of Common Stock are initially
entitled to receive Corporate Event Consideration with respect to the shares of Common Stock of such holder). Any Corporate Event Consideration
included in the Rights, if any, pursuant to this Section 6(b) is pall passu with the Corporate Event Consideration to be paid
to holders of shares of Common Stock and the Company shall not permit a payment of any Corporate Event Consideration to the holders of
shares of Common Stock without on or prior to such time delivering the Right to the Holders in accordance herewith. Cash payments, if
any, required by this Section 6(b) shall have priority to payments to all other stockholders of the Company in connection with such Change
of Control. Notwithstanding anything to the contrary in this Section 6(b), but subject to Section 4(d), until the applicable Change of
Control Election Price is paid in full to the applicable Holder in cash or Corporate Event Consideration in accordance herewith, the
Preferred Shares submitted by such Holder for exchange or payment, as applicable, under this Section 6(b) may be converted, in whole
or in part, by such Holder into Common Stock pursuant to Section 4 or in the event the Conversion Date is after the consummation of such
Change of Control, stock or equity interests of the Successor Entity substantially equivalent to the Company's shares of Common Stock
pursuant to Section 6. In the event of the Company's repayment or exchange, as applicable, of any of the Preferred Shares under this
Section 6(b), such Holder's damages would be uncertain and difficult to estimate because of the parties' inability to predict future
interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for a Holder. Accordingly, any
Required Premium due under this Section 6(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of such Holder's
actual loss of its investment opportunity and not as a penalty. Notwithstanding anything herein to the contrary, in connection with any
redemption hereunder at a time a Holder is entitled to receive a cash payment under any of the other Transaction Documents, at the option
of such Holder delivered in writing to the Company, the applicable redemption price hereunder shall be increased by the amount of such
cash payment owed to such Holder under such other Transaction Document and, upon payment in full or conversion in accordance herewith,
shall satisfy the Company's payment obligation under such other Transaction Document.
7. Rights Upon Issuance of Purchase Rights and Other Corporate Events.
(a)
Purchase Rights. In addition to any adjustments pursuant to Section 8 and Section 15 below, if at any time the Company grants,
issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to all
or substantially all of the record holders of any class of Common Stock (the "Purchase Rights"), then each Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if
such Holder had held the number of shares of Common Stock acquirable upon complete conversion of all the Preferred Shares (without taking
into account any limitations or restrictions on the convertibility of the Preferred Shares and assuming for such purpose that all the
Preferred Shares were converted at the Alternate Conversion Price as of the applicable record date) held by such Holder immediately prior
to 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 such Holder's right to participate in any such Purchase Right would result in such Holder and the other Attribution
Parties exceeding the Maximum Percentage, then such Holder shall not be entitled to participate in such Purchase Right to such extent
of the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase
Right (and beneficial ownership) to such extent of any such excess) and such Purchase Right to such extent shall be held in abeyance (and,
if such Purchase Right has an expiration date, maturity date or other similar provision, such term shall be extended by such number of
days held in abeyance, if applicable) for the benefit of such Holder until such time or times, if ever, as its right thereto would not
result in such Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times such Holder shall be
granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right
held similarly in abeyance (and, if such Purchase Right has an expiration date, maturity date or other similar provision, such term shall
be extended by such number of days held in abeyance, if applicable)) to the same extent as if there had been no such limitation.
(b)
Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation
of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets
with respect to or in exchange for shares of Common Stock (a "Corporate Event"), the Company shall make appropriate
provision to ensure that each Holder will thereafter have the right, at such Holder's option, to receive upon a conversion of all the
Preferred Shares held by such Holder (i) such securities or other assets (the "Corporate Event Consideration") to which
such Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by such Holder
upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of the
Preferred Shares set forth in this Certificate of Designations) or (ii) in lieu of the shares of Common Stock otherwise receivable upon
such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation
of such Corporate Event in such amounts as such Holder would have been entitled to receive had the Preferred Shares held by such Holder
initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion
rate for such consideration commensurate with the Conversion Rate of an Alternate Conversion. Provision made pursuant the preceding sentence
shall be in a form and substance reasonably satisfactory to the Required Holders. The provisions of this Section 7 shall apply similarly
and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of
the Preferred Shares set forth in this Certificate of Designations.
8. Rights Upon Issuance
of Other Securities.
(a)Adjustment
of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Subscription Date the Company grants, issues or
sells (or enters into any agreement to grant, issue or sell), or in accordance with this Section 8(a) is deemed to have granted, issued
or sold, any shares of Common Stock (including the granting, issuance or sale of shares of Common Stock owned or held by or for the account
of the Company, but excluding any Excluded Securities granted, issued or sold or deemed to have been granted, issued or sold) for a consideration
per share (the "New Issuance Price") less than a price equal to the Conversion Price in effect immediately prior to such granting,
issuance or sale or deemed granting, issuance or sale (such Conversion Price then in effect is referred to herein as the "Applicable
Price") (the foregoing a "Dilutive Issuance"), then, immediately after such Dilutive Issuance, the Conversion Price then
in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing (including, without limitation,
determining the adjusted Conversion Price and the New Issuance Price under this Section 8(a)), the following shall be applicable:
(i)Issuance
of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any Options
and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon
conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the
terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued
and sold by the Company at the time of the granting, issuance or sale of such Option for such price per share. For purposes of this Section
8(a)(i), the "lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option
or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant
to the terms thereof' shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to any one share of Common Stock upon the granting, issuance or sale of such Option, upon exercise of such
Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant
to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable (or may
become issuable assuming all possible market conditions) upon the exercise of any such Options or upon conversion, exercise or exchange
of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof, minus (2) the sum
of all amounts paid or payable to the holder of such Option (or any other Person) with respect to any one share of Common Stock upon
the granting, issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible
Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration (including,
without limitation, consideration consisting of cash, debt forgiveness, assets or any other property) received or receivable by, or benefit
conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion
Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such
Options or otherwise pursuant to the terms thereof or upon the actual issuance of such shares of Common Stock upon conversion, exercise
or exchange of such Convertible Securities.
(ii)Issuance
of Convertible Securities. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any Convertible
Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or
exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall
be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale (or the time of execution
of such agreement to issue or sell, as applicable) of such Convertible Securities for such price per share. For the purposes of this
Section 8(a)(ii), the "lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise
or exchange thereof or otherwise pursuant to the terms thereof' shall be equal to ( I ) the lower of (x) the sum of the lowest amounts
of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale (or
pursuant to the agreement to issue or sell, as applicable) of the Convertible Security and upon conversion, exercise or exchange of such
Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security
for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon conversion, exercise
or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such
Convertible Security (or any other Person) with respect to any one share of Common Stock upon the issuance or sale (or the agreement
to issue or sell, as applicable) of such Convertible Security plus the value of any other consideration received or receivable (including,
without limitation, any consideration consisting of cash, debt forgiveness, assets or other property) by, or benefit conferred on, the
holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price
shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities
or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of
any Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 8(a),
except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issuance or sale.
(iii)
Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities
are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than proportional
changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 8(a) below), the Conversion
Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have been in effect at
such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration
or increased or decreased conversion rate (as the case may be) at the time initially granted, issued or sold. For purposes of this Section
8(a)(iii), if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that
was outstanding as of the Subscription Date) are increased or decreased in the manner described in the immediately preceding sentence,
then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 8(a) shall be
made if such adjustment would result in an increase of the Conversion Price then in effect.
(iv) Calculation
of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance
or sale or deemed issuance or sale of any other securities of the Company (as determined by the Required Holder, the "Primary Security",
and such Option and/or Convertible Security and/or Adjustment Right, the "Secondary Securities"), together comprising one integrated
transaction (or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the Company either
(A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are consummated
under the same plan of financing), the aggregate consideration per share of Common Stock with respect to such Primary Security shall
be deemed to be equal to the difference of (x) the lowest price per share for which one share of Common Stock was issued (or was deemed
to be issued pursuant to Section 8(a)(i) or 8(a)(ii) above, as applicable) in such integrated transaction solely with respect to such
Primary Security, minus (y) with respect to such Secondary Securities, the sum of (I) the Black Scholes Consideration Value of each such
Option, if any, (II) the fair market value (as determined by the Required Holder in good faith) or the Black Scholes Consideration Value,
as applicable, of such Adjustment Right, if any, and (III) the fair market value (as determined by the Required Holder) of such Convertible
Security, if any, in each case, as determined on a per share basis in accordance with this Section 8(a)(iv). If any shares of Common
Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received
therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the
purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by
the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than
cash, the amount of such consideration received by the Company (for the purpose of determining the consideration paid for such Common
Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be the
fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of
consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the
five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are
issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount
of consideration therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security,
but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the fair value of such portion
of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible
Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined
jointly by the Company and the Required Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence
of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within
five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Required Holder. The determination of such appraiser shall be final and binding upon all parties absent
manifest error and the fees and expenses of such appraiser shall be borne by the Company.
(v)Record Date.
If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares
of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase (as the case may be).
(b)Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of Section 7 or Section I5,
if the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend, stock combination, recapitalization
or other similar transaction) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion
Price in effect immediately prior to such subdivision will be proportionately reduced. Without limiting any provision of Section 7 or
Section 15, if the Company at any time on or after the Subscription Date combines (by any stock split, stock dividend, stock combination,
recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant
to this Section 8(a) shall become effective immediately after the effective date of such subdivision or combination. If any event requiring
an adjustment under this Section 8(a) occurs during the period that a Conversion Price is calculated hereunder, then the calculation
of such Conversion Price shall be adjusted appropriately to reflect such event.
(c)
Holder's Right of Adjusted Conversion Price. In addition to and not in limitation of the other provisions of this Section
8(b), if the Company in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options or Convertible
Securities (other than a Permitted Equity Line (as defined in the Exchange Agreement)) (any such securities, "Variable Price Securities")
after the Subscription Date that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares
of Common Stock at a price which varies or may vary with the market price of the shares of Common Stock, including by way of one or more
reset(s) to a fixed price, but exclusive of such formulations reflecting share splits, share combinations, and share dividends (each of
the formulations for such variable price being herein referred to as, the "Variable Price"), the Company shall provide
written notice thereof via electronic mail and overnight courier to each Holder on the date of such agreement and/or the issuance of such
shares of Common Stock, Convertible Securities or Options, as applicable. From and after the date the Company enters into such agreement
or issues any such Variable Price Securities, each Holder shall have the right, but not the obligation, in its sole discretion to substitute
the Variable Price for the Conversion Price upon conversion of the Preferred Shares by designating in the Conversion Notice delivered
upon any conversion of Preferred Shares that solely for purposes of such conversion such Holder is relying on the Variable Price rather
than the Conversion Price then in effect. A Holder's election to rely on a Variable Price for a particular conversion of Preferred Shares
shall not obligate such Holder to rely on a Variable Price for any future conversions of Preferred Shares.
(d)
Calculations. All calculations under this Section 8 shall be made by rounding to the nearest cent or the nearest 1/100th
of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by
or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.
(e)
Voluntary Adjustment by Company. Subject to the rules and regulations of the Principal Market, the Company may at any time
any Preferred Shares remain outstanding, with the prior written consent of the Required Holder, reduce the then current Conversion Price
to any amount and for any period of time deemed appropriate by the Board.
(f) Adjustments.
If on the Applicable Date (as defined in the Securities 25 Purchase Agreement) (the "Adjustment Date"), the Conversion
Price then in effect is greater than the greater of (A) the Floor Price, and (B) the Market Price then in effect (the "Adjustment
Price"), on the Adjustment Date the Conversion Price shall automatically lower to the Adjustment Price.
(g)
Exchange Right. Notwithstanding anything herein to the contrary, if the Company or any of its Subsidiaries consummates
any Subsequent Placement (other than with respect to Excluded Securities (as defined in the Securities Purchase Agreement)), and a Holder
elects in writing to the Company to participate in such Subsequent Placement, each such Holder may, at the option of such Holder as elected
in writing to the Company, exchange all, or any part, of the Preferred Shares of such Holder into the securities in such Subsequent Placement
(with the aggregate amount of such securities to be issued in such exchange equal to such aggregate amount of such securities with a
purchase price valued at 125% of the Conversion Amount of the Preferred Shares delivered by such Holder in exchange therefor).
(h)
Conversion Floor Price. Prior to the Stockholder Approval Date (as defined in the Securities Purchase Agreement), no adjustment
pursuant to this Section 2 shall cause the Conversion Price to be less than $0.234 (as adjusted for any stock dividend, stock split, stock
combination, reclassification or similar transaction occurring after the date of the Exchange Agreement) (the "Conversion Floor
Price"). As of the Stockholder Approval Date, any Dilutive Issuances or other events that would have resulted in an adjustment
to the Conversion Price prior to the Stockholder Approval Date, but for the application of this Section 8(g), shall adjust the Conversion
Price hereunder as if such Dilutive Issuances and/or other events, as applicable, occurred on the Stockholder Approval Date.
9.Redemption at the Company's
Election. At any time, the Company shall have the right to redeem all, but not less than all, of the Preferred Shares then outstanding
(the "Company Optional Redemption Amount") on the Company Optional Redemption Date (each as defined below) (a "Company
Optional Redemption"). The Preferred Shares subject to redemption pursuant to this Section 9 shall be redeemed by the Company
in cash at a price (the "Company Optional Redemption Price") equal to 125% of the greater of (i) the Conversion Amount
being redeemed as of the Company Optional Redemption Date and (ii) the product of (1) the Conversion Rate with respect to the
Conversion Amount being redeemed as of the Company Optional Redemption Date multiplied by (2) the greatest Closing Sale Price of the
Common Stock on any Trading Day during the period commencing on the date immediately preceding such Company Optional Redemption Notice
Date and ending on the Trading Day immediately prior to the date the Company makes the entire payment required to be made under this
Section 9. The Company may exercise its right to require redemption under this Section 9 by delivering a written notice thereof by electronic
mail and overnight courier to all, but not less than all, of the Holders (the "Company Optional Redemption Notice" and
the date all of the Holders received such notice is referred to as the "Company Optional Redemption Notice Date"). Such
Company Optional Redemption Notice shall be irrevocable; provided that the Company Optional Redemption Notice may be conditioned upon
the consummation of a refinancing transaction or a Going Private Transaction. The Company Optional Redemption Notice shall (x) state
the date on which the Company Optional Redemption shall occur (the "Company Optional Redemption Date") which date shall
not be less than ten (10) Trading Days nor more than twenty (20) Trading Days following the Company Optional Redemption Notice Date,
and (y) state the aggregate Conversion Amount of the Preferred Shares which is being redeemed in such Company Optional Redemption from
such Holder and all of the other Holders of the Preferred Shares pursuant to this Section 9 on the Company Optional Redemption Date.
The Company shall deliver the applicable Company Optional Redemption Price to each Holder in cash on the applicable Company Optional
Redemption Date. Notwithstanding anything herein to the contrary, at any time prior to the date the Company Optional Redemption Price
is paid, in full, the Company Optional Redemption Amount may be converted, in whole or in part, by any Holder into shares of Common Stock
pursuant to Section 4. All Conversion Amounts converted by a Holder after the Company Optional Redemption Notice Date shall reduce the
Company Optional Redemption Amount of the Preferred Shares of such Holder required to be redeemed on the Company Optional Redemption
Date. In the event of the Company's redemption of any of the Preferred Shares under this Section 9, a Holder's damages would be uncertain
and difficult to estimate because of the parties' inability to predict future interest rates and the uncertainty of the availability
of a suitable substitute investment opportunity for such Holder. Accordingly, any redemption premium due under this Section 9 is intended
by the parties to be, and shall be deemed, a reasonable estimate of such Holder's actual loss of its investment opportunity and not as
a penalty. For the avoidance of doubt, the Company shall have no right to effect a Company Optional Redemption if any Triggering Event
has occurred and continuing, but any Triggering Event shall have no effect upon any Holder's right to convert Preferred Shares in its
discretion. Notwithstanding the foregoing, with respect to a Going Private Transaction, the Company may effect a Company Optional Redemption
under this Section 9, but with "Change of Control Election Price" replacing "Company Optional Redemption Price" for
all purposes in this Section 9 in connection therewith.
10.Noncircumvention.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, bylaws or through
any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Certificate of Designations,
and will at all times in good faith carry out all the provisions of this Certificate of Designations and take all action as may be required
to protect the rights of the Holders hereunder. Without limiting the generality of the foregoing or any other provision of this Certificate
of Designations or the other Transaction Documents, the Company (a) shall not increase the par value of any shares of Common Stock receivable
upon the conversion of any Preferred Shares above the Conversion Price then in effect, (b) shall take all such actions as may be necessary
or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the
conversion of Preferred Shares and (c) shall, so long as any Preferred Shares are outstanding, take all action necessary to reserve and
keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Preferred
Shares, the maximum number of shares of Common Stock as shall from time to time be necessary to effect the conversion of the Preferred
Shares then outstanding (without regard to any limitations on conversion contained herein). Notwithstanding anything herein to the contrary,
if after the sixty (60) calendar day anniversary of the Initial Issuance Date, each Holder is not permitted to convert such Holder's
Preferred Shares in full for any reason (other than pursuant to restrictions set forth in Section 4(d) hereof), the Company shall use
its best efforts to promptly remedy such failure, including, without limitation, obtaining such consents or approvals as necessary to
effect such conversion into shares of Common Stock.
11.Authorized Shares.
(a)
Reservation. So long as any Preferred Shares remain outstanding, the Company shall at all times reserve at least 250% of
the number of shares of Common Stock as shall from time to time be necessary to effect the conversion, including without limitation,
Alternate Conversions, of all of the Preferred Shares then outstanding at the Alternate Conversion Price then in effect (without regard
to any limitations on conversions) (the "Required Reserve Amount"). The Required Reserve Amount (including, without
limitation, each increase in the number of shares so reserved) shall be allocated pro rata among the Holders based on the number of the
Preferred Shares held by each Holder on the Initial Issuance Date or increase in the number of reserved shares, as the case may be (the
"Authorized Share Allocation"). In the event that a Holder shall sell or otherwise transfer any of such Holder's Preferred
Shares, each transferee shall be allocated a pro rata portion of such Holder's Authorized Share Allocation. Any shares of Common Stock
reserved and allocated to any Person which ceases to hold any Preferred Shares shall be allocated to the remaining Holders of Preferred
Shares, pro rata based on the number of the Preferred Shares then held by the Holders. Notwithstanding the foregoing, a Holder may allocate
its Authorized Share Allocation to any other of the securities of the Company held by such Holder (or any of its designees) by delivery
of a written notice to the Company.
(b)
Insufficient Authorized Shares. If, notwithstanding Section 11(a) and not in limitation thereof, at any time while any
of the Preferred Shares remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common
Stock to satisfy its obligation to reserve for issuance upon conversion of the Preferred Shares at least a number of shares of Common
Stock equal to the Required Reserve Amount (an "Authorized Share Failure"), then the Company shall immediately take
all action necessary to increase the Company's authorized shares of Common Stock to an amount sufficient to allow the Company to reserve
the Required Reserve Amount for the Preferred Shares then outstanding. Without limiting the generality of the foregoing sentence, as
soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than ninety (90) days after
the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase
in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with
a proxy statement and shall use its best efforts to solicit its stockholders' approval of such increase in authorized shares of Common
Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal (or, if a majority of the
voting power then in effect of the capital stock of the Company consents to such increase, in lieu of such proxy statement, deliver to
the stockholders of the Company an information statement that has been filed with (and either approved by or not subject to comments
from) the SEC with respect thereto). Notwithstanding the foregoing, if at any such time of an Authorized Share Failure, the Company is
able to obtain the written consent of a majority of the shares of its issued and outstanding shares of Common Stock to approve the increase
in the number of authorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and submitting
for filing with the SEC an Information Statement on Schedule I 4C. In the event that the Company is prohibited from issuing shares of
Common Stock to a Holder upon any conversion due to the failure by the Company to have sufficient shares of Common Stock available out
of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the "Authorized Failure
Shares"), in lieu of delivering such Authorized Failure Shares to such Holder, the Company shall pay cash in exchange for the redemption
of such portion of the Conversion Amount of the Preferred Shares convertible into such Authorized Failure Shares at a price equal to
the sum of (i) the product of (x) such number of Authorized Failure Shares and (y) the greatest Closing Sale Price of the Common Stock
on any Trading Day during the period commencing on the date such Holder delivers the applicable Conversion Notice with respect to such
Authorized Failure Shares to the Company and ending on the date of such issuance and payment under this Section 11(a); and (ii) to the
extent such Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale
by such Holder of Authorized Failure Shares, any brokerage commissions and other out-of-pocket expenses, if any, of such Holder incurred
in connection therewith. Nothing contained in Section 11(a) or this Section 11(b) shall limit any obligations of the Company under any
provision of the Exchange Agreement.
12.
Voting Rights. The holders of the Preferred Shares shall have no voting power and no right to vote on any matter at any
time, either as a separate series or class or together with any other series or class of share of capital stock, and shall not be entitled
to call a meeting of such holders for any purpose nor shall they be entitled to participate in any meeting of the holders of Common Stock,
except as provided in this Section 16 and Section 20 or as otherwise required by the DGCL. To the extent that under the DGCL the vote
of the holders of the Preferred Shares, voting separately as a class or series, as applicable, is required to authorize a given action
of the Company, the affirmative vote or consent of the Required Holders of the Preferred Shares, voting together in the aggregate and
not in separate series unless required under the DGCL, represented at a duly held meeting at which a quorum is presented or by written
consent of the Required Holders (except as otherwise may be required under the DGCL), voting together in the aggregate and not in separate
series unless required under the DGCL, shall constitute the approval of such action by both the class or the series, as applicable. Holders
of the Preferred Shares shall be entitled to written notice of all stockholder meetings or written consents (and copies of proxy materials
and other information sent to stockholders) with respect to which they would be entitled to vote, which notice would be provided pursuant
to the Company's bylaws (the "Bylaws") and the DGCL.
13.
Covenants.
(a)
Incurrence of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness (other than Permitted Indebtedness).
(b)
Existence of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, "Liens") other
than Permitted Liens.
(c)
Restricted Payments and Investments. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in
whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any
Indebtedness (other pursuant to this Certificate of Designations) whether by way of payment in respect of principal of (or premium, if
any) or interest on, such Indebtedness or make any Investment, as applicable, if at the time such payment with respect to such Indebtedness
and/or Investment, as applicable, is due or is otherwise made or, after giving effect to such payment, (i) an event constituting a Triggering
Event has occurred and is continuing or (ii) an event that with the passage of time and without being cured would constitute a Triggering
Event has occurred and is continuing.
(d)
Restriction on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries
to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock (other
than as required by this Certificate of Designations).
(e)
Restriction on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not,
directly or indirectly, sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any assets
or rights of the Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions,
other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company
and its Subsidiaries in the ordinary course of business consistent with its past practice and (ii) sales of inventory and product in
the ordinary course of business.
(f)
Change in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, engage in any material line of business substantially different from those lines of business conducted by or publicly
contemplated to be conducted by the Company and each of its Subsidiaries on the Subscription Date or any business substantially related
or incidental thereto. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify
its or their corporate structure or purpose.
(g)
Preservation of Existence. Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, its existence, rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly
qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary, except where the failure to become or remain duly qualified or in good standing could
not reasonably be expected to result in a Material Adverse Effect.
(h)
Maintenance of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, all of its material properties which are necessary or useful in the proper conduct of its business in good working order
and condition, ordinary wear and tear excepted, and comply, and cause each of its Subsidiaries to materially comply, at all times with
the provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture
thereof or thereunder.
(i)Maintenance
of Intellectual Property. The Company will, and will cause each of its Subsidiaries to, take all action necessary or advisable to
maintain all of the Intellectual Property Rights of the Company and/or any of its Subsidiaries that are necessary or material to the conduct
of its business in full force and effect.
(j)
Maintenance of Insurance. The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible
and reputable insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts
and covering such risks as is required by any Governmental Authority having jurisdiction with respect thereto or as is carried generally
in accordance with sound business practice by companies in similar businesses similarly situated.
(k)
Transactions with Affiliates. The
Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party to, any transaction or series
of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any
kind or the rendering of services of any kind) with any affiliate, except transactions in the ordinary course of business in a manner
and to an extent consistent with
past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable
to it or its Subsidiaries than would be obtainable in a comparable arm's length transaction with a Person that is not an affiliate thereof.
(l)
Restricted Issuances.
The Company shall not, directly or indirectly, without the prior written consent of the Required Holders, (i) issue any Preferred Shares
(other than as contemplated by the Exchange Agreement and this Certificate
of Designations), or (ii) issue any other securities that would cause a breach or default under this Certificate
of Designations.
(m)
Stay, Extension and Usury Laws. To the extent that it
may lawfully do so, the Company (A) agrees that it will not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law (wherever or whenever enacted
or in force) that may affect the covenants or the performance of this Certificate of Designations; and (B) expressly waives all benefits
or advantages of any such law and agrees that it will not, by resort to any such law, hinder,
delay or impede the execution of any power granted to the Holders by this Certificate of Designations,
but will suffer and permit the execution of every such power as though no such law has been enacted.
(n)
Taxes. The Company and its Subsidiaries shall pay when due all material taxes, fees or other charges of any nature whatsoever
(together with any related interest or penalties) now or hereafter imposed or assessed against the Company and its Subsidiaries or their
respective assets or upon their ownership, possession, use, operation or disposition thereof or upon their rents, receipts or earnings
arising therefrom (except where the failure to pay would not, individually or in the aggregate, have a material effect on the Company
or any of its Subsidiaries). The Company and its Subsidiaries shall file on or before the due date therefor all personal property tax
returns (except where the failure to file would not, individually or in the aggregate, have a material effect on the Company or any of
its Subsidiaries). Notwithstanding the foregoing, the Company and its Subsidiaries may contest, in good faith and by appropriate proceedings,
taxes for which they maintain adequate reserves therefor in accordance with GAAP.
(o)PCAOB
Registered Auditor. At all times any Preferred Shares remain outstanding, the Company shall have engaged an independent auditor to
audit its financial statements that is registered with (and in compliance with the rules and regulations of) the Public Company Accounting
Oversight Board.
(p)Independent
Investigation. At the request of the Required Holders either (x) at any time when a Triggering Event has occurred and is continuing,
(y) upon the occurrence of an event that with the passage of time or giving of notice would constitute a Triggering Event or (z) at any
time such Required Holders reasonably believe a Triggering Event may have occurred or be continuing, the Company shall hire an independent,
reputable investment bank selected by the Company and approved by such Holder (such approval not to be unreasonably withheld, conditioned
or delayed) to investigate as to whether any breach of this Certificate of Designations has occurred (the "Independent Investigator").
If the Independent Investigator determines that such breach of this Certificate of
Designations has occurred, the Independent Investigator shall notify the Company of such breach and the Company shall deliver written
notice to each Holder of such breach. In connection with such investigation, the Independent Investigator may, during normal business
hours, inspect all contracts, books, records, personnel, offices and other facilities and properties of the Company and its Subsidiaries
and, to the extent available to the Company after the Company uses reasonable efforts to obtain them, the records of its legal advisors
and accountants and any books of account, records, reports and other papers not contractually required of the Company to be confidential
or secret, or subject to attorney-client or other evidentiary privilege, and the Independent Investigator may make such copies and inspections
thereof as the Independent Investigator may reasonably request. The Company shall furnish the Independent Investigator with such financial
and operating data and other information with respect to the business and properties of the Company as the Independent Investigator may
reasonably request. The Company shall permit the Independent Investigator to discuss the affairs, finances and accounts of the Company
with, and to make proposals and furnish advice with respect thereto to, the Company's officers, directors, key employees and independent
public accountants or any of them (and by this provision the Company authorizes said accountants to discuss with such Independent Investigator
the finances and affairs of the Company and any Subsidiaries), all at such reasonable times, upon reasonable notice, and as often as may
be reasonably requested.
14.Liquidation,
Dissolution. Winding-Up. In the event of a Liquidation Event, the Holders shall be entitled to receive in cash out of the assets
of the Company, whether from capital or from earnings available for distribution to its stockholders (the "Liquidation Funds"),
before any amount shall be paid to the holders of any of shares of Junior Stock, but pari passu with any Parity Stock then outstanding,
an amount per Preferred Share equal to the greater of (A) 125% of the Conversion Amount of such Preferred Share on the date of such payment
and (B) the amount per share such Holder would receive if such Holder converted such Preferred Share into Common Stock immediately
prior to the date of such payment, provided that if the Liquidation Funds are insufficient to pay the full amount due to the Holders
and holders of shares of Parity Stock, then each Holder and each holder of Parity Stock shall receive a percentage of the Liquidation
Funds equal to the full amount of Liquidation Funds payable to such Holder and such holder of Parity Stock as a liquidation preference,
in accordance with their respective certificate of designations (or equivalent), as a percentage of the full amount of Liquidation Funds
payable to all holders of Preferred Shares and all holders of shares of Parity Stock. To the extent necessary, the Company shall cause
such actions to be taken by each of its Subsidiaries so as to enable, to the maximum extent permitted by law, the proceeds of a Liquidation
Event to be distributed to the Holders in accordance with this Section 14. All the preferential amounts to be paid to the Holders under
this Section 14 shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution
of any Liquidation Funds of the Company to the holders of shares of Junior Stock in connection with a Liquidation Event as to which this
Section 14 applies.
15. Distribution of Assets.
In addition to any adjustments pursuant to Section 7 and Section 8, if the Company shall declare or make any dividend or other distributions
of its assets (or rights to acquire its assets) to any or all 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) (the "Distributions"), then
each Holder, as holders of Preferred Shares, will be entitled to such Distributions as if such Holder had held the number of shares of
Common Stock acquirable upon complete conversion of the Preferred Shares (without taking into account any limitations or restrictions
on the convertibility of the Preferred Shares and assuming for such purpose that the Preferred Share was convened at the Alternate Conversion
Price as of the applicable record date) immediately prior to the date on which a record is taken for such Distribution or, if no such
record is taken, the date as of which the record holders of Common Stock are to be determined for such Distributions (provided, however,
that to the extent that such Holder's right to participate in any such Distribution would result in such Holder and the other Attribution
Parties exceeding the Maximum Percentage, then such Holder shall not be entitled to participate in such Distribution to such extent of
the Maximum Percentage (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution
(and beneficial ownership) to such extent of any such excess) and the portion of such Distribution shall be held in abeyance for the
benefit of such Holder until such time or times as its right thereto would not result in such Holder and the other Attribution Parties
exceeding the Maximum Percentage, at which time or times, if any, such Holder shall be granted such Distribution (and any Distributions
declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if
there had been no such limitation).
16.
Vote to Change the Terms of or Issue Preferred Shares. In addition to any other rights provided by law, except where the
vote or written consent of the holders of a greater number of shares is required by law or by another provision of the Certificate of
Incorporation, without
first obtaining the affirmative vote at a meeting
duly called for such purpose or the written consent without a meeting of the Required Holders, voting together as a single class, the
Company shall not: (a) amend or repeal any provision of, or add any provision to, its Certificate of Incorporation or bylaws, or file
any certificate of designations or articles of amendment of any series of shares of preferred stock, if such action would adversely alter
or change in any respect the preferences, rights, privileges or powers, or restrictions provided for the benefit of the Preferred Shares
hereunder, regardless of whether any such action shall be by means ofamendment to the Certificate of Incorporation or by merger, consolidation
or otherwise; (b) increase or decrease (other than by conversion) the authorized number of shares of Series B Convertible Preferred Stock;
(c) without limiting any provision of Section 2, create or authorize (by reclassification or otherwise) any new class or series of Senior
Preferred Stock or Parity Stock; (d) purchase, repurchase or redeem any shares of Junior Stock (other than pursuant to the terms of the
Company's equity incentive plans and options and other equity awards granted under such plans (that have in good faith been approved
by the Board)); (e) without limiting any provision of Section 2, pay dividends or make any other distribution on any shares of any Junior
Stock; (0 issue any Preferred Shares other than as contemplated hereby or pursuant to the Securities Purchase Agreement; or (g) without
limiting any provision of Section 14, whether or not prohibited by the terms of the Preferred Shares, circumvent a right of the Preferred
Shares hereunder.
17.
Transfer of Preferred Shares. A Holder may offer, sell or transfer some or all of its Preferred Shares without the consent
of the Company subject only to the provisions of Section 5 of the Securities Purchase Agreement.
18.
Reissuance of Preferred Share Certificates and Book Entries.
(a)
Transfer. If any Preferred Shares are to be transferred, the applicable Holder shall surrender the applicable Preferred
Share Certificate to the Company (or, if the Preferred Shares are held in Book-Entry form, a written instruction letter to the Company),
whereupon the Company will forthwith issue and deliver upon the order of such Holder a new Preferred Share Certificate (in accordance
with Section 18(d)) (or evidence of the transfer of such Book-Entry), registered as such Holder may request, representing the outstanding
number of Preferred Shares being transferred by such Holder and, if less than the entire outstanding number of Preferred Shares is being
transferred, a new Preferred Share Certificate (in accordance with Section 18(d)) to such Holder representing the outstanding number
of Preferred Shares not being transferred (or evidence of such remaining Preferred Shares in a Book-Entry for such Holder). Such Holder
and any assignee, by acceptance of the Preferred Share Certificate or evidence of Book-Entry issuance, as applicable, acknowledge and
agree that, by reason of the provisions of Section 4(c)(i) following conversion or redemption of any of the Preferred Shares, the outstanding
number of Preferred Shares represented by the Preferred Shares may be less than the number of Preferred Shares stated on the face of
the Preferred Shares.
(b)
Lost, Stolen or Mutilated Preferred Share Certificate. Upon receipt by the Company of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of a Preferred Share Certificate (as to which a written certification and
the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification
undertaking by the applicable Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and
cancellation of such Preferred Share Certificate, the Company shall execute and deliver to such Holder a new Preferred Share Certificate
(in accordance with Section 18(d)) representing the applicable outstanding number of Preferred Shares.
(c)
Preferred Share Certificate and Book-Entries Exchangeable for Different Denominations and Forms. Each Preferred Share Certificate
is exchangeable, upon the surrender hereof by the applicable Holder at the principal office of the Company, for a new Preferred Share
Certificate or Preferred Share Certificate(s) or new Book-Entry (in accordance with Section 18(d)) representing, in the aggregate, the
outstanding number of the Preferred Shares in the original Preferred Share Certificate, and each such new Preferred Share Certificate
and/or new Book-Entry, as applicable, will represent such portion of such outstanding number of Preferred Shares from the original Preferred
Share Certificate as is designated in writing by such Holder at the time of such surrender. Each Book-Entry may be exchanged into one
or more new Preferred Share Certificates or split by the applicable Holder by delivery of a written notice to the Company into two or
more new Book-Entries (in accordance with Section I 8(d)) representing, in the aggregate, the outstanding number of the Preferred Shares
in the original Book-Entry, and each such new Book-Entry and/or new Preferred Share Certificate, as applicable, will represent such portion
of such outstanding number of Preferred Shares from the original Book-Entry as is designated in writing by such Holder at the time of
such surrender.
(d)
Issuance of New Preferred Share Certificate or Book-Entry. Whenever the Company is required to issue a new Preferred Share
Certificate or a new Book-Entry pursuant to the terms of this Certificate of Designations, such new Preferred Share Certificate or new
Book-Entry (i) shall represent, as indicated on the face of such Preferred Share Certificate or in such Book-Entry, as applicable, the
number of Preferred Shares remaining outstanding (or in the case of a new Preferred Share Certificate or new Book-Entry being issued
pursuant to Section 18(a) or Section 18(c), the number of Preferred Shares designated by such Holder) which, when added to the number
of Preferred Shares represented by the other new Preferred Share Certificates or other new Book-Entry, as applicable, issued in connection
with such issuance, does not exceed the number of Preferred Shares remaining outstanding under the original Preferred Share Certificate
or original Book-Entry, as applicable, immediately prior to such issuance of new Preferred Share Certificate or new Book-Entry, as applicable,
and (ii) shall have an issuance date, as indicated on the face of such new Preferred Share Certificate or in such new Book-Entry, as
applicable, which is the same as the issuance date of the original Preferred Share Certificate or in such original Book-Entry, as applicable.
19.Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Certificate of Designations shall
be cumulative and in addition to all other remedies available under this Certificate of Designations and any of the other Transaction
Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall
limit any Holder's right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Certificate
of Designations. No failure on the part of a Holder to exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by such Holder of any right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy. In addition, the exercise of any right or remedy of
a Holder at law or equity or under this Certificate of Designations or any of the documents shall not be deemed to be an election of
such Holder's rights or remedies under such documents or at law or equity. The Company covenants to each Holder that there shall be no
characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect
to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by a Holder and shall not, except
as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). No failure on the part
of a Holder to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise by such Holder of any right, power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. In addition, the exercise of any right or remedy of any Holder at law or equity or under Preferred
Shares or any of the documents shall not be deemed to be an election of such Holder's rights or remedies under such documents or at law
or equity. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holders and that
the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened
breach, each Holder shall be entitled, in addition to all other available remedies, to specific performance and/or temporary, preliminary
and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity
of proving actual damages and without posting a bond or other security. The Company shall provide all information and documentation to
a Holder that is requested by such Holder to enable such Holder to confirm the Company's compliance with the terms and conditions of
this Certificate of Designations.
20.
Payment of Collection. Enforcement and Other Costs. If (a) any Preferred Shares are placed in the hands of an attorney
for collection or enforcement or is collected or enforced through any legal proceeding or a Holder otherwise takes action to collect amounts
due under this Certificate of Designations with respect to the Preferred Shares or to enforce the provisions of this Certificate of Designations
or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors' rights
and involving a claim under this Certificate of Designations, then the Company shall pay the costs reasonably incurred by such Holder
for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including,
without limitation, attorneys' fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Certificate
of Designations with respect to any Preferred Shares shall be affected, or limited, by the fact that the purchase price paid for each
Preferred Share was less than the original Stated Value thereof.
21.
Construction; Headings. This Certificate of Designations shall be deemed to be jointly drafted by the Company and the Holders
and shall not be construed against any such Person as the drafter hereof. The headings of this Certificate of Designations are for convenience
of reference and shall not form part of, or affect the interpretation of, this Certificate of Designations. Unless the context clearly
indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof.
The terms "including," "includes," "include" and words of like import shall be construed broadly as if
followed by the words "without limitation." The terms "herein," "hereunder," "hereof" and words
of like import refer to this entire Certificate of Designations instead of just the provision in which they are found. Unless expressly
indicated otherwise, all section references are to sections of this Certificate of Designations. Terms used in this Certificate of Designations
and not otherwise defined herein, but defined in the other Transaction Documents, shall have the meanings ascribed to such terms on the
Initial Issuance Date in such other Transaction Documents unless otherwise consented to in writing by the Required Holders.
22.
Failure or Indulgence Not Waiver. No failure or delay on the part of a Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed
by an authorized representative of the waiving party. This Certificate of Designations shall be deemed to be jointly drafted by the Company
and all Holders and shall not be construed against any Person as the drafter hereof. Notwithstanding the foregoing, nothing contained
in this Section 22 shall permit any waiver of any provision of Section 4(d).
23.
Dispute Resolution.
(a)Submission
to Dispute Resolution.
(i)
In the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price, a Dividend Conversion Price,
an Alternate Conversion Price, a VWAP or a fair market value or the arithmetic calculation of a Conversion Rate, or the applicable redemption
price (as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company
or the applicable Holder (as the case may be) shall submit the dispute to the other party via electronic mail (A) if by the Company,
within two (2) Business Days after the occurrence of the circumstances giving rise to such dispute or (B) if by such Holder at any time
after such Holder learned of the circumstances giving rise to such dispute. If such Holder and the Company are unable to promptly resolve
such dispute relating to such Closing Bid Price, such Closing Sale Price, such Conversion Price, such Dividend Conversion Price, such
Alternate Conversion Price, such VWAP or such fair market value, or the arithmetic calculation of such Conversion Rate or such applicable
redemption price (as the case may be), at any time after the second (2nd) Business Day following such initial notice by the Company or
such Holder (as the case may be) of such dispute to the Company or such Holder
(as the case may be), then such Holder may, with the consent of the Company (not to be unreasonably withheld, conditioned or delayed),
select an independent, reputable investment bank to resolve such dispute.
(ii) Such Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered
in accordance with the first sentence of this Section 23 and (B) written documentation supporting its position with respect to such dispute,
in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which such Holder
selected such investment bank (the "Dispute Submission Deadline") (the documents
referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the "Required Dispute Documentation")
(it being understood and agreed that if either such Holder or the Company fails to so deliver all of the Required Dispute Documentation
by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be
entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such investment bank with
respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was
delivered to such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company
and such Holder or otherwise requested by such investment bank, neither the Company nor such Holder shall be entitled to deliver or submit
any written documentation or other support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
(iii) The Company
and such Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and such Holder of
such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of
such investment bank shall be borne by the party in whose favor the investment bank decides such dispute or, in the event that the investment
bank determines that the applicable calculation is in between the amounts submitted by the Company and such Holder, then half of such
fees and expenses shall be borne by the Company and half of such fees and expenses shall be borne by the Holder, and such investment
bank's resolution of such dispute shall be final and binding upon all parties absent manifest error.
(b)Miscellaneous.
The Company expressly acknowledges and agrees that (i) this Section 23 constitutes an agreement to arbitrate between the Company
and each Holder (and constitutes an arbitration agreement) under the rules then in effect under Delaware
Rapid Arbitration Act, as amended, (ii) the terms of this Certificate of Designations and each other applicable Transaction Document
shall serve as the basis for the selected investment bank's resolution of the applicable dispute, such investment bank shall
be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such investment bank determines
are required to be made by such investment bank in connection with its resolution of such dispute and in resolving such dispute such
investment bank shall apply such findings, determinations and the like to the terms of this Certificate of Designations and any other
applicable Transaction Documents, (iii) the applicable Holder (and only such Holder with respect to disputes solely relating to such
Holder), in its sole discretion, shall have the right to submit any dispute described in this Section 23 to any state or federal court
sitting in Wilmington Delaware, in lieu of utilizing the procedures set forth in this Section 23 and (iv) nothing in this Section 23
shall limit such Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with
respect to any matters described in this Section 23).
24.Notices:
Currency: Payments.
(a)
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Certificate of Designations
must be in writing and will be deemed to have been delivered on the earliest of: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by electronic mail (provided that such sent email is kept on file (whether electronically or otherwise) by the sending
party and the sending party does not receive an automatically generated message from the recipient's email server that such e-mail could
not be delivered to such recipient); or (iii) one (I) Business Day after deposit with an overnight courier service with next day
delivery specified, in each case, properly addressed to the party to receive the same. The mailing address and e-mail address for any
such communications to the Company shall be: 8181 Arista Place, Broomfield, Colorado 80021 Attention: John Lorbiecki, e-mail address:
jlorbiecki@aclarion.com, or such other mailing address and/or e-mail address as the Company has specified by written notice given to
each of the Holders in accordance with this Section 24 not later than five (5) days prior to the effectiveness of such change. The mailing
address and e-mail address for any such communications to any Holder shall be as set forth on such Holder's respective signature page
to the Exchange Agreement, or such other mailing address and/or e-mail address as such Holder has specified by written notice given to
the Company in accordance with this Section 24 not later than five (5) days prior to the effectiveness of such change. Written confirmation
of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated
by the sender's e-mail containing the time, date and recipient's email or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by e-mail or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii)
above, respectively.
(b)
The Company shall provide each Holder with prompt written notice of all actions taken pursuant to this Certificate of Designations, including
in reasonable detail a description of such action and the reason therefore. Without limiting the generality of the foregoing, the Company
shall give written notice to each Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail,
and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on which the Company closes its
books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, or (B) for determining rights to vote
with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known
to the public prior to or in conjunction with such notice being provided to such Holder.
(c)
Currency. All dollar amounts referred to in this Certificate of Designations are in United States Dollars ("U.S. Dollars"),
and all amounts owing under this Certificate of Designations shall be paid in U.S. Dollars. All amounts denominated in other currencies
(if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. "Exchange
Rate" means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Certificate of Designations,
the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed
that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such
period of time).
(d)Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Certificate of Designations, unless otherwise
expressly set forth herein, such payment shall be made in lawful money of the United States of America by wire transfer of immediately
available funds pursuant to wire transfer instructions that Holder shall provide to the Company in writing from time to time. Whenever
any amount expressed to be due by the terms of this Certificate of Designations is due on any day which is not a Business Day, the same
shall instead be due on the next succeeding day which is a Business Day.
25.
Waiver of Notice. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest
and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Certificate
of Designations and the Securities Purchase Agreement.
26.
Governing Law. This Certificate of Designations shall be construed and enforced in accordance with, and all questions concerning
the construction, validity, interpretation and performance of this Certificate of Designations shall be governed by, the internal laws
of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware
or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Except
as otherwise required by Section 23 above, the Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal
courts sifting in Wilmington, Delaware, for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, 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 any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Nothing contained herein (i) shall be deemed or operate to preclude any Holder from bringing suit
or taking other legal action against the Company in any other jurisdiction to collect on the Company's obligations to such Holder, to
realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of such
Holder or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 23 above. THE COMPANY AND EACH HOLDER
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH OR ARISING OUT OF THIS CERTIFICATE OF DESIGNATIONS OR ANY TRANSACTION CONTEMPLATED HEREBY.
27.
Judgment Currency.
(a)If
for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary to
convert into any other currency (such other currency being hereinafter in this Section 27 referred to as the "Judgment Currency")
an amount due in U.S. Dollars under this Certificate of Designations, the conversion shall be made at the Exchange Rate prevailing
on the Trading Day immediately preceding:
(i)
the date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other
jurisdiction that will give effect to such conversion being made on such date: or
(ii)
the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date
as of which such conversion is made pursuant to this Section 27(a)(ii) being hereinafter referred to as the "Judgment Conversion
Date").
(b)
If in the case of any proceeding in the court of any jurisdiction referred to in Section 27(a)(ii) above, there is a change in
the Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party
shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange
Rate prevailing on the date of payment, will produce the amount of US dollars which could have been purchased with the amount of Judgment
Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(c)
Any amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being
obtained for any other amounts due under or in respect of this Certificate of Designations.
28.Taxes.
(a)All payments
made by the Company hereunder or under any other Transaction Document shall be made in accordance with the terms of the respective Transaction
Document and shall be made without set-off, counterclaim, withholding, deduction or other defense. Without limiting the foregoing, all
such payments shall be made free and clear of and without deduction or withholding for any present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto, excluding (i) taxes imposed on the net income of a Holder
by the jurisdiction in which such Holder is organized or where it has its principal lending office, (ii) with respect to any payments
made by the Company hereunder, taxes (including, but not limited to, backup withholding) to the extent such taxes are imposed due to
the failure of the applicable recipient of such payment to provide the Company with whichever (if any) is applicable of valid and properly
completed and executed IRS Forms W-9, W-8BEN, W-8BEN-E, W-8ECI, and/or W-8IMY, when requested in writing by the Company, and (iii) with
respect to any payments made by the Company, taxes to the extent such taxes are imposed due to the failure of the applicable recipient
of such payment to comply with FATCA (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities,
collectively or individually, "Taxes"). If the Company shall be required to deduct or to withhold any Taxes from or in respect
of any amount payable hereunder or under any other Transaction Document:
(i) the
amount so payable shall be increased to the extent necessary so that after making all required deductions and withholdings
(including Taxes on amounts payable to a Holder pursuant to this sentence) such Holder receives an amount equal to the sum it would
have received had no such deduction or withholding been made,
(ii)the Company shall make such deduction or withholding,
(iii)
the Company shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law, and
(iv)
as promptly as possible thereafter, the Company shall send such Holder an official receipt (or, if an official receipt is not available, such other documentation as shall be satisfactory to such Holder,
as the case may be) showing payment. In addition, the Company agrees to pay any present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery, registration
or enforcement of, or otherwise with respect to, this Preferred Shares or any other Transaction Document (collectively, "Other
Taxes").
(b)The Company
hereby indemnifies and agrees to hold each Holder and each of their affiliates and their respective officers, directors, employees, agents
and advisors (each, an "Indemnified Party") each Indemnified Party harmless from and against Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 28) paid by any Indemnified
Party as a result of any payment made hereunder or from the execution, delivery, registration or enforcement of, or otherwise with respect
to, this Preferred Shares or any other Transaction Document, and any liability (including penalties, interest and expenses for nonpayment,
late payment or otherwise) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be paid within thirty (30) days from the date on which such Holder makes written demand therefor,
which demand shall identify the nature and amount of such Taxes or Other Taxes.
(c) If the Company
fails to perform any of its obligations under this Section 28, the Company shall indemnify such Holder for any taxes, interest or penalties
that may become payable as a result of any such failure. The obligations of the Company under this Section 28 shall survive the repayment
and/or conversion, as applicable, in full of the Preferred Shares and all other amounts payable with respect thereto.
(d)If
any Indemnified Party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which
it has been indemnified pursuant to this Section 28 (including by the payment of additional amounts pursuant to this Section 28), it
shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section
28 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including taxes) of such Indemnified Party
and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying
party, upon the request of such Indemnified Party, shall repay to such Indemnified Party the amount paid over pursuant to this paragraph
(d) (plus any penalties, interest, or other charges imposed by the relevant Governmental Authority) in the event that such Indemnified
Party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (d),
in no event will the Indemnified Party be required to pay any amount to an indemnifying party pursuant to this paragraph (d) the payment
of which would place the Indemnified Party in a less favorable net after-Tax position than the Indemnified Party would have been in if
the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification
payments or additional amounts with respect to such Tax had never been paid. This paragraph (d) shall not be construed to require any
Indemnified Party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.
29.
Severability. If any provision of this Certificate of Designations is prohibited by law or otherwise determined to be invalid
or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall
be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Certificate of Designations so long as this Certificate of
Designations as so modified continues to express, without material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon
the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with
a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
Maximum Payments. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges
in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder
exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company
to the applicable Holder and thus refunded to the Company.
30.
Stockholder Matters; Amendment.
(a)
Stockholder Matters. Any stockholder action, approval or consent required, desired or otherwise sought by the Company pursuant
to the DGCL, the Certificate of Incorporation, this Certificate of Designations or otherwise with respect to the issuance of Preferred
Shares may be effected by written consent of the Company's stockholders or at a duly called meeting of the Company's stockholders, all
in accordance with the applicable rules and regulations of the DGCL. This provision is intended to comply with the applicable sections
of the DGCL permitting stockholder action, approval and consent affected by written consent in lieu of a meeting.
(b)
Amendment. Except for Section 4(d) and this Section 30(b), which may not be amended, modified or waived hereunder, this
Certificate of Designations or any provision hereof may be amended by obtaining the affirmative vote at a meeting duly called for such
purpose, or written consent without a meeting in accordance with the DGCL, of the Required Holders, voting separate as a single class,
and with such other stockholder approval, if any, as may then be required pursuant to the DGCL and the Certificate of Incorporation.
Except (a) to the extent otherwise expressly provided in this Certificate of Designations or the Certificate of Incorporation with respect
to voting or approval rights of a particular class or series of capital stock or (b) to the extent otherwise provided pursuant to the
DGCL, the holders of each outstanding class or series of shares of the Company shall not be entitled to vote as a separate voting group
on any amendment to the terms of this Certificate of Designations with respect to which such class or series would otherwise be entitled
under the DGCL to vote as a separate voting group.
31.Certain
Defined Terms. For purposes of this Certificate of Designations, the following terms shall have the following meanings:
(a) "1933
Act" means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) "1934
Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c)
"Additional Amount" means, as of the applicable date of determination, with respect to each Preferred Share, all
declared and unpaid Dividends on such Preferred Share.
(d)
"Adjustment Right" means any right granted with respect to any securities issued in connection with, or with
respect to, any issuance or sale (or deemed issuance or sale in accordance with Section 8(a)) of shares of Common Stock (other than rights
of the type described in Section 7(a) hereof) that could result in a decrease in the net consideration received by the Company in connection
with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar
rights).
(e)
"Affiliate" or "Affiliated" means, with respect to any Person, any other Person that directly
or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition
that "control" of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting
power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether
by contract or otherwise.
(f)
"Alternate Conversion Price" means, with respect to any Alternate Conversion that price which shall be the lowest of
(i) the applicable Conversion Price as in effect on the applicable Conversion Date of the applicable Alternate Conversion, and (ii)
the greater of (x) the Floor Price and (y) 80% of the lowest VWAP of the Common Stock during the five (5) consecutive Trading Day
period ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion
Notice (such period, the "Alternate Conversion Measuring Period"). All such determinations to be appropriately
adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately
decreases or increases the Common Stock during such Alternate Conversion Measuring Period.
(g) "Alternate
Conversion Floor Amount" means an amount equal to the product obtained by multiplying (A) the higher of (I) the highest price
that the Common Stock trades at on the Trading Day immediately preceding the relevant Alternate Conversion Date and (II) the applicable
Alternate Conversion Price and (B) the difference obtained by subtracting (I) the number of shares of Common Stock delivered (or to be
delivered) to such Holder on the applicable Share Delivery Deadline with respect to such Alternate Conversion from (II) the quotient
obtained by dividing (x) the applicable Conversion Amount that such Holder has elected to be the subject of the applicable Alternate
Conversion, by (y) the applicable Alternate Conversion Price without giving effect to clause (x) of such definition.
(h)
"Applicable Date" means the later of (x) the Stockholder Approval Date and (y) the date the Preferred Shares are
eligible to be resold by the Holders (assuming such Holders are not then affiliates of the Company) without restriction under Rule
144 of the 1933 Act (in each case, without regard to any limitations on exercise herein).
(i)
"Approved Stock Plan" means any employee benefit plan or agreement which has been approved by the Board prior
to or subsequent to the Subscription Date pursuant to which shares of Common Stock, restricted stock units, and standard options to purchase
Common Stock may be issued to any employee, officer, consultant or director for services provided to the Company in their capacity as
such.
(j) "Attribution Parties"
means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed
accounts, currently, or from time to time after the Initial Issuance Date, directly or indirectly managed or advised by a Holder's investment
manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of such Holder or any of the foregoing, (iii)
any Person acting or who could be deemed to be acting as a Group together with such Holder or any of the foregoing and (iv) any other
Persons whose beneficial ownership of the Company's Common Stock would or could be aggregated with such Holder's and the other Attribution
Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to subject collectively such Holder
and all other Attribution Parties to the Maximum Percentage.
(k)"Black
Scholes Consideration Value" means the value of the applicable Option, Convertible Security or Adjustment Right (as the case
may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the "OV" function
on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day immediately
preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option, Convertible Security
or Adjustment Right (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to
the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such Option,
Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an
expected volatility equal to the greater of 100% and the 100 day volatility obtained from the "1-rvr
function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be).
(1)"Bloomberg"
means Bloomberg, L.P.
(m)
"Book-Entry" means each entry on the Register evidencing one or more Preferred Shares held by a Holder in lieu
of a Preferred Share Certificate issuable hereunder.
(n)
"Business Day" means any day other than Saturday, Sunday or other day on which commercial banks in The City of
New York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not
be deemed to be authorized or required by law to remain closed due to "stay at home", "shelter-in-place", "non-essential
employee" or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any Governmental
Authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York
generally are open for use by customers on such day.
(o)
"Change of Control" means any Fundamental Transaction other than (i) any merger of the Company or any of its,
direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or
reclassification of the shares of Common Stock in which holders of the Company's voting power immediately prior to such reorganization,
recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities
with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of
such entity or entities) after such reorganization, recapitalization or reclassification, or (iii) pursuant to a migratory merger effected
solely for the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries.
(p)"Change of Control Election Price" means, with respect to any given Change of Control, such price equal to
the greatest of (i) the product of (A) the Required Premium multiplied by (B) the Conversion Amount of the Preferred Shares subject to
the applicable election, as applicable, (ii) the product of (A) the Conversion Amount of the Preferred Shares being redeemed or exchanged,
as applicable, multiplied by (B) the quotient determined by dividing (I) the greatest Closing Sale Price of the shares of Common Stock
during the period beginning on the date immediately preceding the earlier to occur of (I) the consummation of the applicable Change of
Control and (2) the public announcement of such Change of Control and ending on the date such Holder delivers the Change of Control Election
Notice by (II) the Alternate Conversion Price then in effect, and (iii) the product of (A) the Conversion Amount of the Preferred Shares
being redeemed multiplied by (B) the quotient of (I) the aggregate cash consideration and the aggregate cash value of any non-cash consideration
per share of Common Stock to be paid to such holders of the shares of Common Stock upon consummation of such Change of Control (any such
non-cash consideration constituting publicly-traded securities shall be valued at the highest of the Closing Sale Price of such securities
as of the Trading Day immediately prior to the consummation of such Change of Control, the Closing Sale Price of such securities on the
Trading Day immediately following the public announcement of such proposed Change of Control and the Closing Sale Price of such securities
on the Trading Day immediately prior to the public announcement of such proposed Change of Control) divided by (II) the Conversion Price
then in effect.
(q) "Closing
Bid Price" and "Closing Sale Price" means, for any security as of any date, the last closing bid price and
last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market
begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case may
be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by
Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing
bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security
is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively,
of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no
closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the
ask prices, respectively, of any market makers for such security as reported in The Pink Open Market (or a similar organization or agency
succeeding to its functions of reporting prices). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security
on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security
on such date shall be the fair market value as mutually determined by the Company and the Required Holders. If the Company and the Required
Holders are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures
in Section 23. All such determinations shall be appropriately adjusted for any stock splits, stock dividends, stock combinations, recapitalizations
or other similar transactions during such period.
(r) "Closing
Date" shall have the meaning set forth in the Exchange Agreement, which date is the date the Company initially issued the Preferred
Shares pursuant to the terms of the Exchange Agreement.
(s) "Code"
means the Internal Revenue Code of 1986, as amended.
(t)
"Common Stock" means (i) the Company's shares of common
stock, $0.00001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital
resulting from a reclassification of such common stock.
(u)
"Contingent Obligation" means, as to any Person, any
direct or indirect liability, contingent or otherwise, of that
Person with respect to any Indebtedness, lease, dividend or other obligation of another Person i f the primary purpose or intent of the
Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability
will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will
be protected (in whole or in part) against loss with respect thereto.
(v) "Conversion
Floor Price Condition" means that the relevant Alternate Conversion Price is being determined based on clause (x) of such definitions.
(w)
"Convertible Securities" means any stock or other security (other than Options) that is at any time and under any circumstances,
directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire,
any shares of Common Stock.
(x)
"Default Rate" means, with respect to any determination of the aggregate amount of outstanding accrued and unpaid Dividend
hereunder, the sum of (x) the applicable Dividend Rate in effect for such determination and (y) eighteen percent (18%) per annum.
(y)
"Dividend Conversion Price" means, with respect to any given Dividend Date, that price which shall be the lowest of
(i) the applicable Conversion Price as in effect on the applicable Dividend Date, (ii) 90% of the lowest VWAP of the Common Stock during
the five (5) consecutive Trading Day period ending and including the Trading Day immediately preceding the applicable Dividend Date (such
period, the "Dividend Conversion Measuring Period"). All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common
Stock during such Dividend Conversion Measuring Period.
(z)
"Dividend Rate" means, as of any date of determination, ten (10%) per annum; provided, further, that each of
the forgoing rates shall be subject to adjustment from time to time in accordance with Section 3.
(aa) "Eligible Market"
means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital
Market.
(bb) "Equity
Conditions" means, with respect to an given date of determination: (i) on each day during the period beginning thirty calendar
days prior to such applicable date of determination and ending on and including such applicable date of determination all Securities
shall be eligible for sale pursuant to Rule 144 (as defined in the Exchange Agreement) without the need for registration under any applicable
federal or state securities laws (in each case, disregarding any limitation on conversion of the Preferred Shares, other issuance of
securities with respect to the Preferred Shares; (ii) on each day during the period beginning thirty calendar days prior to the applicable
date of determination and ending on and including the applicable date of determination (the "Equity Conditions Measuring Period"),
the Common Stock (including all shares of Common Stock issued or issuable upon conversion of the Preferred Shares) is listed or designated
for quotation (as applicable) on an Eligible Market and shall not have been suspended from trading on an Eligible Market (other than
suspensions of not more than two (2) days and occurring prior to the applicable date of determination due to business announcements by
the Company) nor shall delisting or suspension by an Eligible Market have been threatened (with a reasonable prospect of delisting occurring
after giving effect to all applicable notice, appeal, compliance and hearing periods) or reasonably likely to occur or pending as evidenced
by (A) a writing by such Eligible Market or (B) the Company falling below the minimum listing maintenance requirements of the Eligible
Market on which the Common Stock is then listed or designated for quotation, as applicable; (iii) during the Equity Conditions Measuring
Period, the Company shall have delivered all shares of Common Stock issuable upon conversion of the Preferred Shares on a timely basis
as set forth in Section 4 hereof and all other shares of capital stock required to be delivered by the Company on a timely basis as set
forth in the other Transaction Documents; (iv) any shares of Common Stock to be issued in connection with the event requiring determination
may be issued in fa without violating Section 4(d) hereof; (v) any shares of Common Stock to be issued in connection with the event requiring
determination may be issued in full without violating the rules or regulations of the Eligible Market on which the Common Stock is then
listed or designated for quotation (as applicable); (vi) on each day during the Equity Conditions Measuring Period, no public announcement
of a pending, proposed or intended Fundamental Transaction shall have occurred which has not been abandoned, terminated or consummated;
(vii) the Company shall have no knowledge of any fact that would reasonably be expected to cause any Registrable Securities to not be
eligible for sale pursuant to Rule 144 without the need for registration under any applicable federal or state securities laws (in each
case, disregarding any limitation on conversion of the Preferred Shares, other issuance of securities with respect to the Preferred Shares)
and no Current Information Failure exists or is continuing, (viii) none of the Holders shall be in possession of any material, non-public
information provided to any of them by the Company, any of its Subsidiaries or any of their respective affiliates, employees, officers,
representatives, agents or the like; (ix) on each day during the Equity Conditions Measuring Period, the Company otherwise shall have
been in compliance with each, and shall not have breached any representation or warranty in any material respect (other than representations
or warranties subject to material adverse effect or materiality, which may not be breached in any respect) or any covenant or other term
or condition of any Transaction Document, including, without limitation, the Company shall not have failed to timely make any payment
pursuant to any Transaction Document; (x) there shall not have occurred any Volume Failure as of such applicable date of determination;
(xi) on the applicable date of determination (A) no Authorized Share Failure shall exist or be continuing and the applicable Required
Minimum Securities Amount of shares of Common Stock are available under the certificate of incorporation of the Company and reserved
by the Company to be issued pursuant to this Certificate of Designations and (B) all shares of Common Stock to be issued in connection
with the event requiring this determination may be issued in full without resulting in an Authorized Share Failure; (xii) on each day
during the Equity Conditions Measuring Period, there shall not have occurred and there shall not exist a Triggering Event or an event
that with the passage of time or giving of notice would constitute a Triggering Event; (xiii) the shares of Common Stock issuable pursuant
to the event requiring the satisfaction of the Equity Conditions are duly authorized and listed and eligible for trading without restriction
on an Eligible Market or (xiv) the Company shall have obtained the Stockholder Approval.
(cc)
"Equity Conditions Failure" means that on any day during the period commencing on the first Trading Day in the applicable
Mandatory Conversion Measuring Period through the applicable Mandatory Conversion Date, the Equity Conditions have not been satisfied
(or waived in writing by the applicable Holder).
(dd)
"Exchange Agreement" means that certain exchange agreement dated August 14, 2024, by and between the Company
and the initial Holder, as such may be amended, modified or waived from time to time.
(ee)"Excluded
Securities" means (i) shares of Common Stock, restricted stock units or standard options to purchase Common Stock issued to directors,
officers or employees of the Company for services rendered to the Company in their capacity as such pursuant to an Approved Stock Plan
(as defined above), provided that the exercise price of any such options is not lowered, none of such options are amended to increase
the number of shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any
manner that adversely affects any of the Holders; (ii) shares of Common Stock issued upon the conversion or exercise, as applicable, of
Convertible Securities or Options (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that
are covered by clause (i) above) issued prior to the Subscription Date, provided that the conversion price or exercise price, as applicable,
of any such Convertible Securities or Options (other than standard options to purchase Common Stock issued pursuant to an Approved Stock
Plan that are covered by clause (i) above) is not lowered, none of such Convertible Securities or Options (other than standard options
to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are amended to increase the number
of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities or Options (other than standard options
to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (i) above) are otherwise materially changed
in any manner that adversely affects any of the Holders; (iii) the shares of Common Stock issuable upon conversion of the Preferred Shares
or otherwise pursuant to the terms of this Certificate of Designations; provided, that the terms of this Certificate of Designations are
not amended, modified or changed on or after the Subscription Date (other than antidilution adjustments pursuant to the terms thereof
in effect as of the Subscription Date); and (iv) shares of Common Stock issued pursuant to the Permitted Equity Line.
(ff)"FATCA"
means Sections 1471 through 1474 of the Code, as of the date of this Certificate of Designation (or any amended or successor version
that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations
thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices
adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections
of the Code.
(gg)
"Fiscal Quarter" means each of the fiscal quarters adopted by the Company for financial reporting purposes that correspond
to the Company's fiscal year as of the date hereof that ends on December 31.
(hh)"Floor
Price" means $0.0468 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events),
or, subject to the rules and regulations of the Principal Market, such lower price as the Company and the Required Holders may agree,
from time to time.
(ii)"Fundamental
Transaction" means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise,
in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation)
another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or
assets of the Company or any of its "significant subsidiaries" (as defined in Rule 1-02 of Regulation S-X) to one or more Subject
Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its Common Stock
be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of
at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if
any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to,
such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities
making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively
the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv)
consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate,
acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock
calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity
making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of
Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of
at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the
Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions,
allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the "beneficial owner" (as defined
in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender
offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization,
spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either
(x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate
ordinary voting power represented by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this
Certificate of Designations calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z)
a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities
of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other
stockholders of the Company to surrender their shares of Common Stock without approval of the stockholders of the Company or (C) directly
or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering
into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in
which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this
definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent
with the intended treatment of such instrument or transaction.
(jj)"GAAP"
means United States generally accepted accounting principles, consistently applied.
(kk) "Going Private
Transaction" means any Change of Control (i) pursuant to which, the Company (and the Successor Entity, if applicable) ceases
to have any securities registered under the 1934 Act or (ii) that results in the purchase and/or cancellation of all of the Common Stock
of the Company solely for cash (and not in whole, or in part, for any other securities of any Person).
(ll) "Group"
means a "group" as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(mm) "Governmental
Authority" means any federal, foreign, state, county, municipal, provincial, or local governmental authority, court, judicial
body, arbitration tribunal, government or self-regulatory organization, commission, tribunal or organization, or any regulatory, administrative,
or other agency, or any political or other subdivision, department, commission, board, bureau, branch, division, ministry, or instrumentality
of any of the foregoing.
(nn) "Indebtedness"
means of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services, including, without limitation, "capital leases" in accordance
with United States generally accepted accounting principles consistently applied for the periods covered thereby (other than trade payables
entered into in the ordinary course of business consistent with past practice), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case
with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller
or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations
under any leasing or similar arrangement which, in connection with United States generally accepted accounting principles, consistently
applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F)
above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, lien, pledge, charge, security interest or other encumbrance of any nature whatsoever in or upon any property
or assets (including accounts and contract rights) with respect to any asset or property owned by any Person, even though the Person
which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations
in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above.
(oo) "Intellectual
Property Rights" means, with respect to the Company and its Subsidiaries, all of their rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications
and registrations therefor.
(pp) "Investment"
means any beneficial ownership (including stock, partnership or limited liability company interests) of or in any Person, or any loan,
advance or capital contribution to any Person or the acquisition of all, or substantially all, of the assets of another Person or the
purchase of any assets of another Person for greater than the fair market value of such assets.
(a) "Liquidation
Event" means, whether in a single transaction or series of transactions, the voluntary or involuntary liquidation, dissolution
or winding up of the Company or such Subsidiaries the assets of which constitute all or substantially all of the assets of the business
of the Company and its Subsidiaries, taken as a whole.
(b)
"Market Price" means, with respect to any Adjustment Date, the Closing Bid Price of the Common Stock as of the Trading
Day ended immediately prior to such applicable Adjustment Date.
(c)
"Material Adverse Effect" means any material adverse effect on the business, properties, assets, liabilities, operations,
results of operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries, if any, individually or taken
as a whole, or on the transactions contemplated hereby or on the other Transaction Documents (as defined below), or by the agreements
and instruments to be entered into in connection therewith or on the authority or ability of the Company to perform its obligations under
the Transaction Documents.
(d)
"Options" means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(e)"Parent
Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(f)"Permitted
Indebtedness" means (i) Indebtedness set forth on a Disclosure Schedule to the Exchange Agreement, as in effect as of the Subscription
Date, (ii) Indebtedness secured by Permitted Liens or unsecured but as described in clauses (iv) and (v) of the definition of Permitted
Liens.
(g)
"Permitted Liens" means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in
the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created
by operation of law, such as materialmen's liens, mechanics' liens and other similar liens, arising in the ordinary course of business
with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings, (iv)
Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase price of such equipment
or Indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B) existing on such equipment
at the time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the
proceeds of such equipment, in either case, with respect to Indebtedness in an aggregate amount not to exceed $500,000, (v) Liens incurred
in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in clause (iv) above,
provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal
amount of the Indebtedness being extended, renewed or refinanced does not increase, and (vi) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payments of custom duties in connection with the importation of goods, and Liens arising from judgments,
decrees or attachments in circumstances not constituting a Triggering Event under Section 5(aXxiii).
(h)
"Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization, any other entity or a government or any department or agency thereof.
(i)"Principal Market" means, as of any time of determination, the principal trading market, if any, in which
the shares of Common Stock then trade.
(j)[Reserved].
(k)"Required
Premium" means 125%.
(l) "SEC"
means the United States Securities and Exchange Commission or the successor thereto.
(m)
"Securities" shall have the meaning as set forth in the Securities Purchase Agreement.
(d)"Stated Value" shall mean $1,000 per share, subject to adjustment for
stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions or other similar events
occurring after the Initial Issuance Date with respect to the Preferred Shares.
(n)
"Subscription Date" means August 14, 2024.
(o)
"Subsequent Placement" means any direct, or indirect, issuance, offer, sale, grant of any option or right to
purchase, or otherwise disposal of (or announcement of any issuance, offer, sale, grant of any option or right to purchase or other disposition
of) any equity security or any equity-linked or related security (including, without limitation, any "equity security" (as
that term is defined under Rule 405 promulgated under the 1933 Act), any Convertible Securities, any debt, any preferred stock or any
purchase rights) by the Company or any of its Subsidiaries.
(e)
"Stock Combination Event" means the occurrence at any time and from time
to time on or after the Subscription Date of any stock split, stock dividend, stock combination recapitalization or other similar transaction
involving the Common Stock.
(f)"Subject Entity" means any Person, Persons or Group or any Affiliate
or associate of any such Person, Persons or Group.
(g)"Subsidiary" shall have the meaning set forth in the Securities Purchase
Agreement.
(h)
"Successor Entity" means the Person (or, if so elected by the Required Holders,
the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Required
Holders, the Parent Entity) with which such Fundamental Transaction shall have been entered into.
(i)"Trading Day" means, as applicable, (x) with respect to all price or
trading volume determinations relating to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or,
if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities
market on which the Common Stock is then traded, provided that "Trading Day" shall not include any day on which the Common
Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading
during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing
time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise
designated as a Trading Day in writing by the applicable Holder or (y) with respect to all determinations other than price determinations
relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.
(v) "Transaction
Documents" means the Exchange Agreement, this Certificate of Designations, and each of the other agreements and instruments
entered into or delivered by the Company or any of the Holders in connection with the transactions contemplated by the Exchange Agreement,
all as may be amended from time to time in accordance with the terms thereof.
(w)"Volume Failure" means, with respect to a particular date of determination, the aggregate daily dollar trading
volume (as reported on Bloomberg) of the Common Stock on the Principal Market on any Trading Day during the twenty (20) Trading Day period
ending on the Trading Day immediately preceding such date of determination (such period, the "Volume Failure Measuring Period"),
is less than $1,000.
(x)
"VWAP" means, for any security as of any date, the dollar volume-weighted average price for such security on
the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities
exchange or securities market on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending
at 4:00 p.m., New York time, as reported by Bloomberg through its "VAP" function (set to 09:30 start time and 16:00 end time)
or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the
electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York
time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours,
the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported
in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be
calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market
value as mutually determined by the Company and the Required Holders. If the Company and the Required Holders are unable to agree upon
the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 23. All such
determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar
transaction during such period.
(y) [Reserved.]
32.Disclosure.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Certificate of Designations, unless the
Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating
to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York city time on the Business Day immediately
following such notice delivery date, publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise.
In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its
Subsidiaries, the Company so shall indicate to the applicable Holder explicitly in writing in such notice (or promptly (but no later
than the next Business Day) following receipt of notice from such Holder, as applicable), and in the absence of any such written indication
in such notice (or notification from the Company promptly (but no later than the next Business Day) following receipt of notice from
such Holder), such Holder shall be entitled to presume that information contained in the notice does not constitute material, non-public
information relating to the Company or any of its Subsidiaries. Nothing contained in this Section 32 shall limit any obligations of the
Company, or any rights of any Holder, under Section 5 of the Exchange Agreement.
33.Absence
of Trading and Disclosure Restrictions. The
Company acknowledges and agrees that no Holder is a fiduciary or agent of the Company and that each Holder shall have no obligation to
(a) maintain the confidentiality of any information provided by the Company or (b) refrain from trading any securities while in possession
of such information in the absence of a written non-disclosure agreement signed by an officer of such Holder that explicitly provides
for such confidentiality and trading restrictions. In the absence of such an executed, written nondisclosure agreement, the Company acknowledges
that each Holder may freely trade in any securities issued by the Company, may possess and use any information provided by the Company
in connection with such trading activity, and may disclose any such information to any third party.
[The remainder of the page is intentionally left
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IN WITNESS WHEREOF, the Company
has caused this Certificate of Designations of the Certificate of Incorporation of Aclarion, Inc.to be signed by its Chief Financial
Officer on this 14th day of August, 2024.
ACLARION, INC.
By: /s/ John Lorbiecki
Name: John Lorbiecki
Title: Chief Financial Officer and Treasurer
EXHIBIT I
ACLARION, INC.
CONVERSION NOTICE
Reference
is made to the Certificate of Designations of the Certificate of Incorporation of Aclarion, Inc., a Delaware corporation (the "Company")
establishing the terms, preferences and rights of the Series B Convertible Preferred Stock, $0.00001 par value (the "Preferred Shares")
of the Company (the "Certificate of Designations"). In accordance with and pursuant to the Certificate of Designations,
the undersigned hereby elects to convert the number of Preferred Shares indicated below into shares of common stock, $0.00001 value per
share (the "Common Stock"), of the Company, as of the date specified below.
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Aggregate Stated Value of such Preferred Shares to be converted: |
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Aggregate accrued and unpaid Dividends with respect to such Preferred Shares to be converted: |
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AGGREGATE CONVERSION AMOUNT TO BE CONVERTED: |
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Please confirm the following information:
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Number of shares of Common Stock to be issued: |
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•If
this Conversion Notice is being delivered with respect to
an Alternate Conversion, check here if Holder is electing to use the following Alternate Conversion Price:_______________________
Please issue the Common Stock into
which the applicable Preferred Shares are being converted to Holder, or for its benefit, as follows:
•Check
here if requesting delivery as a certificate to the following name and to the following address:
•Check here if
requesting delivery by Deposit/Withdrawal at Custodian as follows:
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EXHIBIT II
ACKNOWLEDGMENT
The Company hereby
acknowledges this Conversion Notice, (b) certifies that the above indicated number of shares of Common Stock [are][are not] eligible
to be resold by the applicable Holder either (i) pursuant to Rule 144 (subject to such Holder's execution and delivery to the
Company of a customary 144 representation letter) or (ii) an effective and available registration statement and (c) hereby directs
___________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions
dated _____________________________ , 20__ from the Company and acknowledged and agreed to by
ACLARION, INC.
By:
Name:
Title:
Exhibit 10.1
AMENDMENT AND EXCHANGE AGREEMENT
This Amendment and Exchange
Agreement (the “Agreement”) is entered into as of the date set forth on the signature pages below, by and among Aclarion,
Inc., a Delaware corporation with offices located at 8181 Arista Place, Suite 100, Broomfield, CO 80021 (the “Company”)
and the investor signatory hereto (the “Holder”), with reference to the following facts:
A.
Prior to the date hereof, (i) the Company and the Holder and/or certain other investors (the “Other Holders”,
and together with the Holder, the “Holders”) entered into that certain Securities Purchase Agreement, dated May 16,
2023 (as may be amended, modified, restated, restructured or supplemented from time to time, each a “Securities Purchase Agreement”),
pursuant to which the Holder purchased, among other things, certain senior notes (as amended, modified or waived prior to the date hereof,
and including any notes issued in exchange therefore, the “Original Notes”). Capitalized terms not defined herein shall
have the meaning as set forth in the Securities Purchase Agreement.
B.
The Company has authorized a new series of convertible preferred stock of the Company designated as Series B Convertible Preferred
Stock, $0.00001 par value, the terms of which are set forth in the certificate of designation for such series of preferred stock (the
“New Certificate of Designations”) in the form attached hereto as Exhibit A (together with any convertible
preferred shares issued in replacement thereof in accordance with the terms thereof, the “Series B Preferred Stock”),
which Series B Preferred Stock shall be convertible into shares of Common Stock, in accordance with the terms of the New Certificate of
Designations.
C.
As of the date hereof, the Holder desires to exchange such portion of the amounts outstanding under the Original Note as set forth
on the signature page of the Holder attached hereto (the “Exchange Note”) into (i) such aggregate number of shares
of Series B Preferred Stock as set forth on the signature page of the Holder attached hereto (the “New Preferred Shares”,
and such shares of Common Stock issuable pursuant to the terms of the New Certificate of Designations, including, without limitation,
upon conversion or otherwise, collectively, the “New Conversion Shares”, and together with the New Preferred Shares,
the “New Securities”) in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities
Act of 1933, as amended (the “Securities Act”).
D.
Each of the Company and the Holder desire to effectuate such exchange on the basis and subject to the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration
of the foregoing premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:
1.
Exchange
(a)Exchange
of Securities. On the Effective Date (as defined below), pursuant to Section 3(a)(9) of the Securities Act, the Holder hereby
agrees to convey, assign and transfer the Exchange Note to the Company in exchange for which the Company agrees to issue the New Preferred
Shares to the Holder (the “Exchange”). As soon as commercially practicable following the Effective Date, the Holder
shall deliver or cause to be delivered to the Company (or its assignee) the Original Note (or affidavit of lost note, in form provided
upon request by the Company and reasonably acceptable to the Holder). Immediately following the delivery of the New Preferred Shares
to the Holder (or its assignee), the Holder hereby relinquishes all rights, title and interest in the Exchange Note (including any claims
the Holder may have against the Company related thereto) and assigns the same to the Company and the Exchange Note shall be cancelled.
(b)Other
Documents. The Company and the Holder shall execute and/or deliver such other documents and agreements as are customary and reasonably
necessary to effectuate the Exchange.
2.Amendments
(a)
Ratifications. Except as otherwise expressly provided herein, the Securities Purchase Agreement and each other Transaction
Document (as defined in the Securities Purchase Agreement), is, and shall continue to be, in full force and effect and is hereby ratified
and confirmed in all respects, except that on and after the Effective Date: (i) all references in the Securities Purchase Agreement to
“this Agreement”, “hereto”, “hereof”, “hereunder” or words of like import referring to
the Securities Purchase Agreement shall mean the Securities Purchase Agreement as amended by this Agreement, and (ii) all references in
the other Transaction Documents, to the “Securities Purchase Agreement”, “thereto”, “thereof”, “thereunder”
or words of like import referring to the Securities Purchase Agreement shall mean the Securities Purchase Agreement as amended by this
Agreement.
(b)
Amendments to Transaction Documents. On and after the Effective Date, each of the Transaction Documents (as defined in the
Securities Purchase Agreement) are hereby amended as follows:
(i)The
defined term “Warrant” is hereby amended to include the “New Preferred Shares (as defined in each Amendment and Exchange
Agreement)”.
(ii)
The defined term
“Warrant Shares” is hereby amended to include the “New Conversion Shares (as defined in each Amendment and Exchange
Agreement)”.
(iii)The
defined term “Amendment and Exchange Agreement” shall mean this Agreement.
(iv)The
defined term “Transaction Documents” is hereby amended to include this Agreement.
3.
Representations and Warranties of the Company.
(a)
Organization and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly
existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority
to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company
and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which
its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below).
As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties,
assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary,
individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Exchange Documents or any other agreements
or instruments to be entered into in connection herewith or therewith or (iii) the authority or ability of the Company or any of its Subsidiaries
to perform any of their respective obligations under any of the Exchange Documents (as defined below). Other than the Persons (as defined
below) set forth on Schedule 2(a) the Company has no Subsidiaries. “Subsidiaries” means any Person in which
the Company, directly or indirectly, (A) owns any of the outstanding capital stock or holds any equity or similar interest of such Person
or (B) controls or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is
individually referred to herein as a “Subsidiary”. “Person” means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental
Entity or any department or agency thereof.
(b)
Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations
(including, without limitation, the issuance of the New Preferred Shares in accordance with the terms hereof and the reservation and issuance
of the New Conversion Shares in accordance with the terms of the New Certificate of Designations) under this Agreement, the New Certificate
of Designations and each of the other agreements and certificates entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the “Exchange Documents”). The execution and delivery of the Exchange
Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation,
the issuance of the New Preferred Shares, have been duly authorized by the Board of Directors of the Company and, other than such filings
required under applicable securities or “Blue Sky” laws of the states of the United States (the “Required Approvals”)
and no further filing, consent, or authorization is required by the Company or of its Board of Directors or its shareholders. This Agreement
and the other Exchange Documents have been duly executed and delivered by the Company and constitute the legal, valid and binding obligations
of the Company enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited
by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
(c) Issuance of New Preferred Shares. The issuance of the New Preferred Shares are duly authorized and, upon issuance in accordance
with the terms of this Agreement, the New Preferred Shares shall be validly issued, fully paid and non-assessable and free from all preemptive
or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests
and other encumbrances (collectively “Liens”) with respect to the issue thereof. Upon conversion of the New Preferred
Shares in accordance with this Agreement and the other Exchange Documents including, without limitation, the New Certificate of Designations,
the Common Stock issued to the Holder, upon the conversion of the New Preferred Shares, when issued, will be validly issued, fully paid
and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled
to all rights accorded to a holder of Common Stock. Assuming the accuracy of the representations and warranties of the Holder contained
herein, the offer and issuance by the Company of the New Preferred Shares is exempt from registration under the 1933 Act. As of the date
hereof, the Company shall have reserved from its duly authorized capital stock not less than the Required Reserve Amount (as defined below)
for issuances of New Conversion Shares pursuant to the New Certificate of Designations.
(d)
Securities Law Exemptions. Assuming the accuracy of the representations and warranties of the Holder contained herein, the
offer and issuance by the Company of the New Preferred Shares is exempt from registration under the 1933 Act, pursuant to the exemption
provided by Section 4(a)(2) thereof, and applicable state securities laws.
(e)
No Conflict; Required Filings and Consents.
(i)
The execution, delivery and performance of the Exchange Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby will not (i) result in a violation of the Certificate of Incorporation (as defined below) (including,
without limitation, any certificate of designation contained therein), Bylaws (as defined below), certificate of formation, memorandum
of association, articles of association, bylaws or other organizational documents of the Company or any of its Subsidiaries, or any capital
stock or other securities of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party for
which a consent or waiver has not been obtained, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree
(including, without limitation, foreign, federal and state securities laws and regulations and the rules and regulations of the Nasdaq
Capital Market (the “Principal Market”) and including all applicable foreign, federal and state laws, rules and regulations)
applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound
or affected.
(ii)
Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or
registration with (other than the Required Approvals), any Governmental Entity or any regulatory or self-regulatory agency or any other
Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Exchange Documents,
in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the
Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior
to the date hereof, and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the
Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Exchange
Documents. The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances
which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future. “Governmental Entity”
means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local,
municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or
entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature
or instrumentality of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international
organization or any of the foregoing.
(f)
Acknowledgment Regarding Holder’s Acquisition of New Securities. The Company acknowledges and agrees that the Holder
is acting solely in the capacity of an arm’s length purchaser with respect to the Exchange Documents and the transactions contemplated
hereby and thereby and that the Holder is not (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate”
(as defined in Rule 144 promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”)) of
the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more than 10% of the shares of Common
Stock (as defined for purposes of Rule 13d-3 of the 1934 Act). The Company further acknowledges that the Holder is not acting as a financial
advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Exchange Documents and
the transactions contemplated hereby and thereby, and any advice given by the Holder or any of its representatives or agents in connection
with the Exchange Documents and the transactions contemplated hereby and thereby is merely incidental to the Holder’s purchase of
the New Securities. The Company further represents to the Holder that the Company’s and each Subsidiary’s decision to enter
into the Exchange Documents to which it is a party has been based solely on the independent evaluation by the Company, each Subsidiary
and their respective representatives.
(g)
No Placement Agent. Neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection
with the offer or sale of the New Securities. The Company shall pay, and hold the Holder harmless against, any liability, loss or expense
(including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim.
(h)
No Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their
behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances
that would cause this offering of the New Securities to require approval of stockholders of the Company under any applicable stockholder
approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated for quotation. None of the Company, its Subsidiaries, their affiliates nor
any Person acting on their behalf will take any action or steps that would cause the offering of any of the New Securities to be integrated
with other offerings of securities of the Company.
(i)
Dilutive Effect. The Company understands and acknowledges that the number of New Conversion Shares will increase in certain
circumstances. The Company further acknowledges that its obligation to issue the New Conversion Shares upon conversion of the New Preferred
Shares in accordance with this Agreement and the New Certificate of Designations is, absolute and unconditional regardless of the dilutive
effect that such issuance may have on the ownership interests of other stockholders of the Company.
(j)
Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action,
if any, in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison pill (including,
without limitation, any distribution under a rights agreement), stockholder rights plan or other similar anti-takeover provision under
the Certificate of Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise
which is or could become applicable to the Holder as a result of the transactions contemplated by this Agreement, including, without limitation,
the Company’s issuance of the New Securities and the Holder’s ownership of the New Securities. The Company and its board of
directors have taken all necessary action, if any, in order to render inapplicable any stockholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of shares of Common Stock or a change in control of the Company or any of its Subsidiaries.
(k)
SEC Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has filed all reports,
schedules, forms, proxy statements, statements and other documents required to be filed by it with the New Securities and Exchange Commission
(the “SEC”) pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934
Act”) (all of the foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial statements,
notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”).
The Company has delivered or has made available to the Holders or their respective representatives true, correct and complete copies of
each of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC
Documents complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC
with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with generally
accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments which will not be material, either individually or in the aggregate). The reserves, if
any, established by the Company or the lack of reserves, if applicable, are reasonable based upon facts and circumstances known by the
Company on the date hereof and there are no loss contingencies that are required to be accrued by the Statement of Financial Accounting
Standard No. 5 of the Financial Accounting Standards Board which are not provided for by the Company in its financial statements or otherwise.
No other information provided by or on behalf of the Company to any of the Holders which is not included in the SEC Documents (including,
without limitation, information in the disclosure schedules to this Agreement) contains any untrue statement of a material fact or omits
to state any material fact necessary in order to make the statements therein not misleading, in the light of the circumstance under which
they are or were made. The Company is not currently contemplating to amend or restate any of the financial statements (including, without
limitation, any notes or any letter of the independent accountants of the Company with respect thereto) included in the SEC Documents
(the “Financial Statements”), nor is the Company currently aware of facts or circumstances which would require the
Company to amend or restate any of the Financial Statements, in each case, in order for any of the Financials Statements to be in compliance
with GAAP and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend
that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate any of
the Financial Statements.
(l)
Absence of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in
a Form 10-K, there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties,
operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries. Since
the date of the Company’s most recent audited financial statements contained in a Form 10-K, neither the Company nor any of its
Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course
of business or (iii) made any capital expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither
the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy,
insolvency, reorganization, receivership, liquidation or winding up. As described in the SEC Documents, our past working capital deficiency,
stockholders’ deficit and recurring losses from operations raised substantial doubt about our ability to continue as a going concern.
As a result, our independent registered public accounting firm has included an explanatory paragraph in its report on our financial statements
for the year ended December 31, 2023 with respect to this uncertainty.
(m)
No Undisclosed Events, Liabilities, Developments or Circumstances. Except as set forth in the SEC Documents, no event, liability,
development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its
Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition
(financial or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws on a registration
statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly
announced, (ii) could have a material adverse effect on the Holder’s investment hereunder or (iii) could have a Material Adverse
Effect.
(n)
Conduct of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of
or in default under its Certificate of Incorporation, any certificate of designation, preferences or rights of any other outstanding series
of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation, memorandum
of association, articles of association, Certificate of Incorporation or certificate of incorporation or bylaws, respectively. Neither
the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in
violation of any of the foregoing, except in all cases for possible violations which could not, individually or in the aggregate, have
a Material Adverse Effect. Without limiting the generality of the foregoing, except as set forth in the SEC Documents, the Company is
not in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances
that could reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future. During the
two years prior to the date hereof, (i) the Common Stock has been listed or designated for quotation on the Principal Market, (ii) trading
in the Common Stock has not been suspended by the SEC or the Principal Market and (iii) except as set forth in the SEC Documents, the
Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of
the Common Stock from the Principal Market. The Company and each of its Subsidiaries possess all certificates, authorizations and permits
issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the failure to possess
such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse Effect, and neither
the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate,
authorization or permit. There is no agreement, commitment, judgment, injunction, order or decree binding upon the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries is a party which has or would reasonably be expected to have the effect
of prohibiting or materially impairing any business practice of the Company or any of its Subsidiaries, any acquisition of property by
the Company or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently conducted other
than such effects, individually or in the aggregate, which have not had and would not reasonably be expected to have a Material Adverse
Effect on the Company or any of its Subsidiaries.
(o)
Foreign Corrupt Practices. Neither the Company, the Company’s subsidiary or any director, officer, agent, employee,
nor any other person acting for or on behalf of the foregoing (individually and collectively, a “Company Affiliate”)
have violated the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other applicable anti-bribery or anti-corruption
laws, nor has any Company Affiliate offered, paid, promised to pay, or authorized the payment of any money, or offered, given, promised
to give, or authorized the giving of anything of value, to any officer, employee or any other person acting in an official capacity for
any Governmental Entity to any political party or official thereof or to any candidate for political office (individually and collectively,
a “Government Official”) or to any person under circumstances where such Company Affiliate knew or was aware of a high
probability that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to any
Government Official, for the purpose of:
(i)(A)
influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do
or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official
to influence or affect any act or decision of any Governmental Entity, or
(ii)assisting
the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its Subsidiaries.
(p)
Sarbanes-Oxley Act. The Company and each Subsidiary is in compliance with any and all applicable requirements of the Sarbanes-Oxley
Act of 2002, as amended, and any and all applicable rules and regulations promulgated by the SEC thereunder.
(q)
Transactions With Affiliates. Except as set forth in the SEC Documents, no current or former employee, partner, director,
officer or stockholder (direct or indirect) of the Company or its Subsidiaries, or any associate, or, to the knowledge of the Company,
any affiliate of any thereof, or any relative with a relationship no more remote than first cousin of any of the foregoing, is presently,
or has ever been, (i) a party to any transaction with the Company or its Subsidiaries (including any contract, agreement or other arrangement
providing for the furnishing of services by, or rental of real or personal property from, or otherwise requiring payments to, any such
director, officer or stockholder or such associate or affiliate or relative Subsidiaries (other than for ordinary course services as employees,
officers or directors of the Company or any of its Subsidiaries)) or (ii) the direct or indirect owner of an interest in any corporation,
firm, association or business organization which is a competitor, supplier or customer of the Company or its Subsidiaries (except for
a passive investment (direct or indirect) in less than 5% of the common stock of a company whose securities are traded on or quoted through
an Eligible Market (as defined in the New Certificate of Designations)), nor does any such Person receive income from any source other
than the Company or its Subsidiaries which relates to the business of the Company or its Subsidiaries or should properly accrue to the
Company or its Subsidiaries. No employee, officer, stockholder or director of the Company or any of its Subsidiaries or member of his
or her immediate family is indebted to the Company or its Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries
indebted (or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services
rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the Company, and (iii) for other standard employee benefits
made generally available to all employees or executives (including stock option agreements outstanding under any stock option plan approved
by the Board of Directors of the Company).
(r)
Equity Capitalization.
(i)
Definitions:
(1)
“Common Stock” means (x) the Company’s shares of common stock, $0.00001 par value per share, and
(y) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such
common stock.
(2)“Preferred Stock” means (x) the Company’s blank check preferred stock,
$0.00001 par value per share, the terms of which may be designated by the board of directors of the Company in a certificate of designations
and (y) any capital stock into which such preferred stock shall have been changed or any share capital resulting from a reclassification
of such preferred stock (other than a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate
of designations).
(ii)
Authorized and Outstanding Capital Stock. Schedule 3(r)(ii) sets forth as of the date hereof, the authorized, issued and
outstanding capital stock of the Company as well as all outstanding equity linked securities, including all options, warrants, restricted
stock units, Convertible Securities. No shares of Common Stock are held in the treasury of the Company. “Convertible Securities”
means any capital stock or other security of the Company or any of its Subsidiaries that is at any time and under any circumstances directly
or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital
stock or other security of the Company (including, without limitation, Common Stock) or any of its Subsidiaries.
(iii)
Valid Issuance; Available Shares; Affiliates. All of such outstanding shares are duly authorized
and have been, or upon issuance will be, validly issued and are fully paid and nonassessable. The SEC Documents disclose all securities
that are, as of the date hereof, owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated
based on the assumption that only officers, directors and holders of at least 10% of the Company’s issued and outstanding Common
Stock are “affiliates” without conceding that any such Persons are “affiliates” for purposes of federal securities
laws) of the Company or any of its Subsidiaries. To the Company’s knowledge, except as set forth in the SEC Documents, no Person
owns 10% or more of the Company’s issued and outstanding shares of Common Stock (calculated based on the assumption that all Convertible
Securities (as defined below), whether or not presently exercisable or convertible, have been fully exercised or converted (as the case
may be) taking account of any limitations on exercise or conversion (including “blockers”) contained therein without conceding
that such identified Person is a 10% stockholder for purposes of federal securities laws).
(iv)
Existing Securities; Obligations. Except as disclosed in the SEC Documents: (A) none of
the Company’s or any Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar
rights or Liens suffered or permitted by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings
or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or capital
stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or capital
stock of the Company or any of its Subsidiaries; (C) except as set forth on Schedule 3(r)(iv), there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (D)
there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containing anti-dilution
or similar provisions that will be triggered by the issuance of the New Securities; and (F) neither the Company nor any Subsidiary has
any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.
(v)
Organizational Documents. The SEC Documents disclose true, correct and complete copies of
the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”),
and the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all Convertible
Securities and the material rights of the holders thereof in respect thereto.
(s)
Indebtedness and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except as disclosed in the SEC Documents,
has any outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing
Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound, (ii)
is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract,
agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) has any financing statements securing
obligations in any amounts filed in connection with the Company or any of its Subsidiaries; (iv) is in violation of any term of, or in
default under, any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not
result, individually or in the aggregate, in a Material Adverse Effect, or (v) is a party to any contract, agreement or instrument relating
to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the SEC
Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or
its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could not have a Material Adverse
Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness
for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including,
without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course
of business consistent with past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds
and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations
so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets
acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement
which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness
referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H)
all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above;
and (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise,
of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such
liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto.
(t)
Litigation. Except as set forth in the SEC Documents, there is no action, suit, arbitration, proceeding, inquiry or investigation
before or by the Principal Market, any court, public board, other Governmental Entity, self-regulatory organization or body pending or,
to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the
Company’s or its Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in their capacities
as such. No director, officer or employee of the Company or any of its subsidiaries has willfully violated 18 U.S.C. §1519 or engaged
in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing, there has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company, any of its Subsidiaries or any
current or former director or officer of the Company or any of its Subsidiaries. The SEC has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company under the 1933 Act or the 1934 Act. Except as set forth
in the SEC Documents, neither the Company nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree, determination
or award of any Governmental Entity.
(u)
Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which
the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought
or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse Effect.
(v)
Employee Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or
employs any member of a union. The Company and its Subsidiaries believe that their relations with their employees are good. No executive
officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company or any of its Subsidiaries has
notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate
such officer’s employment with the Company or any such Subsidiary. No current (or former) executive officer or other key employee
of the Company or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive officer or other key employee (as the case may be) does not
subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries
are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices
and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually
or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(w)
Title.
(i)
Real Property. Each of the Company and its Subsidiaries holds good title to all real property, leases in real property,
facilities or other interests in real property owned or held by the Company or any of its Subsidiaries (the “Real Property”)
owned by the Company or any of its Subsidiaries (as applicable). The Real Property is free and clear of all Liens and is not subject to
any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except for (a) Liens for
current taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the
property subject thereto. Any Real Property held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company or any of its Subsidiaries.
(ii)
Fixtures and Equipment. Each of the Company and its Subsidiaries (as applicable) has good title to, or a valid leasehold
interest in, the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are
used by the Company or its Subsidiary in connection with the conduct of its business (the “Fixtures and Equipment”). The Fixtures
and Equipment are structurally sound, are in good operating condition and repair, are adequate for the uses to which they are being put,
are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient for the conduct of the
Company’s and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior to the date hereof. Each of
the Company and its Subsidiaries owns all of its Fixtures and Equipment free and clear of all Liens except for (a) liens for current taxes
not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject
thereto.
(x)
Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications
and registrations therefor (“Intellectual Property Rights”) necessary to conduct their respective businesses as now conducted
and presently proposed to be conducted. The Company does not have any knowledge of any infringement by the Company or its Subsidiaries
of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge of the Company
or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding its Intellectual Property Rights.
Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might give rise to any of the foregoing infringements
or claims, actions or proceedings. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their Intellectual Property Rights.
(y)
Environmental Laws. (i) The Company and its Subsidiaries (A) are in compliance with any and all Environmental Laws (as defined
below), (B) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (C) are in compliance with all terms and conditions of any such permit, license or approval where, in each of
the foregoing clauses (A), (B) and (C), the failure to so comply could be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution
or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment,
or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous
Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice
letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
(ii)No
Hazardous Materials:
(A)have
been disposed of or otherwise released from any Real Property of the Company or any of its Subsidiaries in violation of any Environmental
Laws; or
(B)are
present on, over, beneath, in or upon any Real Property or any portion thereof in quantities that would constitute a violation of any
Environmental Laws. No prior use by the Company or any of its Subsidiaries of any Real Property has occurred that violates any Environmental
Laws, which violation would have a material adverse effect on the business of the Company or any of its Subsidiaries.
(iii)Neither
the Company nor any of its Subsidiaries knows of any other person who or entity which has stored, treated, recycled, disposed of or otherwise
located on any Real Property any Hazardous Materials, including, without limitation, such substances as asbestos and polychlorinated biphenyls.
(iv)None
of the Real Properties are on any federal or state “Superfund” list or Liability Information System (“CERCLIS”)
list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related Liens.
(z)
[Intentionally Omitted].
(aa)
Tax Status. The Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income
and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes
and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment
of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in
any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries
know of no basis for any such claim. The Company is not operated in such a manner as to qualify as a passive foreign investment company,
as defined in Section 1297 of the Code.
(bb)
Internal Accounting and Disclosure Controls. Except as set forth in the SEC Documents, the Company and each of its Subsidiaries
maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles, including that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities
is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets
and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect
to any difference. Except as set forth in the SEC Documents, the Company maintains disclosure controls and procedures (as such term is
defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company
in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified
in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company’s
management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to
allow timely decisions regarding required disclosure. Except as set forth in the SEC Documents, neither the Company nor any of its Subsidiaries
has received any notice or correspondence from any accountant, Governmental Entity or other Person relating to any potential material
weakness or significant deficiency in any part of the internal controls over financial reporting of the Company or any of its Subsidiaries.
(cc)
Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of
its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act
filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.
(dd)
Investment Company Status. The Company is not, and upon consummation of the sale of the New Securities will not be, an “investment
company,” an affiliate of an “investment company,” a company controlled by an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”
as such terms are defined in the Investment Company Act of 1940, as amended.
(ee)
Acknowledgement Regarding Holder’s Trading Activity. It is understood and acknowledged by the Company that (i) following
the public disclosure of the transactions contemplated by the Exchange Documents, in accordance with the terms thereof, the Holder has
not been asked by the Company or any of its Subsidiaries to agree, nor has the Holder agreed with the Company or any of its Subsidiaries,
to desist from effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or short)
any securities of the Company, or “derivative” securities based on securities issued by the Company or to hold any of the
New Securities for any specified term; (ii) the Holder, and counterparties in “derivative” transactions to which any the Holder
is a party, directly or indirectly, presently may have a “short” position in the Common Stock which was established prior
to the Holder’s knowledge of the transactions contemplated by the Exchange Documents; (iii) the Holder shall not be deemed to have
any affiliation with or control over any arm’s length counterparty in any “derivative” transaction; and (iv) the Holder
may rely on the Company’s obligation to timely deliver shares of Common Stock upon conversion, exercise or exchange, as applicable,
of the New Securities as and when required pursuant to the Exchange Documents for purposes of effecting trading in the Common Stock of
the Company. The Company further understands and acknowledges that following the public disclosure of the transactions contemplated by
the Exchange Documents pursuant to the 8-K Filing (as defined below) the Holder may engage in hedging and/or trading activities (including,
without limitation, the location and/or reservation of borrowable shares of Common Stock) at various times during the period that the
New Securities are outstanding, including, without limitation, during the periods that the value and/or number of the New Conversion Shares
deliverable with respect to the New Preferred Shares are being determined and such hedging and/or trading activities (including, without
limitation, the location and/or reservation of borrowable shares of Common Stock), if any, can reduce the value of the existing stockholders’
equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges
that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the New Certificate of Designations
or any other Exchange Document or any of the documents executed in connection herewith or therewith.
(ff)
Manipulation of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person
acting on their behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any of the New Securities,
(ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the New Securities, (iii) paid or agreed to
pay to any Person any compensation for soliciting another to purchase any other securities of the Company or any of its Subsidiaries or
(iv) paid or agreed to pay any Person for research services with respect to any securities of the Company or any of its Subsidiaries.
(gg)
U.S. Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long
as any of the New Preferred Shares are held by any of the Holders, shall become, a U.S. real property holding corporation within the meaning
of Section 897 of the Code, and the Company and each Subsidiary shall so certify upon the Holder’s request.
(hh)
Transfer Taxes. On the date hereof, all stock transfer or other taxes (other than income or similar taxes) which are required
to be paid in connection with the issuance, exchange and transfer of the New Preferred Shares to be issued to the Holder hereunder will
be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied
with.
(ii)
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of
1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent
(5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a
bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries
or affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and
to regulation by the Federal Reserve.
(jj)
Shell Company Status. The Company is not, and has never been, an issuer identified in, or subject to, Rule 144(i).
(kk)
Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the best
of the Company’s knowledge (after reasonable inquiry of its officers and directors), any of the officers, directors, employees,
agents or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise with which the Company
or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or
gift of money, property, or services, whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii)
to any political organization, or the holder of or any aspirant to any elective or appointive public office except for personal political
contributions not involving the direct or indirect use of funds of the Company or any of its Subsidiaries.
(ll)
Money Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot
Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, but not limited to, the
laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, without
limitation, (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR,
Subtitle B, Chapter V.
(mm)
Management. During the past five year period, no current officer or director of the Company or any of its Subsidiaries has
been the subject of:
(i)
a petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal
agent or similar officer for such Person, or any partnership in which such person was a general partner at or within two years before
the filing of such petition or such appointment, or any corporation or business association of which such person was an executive officer
at or within two years before the time of the filing of such petition or such appointment;
(ii)
a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do
not relate to driving while intoxicated or driving under the influence);
(iii)
any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining any such person from, or otherwise limiting, the following activities:
(1)
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person
of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director
or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct
or practice in connection with such activity;
(2)
Engaging in any particular type of business practice; or
(3)
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation
of securities laws or commodities laws;
(iv)
any order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise
limiting for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph,
or to be associated with persons engaged in any such activity;
(v)
a finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities
law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently
reversed, suspended or vacated; or
(vi)
a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated
any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.
(nn)
Stock Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable
stock option plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date
such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s stock option
plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice of the Company to knowingly
grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement
of material information regarding the Company or its Subsidiaries or their financial results or prospects.
(oo)
No Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company
and the Company is current with respect to any fees owed to its accountants and lawyers which would be reasonably likely to affect the
Company’s ability to perform any of its obligations under any of the Exchange Documents. In addition, on or prior to the date hereof,
the Company had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions,
the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.
(pp)
No Additional Agreements. The Company does not have any agreement or understanding with the Holder with respect to the transactions
contemplated by the Exchange Documents other than as specified in the Exchange Documents.
(qq)
Public Utility Holding Act None of the Company nor any of its Subsidiaries is a “holding company,” or an “affiliate”
of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.
(rr)
Federal Power Act. None of the Company nor any of its Subsidiaries is subject to regulation as a “public utility”
under the Federal Power Act, as amended.
(ss)
Cybersecurity. The Company and its Subsidiaries’ information technology assets and equipment, computers, systems,
networks, hardware, software, websites, applications, and databases (collectively, “IT Systems”) are adequate for,
and operate and perform in all material respects as required in connection with the operation of the business of the Company and its subsidiaries
as currently conducted, free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants
that would reasonably be expected to have a Material Adverse Effect on the Company’s business. The Company and its Subsidiaries
have implemented and maintained commercially reasonable physical, technical and administrative controls, policies, procedures, and safeguards
to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of all
IT Systems and data, including “Personal Data,” used in connection with their businesses. “Personal Data”
means (i) a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification
number, driver’s license number, passport number, credit card number, bank information, or customer or account number; (ii) any
information which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended;
(iii) “personal data” as defined by the European Union General Data Protection Regulation (“GDPR”) (EU
2016/679); (iv) any information which would qualify as “protected health information” under the Health Insurance Portability
and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (collectively, “HIPAA”);
and (v) any other piece of information that allows the identification of such natural person, or his or her family, or permits the collection
or analysis of any data related to an identified person’s health or sexual orientation. There have been no breaches, violations,
outages or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability or the
duty to notify any other person or such, nor any incidents under internal review or investigations relating to the same except in each
case, where such would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. The
Company and its Subsidiaries are presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations
of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy
and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access,
misappropriation or modification except in each case, where such would not, either individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
(tt)
Compliance with Data Privacy Laws. The Company and its Subsidiaries are, and at all prior times were, in compliance with
all applicable state and federal data privacy and security laws and regulations, including without limitation HIPAA, and the Company and
its Subsidiaries have taken commercially reasonable actions to prepare to comply with, and since May 25, 2018, have been and currently
are in compliance with, the GDPR (EU 2016/679) (collectively, the “Privacy Laws”) except in each case, where such would
not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. To ensure compliance with
the Privacy Laws, the Company and its Subsidiaries have in place, comply with, and take appropriate steps reasonably designed to ensure
compliance in all material respects with their policies and procedures relating to data privacy and security and the collection, storage,
use, disclosure, handling, and analysis of Personal Data (the “Policies”). The Company and its Subsidiaries have at
all times made all disclosures to users or customers required by applicable laws and regulatory rules or requirements, and none of such
disclosures made or contained in any Policy have, to the knowledge of the Company, been inaccurate or in violation of any applicable laws
and regulatory rules or requirements in any material respect. The Company further certifies that neither it nor any Subsidiary: (i) has
received notice of any actual or potential liability under or relating to, or actual or potential violation of, any of the Privacy Laws,
and has no knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting
or paying for, in whole or in part, any investigation, remediation, or other corrective action pursuant to any Privacy Law; or (iii) is
a party to any order, decree, or agreement that imposes any obligation or liability under any Privacy Law.
(uu)
No Consideration Paid. No commission or other remuneration has been paid by Company for soliciting the exchange of the Exchange
Note for the New Preferred Shares as contemplated hereby.
(vv)
Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Holders
or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information
concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the
other Exchange Documents. The Company understands and confirms that each of the Holders will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to the Holders regarding the Company and its Subsidiaries,
their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the
Company or any of its Subsidiaries is true and correct as of the date furnished and does not contain any untrue statement of a material
fact or omit to state any material fact as of the date furnished necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. All of the written information furnished after the date hereof by or
on behalf of the Company or any of its Subsidiaries to the Holder pursuant to or in connection with this Agreement and the other Exchange
Documents, taken as a whole, will be true and correct in all material respects as of the date on which such information is so provided
and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations
(including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure
at or before the date hereof or announcement by the Company but which has not been so publicly disclosed. The Company acknowledges and
agrees that the Holder has not made any representations or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in Section 3 below.
4.
Representations and Warranties of Holders. The Holder represents and warrants to the Company, as of the date hereof,
as follows:
(a)
Organization and Authority. The Holder has the requisite power and authority to enter into and perform its obligations under
this Agreement. The execution and delivery of this Agreement by the Holder and the consummation by Holder of the transactions contemplated
hereby has been duly authorized by Holder’s board of directors or other governing body. This Agreement has been duly executed and
delivered by Holder and constitutes the legal, valid and binding obligation of Holder, enforceable against Holder in accordance with its
terms.
(b)
Ownership of Original Note. The Holder owns the Original Note free and clear of any Liens (other than the obligations pursuant
to this Agreement, the Transaction Documents and applicable securities laws).
(c)
Reliance on Exemptions. The Holder understands that the New Securities are being offered and exchanged in reliance on specific
exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and the Holder’s compliance with, the representations, warranties, agreements, acknowledgments and
understandings of the Holder set forth herein and in the Exchange Documents in order to determine the availability of such exemptions
and the eligibility of the Holder to acquire the New Securities.
(d)
Validity; Enforcement. This Agreement and the Exchange Documents to which the Holder is a party have been duly and validly
authorized, executed and delivered on behalf of the Holder and shall constitute the legal, valid and binding obligations of the Holder
enforceable against the Holder in accordance with their respective terms, except as such enforceability may be limited by general principles
of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors’ rights and remedies.
(e)
No Conflicts. The execution, delivery and performance by the Holder of this Agreement and the Exchange Documents to which
the Holder is a party, and the consummation by the Holder of the transactions contemplated hereby and thereby will not (i) result in a
violation of the organizational documents of the Holder or (ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Holder is a party, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws) applicable to the Holder, except in the case of clauses (ii) and
(iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the ability of the Holder to perform its obligations hereunder.
(f)
Transfer or Resale. The Holder understands that and Section 21(d) hereof: (i) the New Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless
(A) subsequently registered thereunder, (B) the Holder shall have delivered to the Company (if requested by the Company) an opinion of
counsel, in a form reasonably acceptable to the Company, to the effect that such New Securities to be sold, assigned or transferred may
be sold, assigned or transferred pursuant to an exemption from such registration, or (C) the Holder provides the Company with reasonable
assurance that such New Securities can be sold, assigned or transferred pursuant to Rule 144; (ii) any sale of the New Securities made
in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale
of the New Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations
of the SEC promulgated thereunder; and (iii) except as set forth in the Registration Rights Agreement, neither the Company nor any other
Person is under any obligation to register the New Securities under the 1933 Act or any state securities laws or to comply with the terms
and conditions of any exemption thereunder. Notwithstanding the foregoing, the New Securities may be pledged in connection with a bona
fide margin account or other loan or financing arrangement secured by the New Securities and such pledge of New Securities shall not be
deemed to be a transfer, sale or assignment of the New Securities hereunder, and the Holder effecting a pledge of New Securities shall
not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement
or any other Exchange Document, including, without limitation, this Section 4(f).
(g)
No Consideration Paid. No commission or other remuneration has been paid by the Holder for soliciting the exchange of the
Exchange Note for the New Preferred Shares as contemplated hereby.
5.
Disclosure of Transaction. The Company shall, on or before 9:30 a.m., New York City Time, on or prior to the second (2nd)
Business Day after the date of this Agreement, file a Current Report on Form 8-K describing the terms of the transactions contemplated
hereby in the form required by the 1934 Act and attaching the Exchange Documents, to the extent they are required to be filed under the
1934 Act, that have not previously been filed with the SEC by the Company (including, without limitation, this Agreement) as exhibits
to such filing (including all attachments, the “8-K Filing”). From and after the filing of the 8-K Filing, the Company
shall have disclosed all material, non-public information (if any) provided up to such time to the Holder by the Company or any of its
Subsidiaries or any of their respective officers, directors, employees or agents. In addition, effective upon the filing of the 8-K Filing,
the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement with respect to the transactions
contemplated by the Exchange Documents or as otherwise disclosed in the 8-K Filing, whether written or oral, between the Company, any
of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and any of the
Holder or any of their affiliates, on the other hand, shall terminate. Neither the Company, its Subsidiaries nor the Holder shall issue
any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however,
the Company shall be entitled, without the prior approval of the Holder, to make a press release or other public disclosure with respect
to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith or (ii) as is required
by applicable law and regulations (provided that in the case of clause (i) the Holder shall be consulted by the Company in connection
with any such press release or other public disclosure prior to its release). Without the prior written consent of the Holder (which
may be granted or withheld in the Holder’s sole discretion), except as required by applicable law, the Company shall not (and shall
cause each of its Subsidiaries and affiliates to not) disclose the name of the Holder in any filing, announcement, release or otherwise.
6.
No Integration. None of the Company, its Subsidiaries, any of their affiliates, or any Person acting on their behalf
shall, directly or indirectly, make any offers or sales of any security (as defined in the Securities Act) or solicit any offers to buy
any security or take any other actions, under circumstances that would require registration of the New Securities under the Securities
Act or cause this offering of the New Securities to be integrated with such offering or any prior offerings by the Company for purposes
of Regulation D under the Securities Act.
7.
Listing. The Company shall promptly secure the listing or designation for quotation (as applicable) of all of the
New Conversion Shares upon the Principal Market (subject to official notice of issuance). The Company shall maintain the Common Stock’s
authorization for quotation on the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action which would
be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall pay all
fees and expenses in connection with satisfying its obligations under this Section 7.
8.
Fees. The Company shall reimburse Kelley Drye & Warren LLP, on demand, for all costs and expenses incurred by
it in connection with preparing and delivering this Agreement (including, without limitation, all legal fees and disbursements in connection
therewith, and due diligence in connection with the transactions contemplated thereby) in an aggregate non-accountable amount equal to
$35,000 (the “Legal Fee Amount”).
9.
Blue Sky. The Company shall make all filings and reports relating to the Exchange as required under applicable securities
or “Blue Sky” laws of the states of the United States following the date hereof, if any.
10.
Effective Date. Except as otherwise provided herein, this Agreement shall be deemed effective as of such date that
Company and the Holder shall have duly executed and delivered this Agreement (the “Effective Date”).
11.
No Commissions. Neither the Company nor the Holder has paid or given, or will pay or give, to any person, any commission,
fee or other remuneration, directly or indirectly, in connection with the transactions contemplated by this Agreement.
12.
Termination. Notwithstanding anything contained in this Agreement to the contrary, if the Effective Date has not
occurred and the Company does not deliver the New Preferred Shares to the Holder, in accordance with Section 1 hereof, then, at the election
of the Holder delivered in writing to the Company at any time after the fifth (5th) Business Day immediately following the date of this
Agreement, this Agreement shall be terminated and be null and void ab initio and the Exchange Note shall not be cancelled hereunder and
shall remain outstanding as if this Agreement never existed.
13.
Conversion Procedures. The form of Conversion Notice (as defined in the New Certificate of Designations) included
in the New Preferred Shares sets forth the totality of the procedures required of the Holder in order to exercise the New Preferred Shares.
No legal opinion or other information or instructions shall be required of the Holder to exercise the New Preferred Shares. The Company
shall honor exercises of the New Preferred Shares and shall deliver the New Conversion Shares in accordance with the terms, conditions
and time periods set forth in the New Preferred Shares. Without limiting the preceding sentences, no ink-original Conversion Notice shall
be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Conversion Notice form be required
in order to exercise the New Preferred Shares.
14.
Reservation of Shares. So long as any portion of the New Preferred Shares remains outstanding, the Company shall
take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 250% of the sum of
the maximum number of New Conversion Shares issuable upon conversion of the New Preferred Shares then outstanding (without regard to
any limitations on the conversion of the New Preferred Shares set forth therein) (collectively, the “Required Reserve Amount”);
provided that at no time shall the number of shares of Common Stock reserved pursuant to this Section 14 be reduced other than proportionally
in connection with any conversion of the New Preferred Shares. If at any time the number of shares of Common Stock authorized and reserved
for issuance by the Company is not sufficient to meet the Required Reserve Amount, the Company will promptly take all corporate action
necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of shareholders
to authorize additional shares to meet the Company’s obligations pursuant to the Exchange Documents, in the case of an insufficient
number of authorized shares, obtain shareholder approval of an increase in such authorized number of shares, and voting the management
shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares
is sufficient to meet the Required Reserve Amount.
15.
Pledge of New Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges
and agrees that the New Securities may be pledged by an Holder in connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the New Securities. The pledge of New Securities shall not be deemed to be a transfer, sale or assignment
of the New Securities hereunder, and no Holder effecting a pledge of New Securities shall be required to provide the Company with any
notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Exchange Document, including, without
limitation, Section 4(g) hereof; provided that an Holder and its pledgee shall be required to comply with the provisions of Section 4(g)
hereof in order to effect a sale, transfer or assignment of New Securities to such pledgee. The Company hereby agrees to execute and deliver
such documentation as a pledgee of the New Securities may reasonably request in connection with a pledge of the New Securities to such
pledgee by the Holder.
16.
[Intentionally Omitted]
17.
Stockholder Approval. The Company shall either (x) if the Company shall have obtained the prior written consent of
the requisite stockholders (the “Stockholder Consent”) to obtain the Stockholder Approval (as defined below), inform
the stockholders of the Company of the receipt of the Stockholder Consent by preparing and filing with the SEC, as promptly as practicable
after the date hereof, but prior to the forty-fifth (45th) calendar day after the date hereof (or, if such filing is delayed by a court
or regulatory agency, in no event later than ninety (90) calendar days after the date hereof), an information statement with respect thereto
or (y) provide each stockholder entitled to vote at a special meeting of stockholders of the Company (the “Stockholder Meeting”),
which shall be promptly called and held not later than October 31, 2024 (the “Stockholder Meeting Deadline”), a proxy
statement, in each case, in a form reasonably acceptable to the Holders and Kelley Drye & Warren LLP, at the expense of the Company,
with the Company obligated to reimburse the expenses of Kelley Drye & Warren LLP incurred in connection therewith in an amount not
exceed $5,000. The proxy statement, if any, shall solicit each of the Company’s stockholder’s affirmative vote at the Stockholder
Meeting for approval of resolutions (“Stockholder Resolutions”) providing for the issuance of all of the New Securities
in compliance with the rules and regulations of the Nasdaq Capital Market (without regard to any limitations on conversion set forth in
the New Certificate of Designations) (such affirmative approval being referred to herein as the “Stockholder Approval”,
and the date such Stockholder Approval is obtained, the “Stockholder Approval Date”), and the Company shall use its
reasonable best efforts to solicit its stockholders’ approval of such resolutions and to cause the Board of Directors of the Company
to recommend to the stockholders that they approve such resolutions. The Company shall be obligated to seek to obtain the Stockholder
Approval by the Stockholder Meeting Deadline. If, despite the Company’s reasonable best efforts the Stockholder Approval is not
obtained on or prior to the Stockholder Meeting Deadline, the Company shall cause an additional Stockholder Meeting to be held on or prior
to December 31, 2024. If, despite the Company’s reasonable best efforts the Stockholder Approval is not obtained after such subsequent
stockholder meetings, the Company shall cause an additional Stockholder Meeting to be held semi-annually thereafter until such Stockholder
Approval is obtained.
18.
Pledge of New Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges
and agrees that the New Securities may be pledged by an Holder in connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the New Securities. The pledge of New Securities shall not be deemed to be a transfer, sale or assignment
of the New Securities hereunder, and no Holder effecting a pledge of New Securities shall be required to provide the Company with any
notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Exchange Document, including, without
limitation, Section 4(f) hereof; provided that an Holder and its pledgee shall be required to comply with the provisions of Section 4(f)
hereof in order to effect a sale, transfer or assignment of New Securities to such pledgee. The Company hereby agrees to execute and deliver
such documentation as a pledgee of the New Securities may reasonably request in connection with a pledge of the New Securities to such
pledgee by the Holder.
19.
Holding Period. For the purposes of Rule 144, the Company acknowledges that the holding period of the New Preferred
Shares (and upon conversion of the New Preferred Shares, the New Conversion Shares) may be tacked onto both the holding period of the
Exchange Note, and the Company agrees not to take a position contrary to this Section 19. The Company acknowledges and agrees that, subject
to the Holder’s representations and warranties contained in Section 3 of this Agreement, New Preferred Shares (and upon conversion
of the New Preferred Shares, the New Conversion Shares) shall not be required to bear any restrictive legend and shall be freely transferable
by the Holder pursuant to and in accordance with Rule 144, provided, for the avoidance of doubt, that the Holder shall not be an affiliate
of the Company and shall not have been an affiliate during the 90 days preceding the date of any transfer.
20.
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.
21.
Register; Transfer Agent Instructions; Legend.
(a)Register.
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice
to each Holder), a register for the New Preferred Shares in which the Company shall record the name and address of the Person in whose
name the New Preferred Shares has been issued (including the name and address of each transferee), and the number of New Conversion Shares
issuable upon conversion of the New Preferred Shares held by such Person. The Company shall keep the register open and available at all
times during business hours for inspection of the Holder or its legal representatives.
(b)Transfer
Agent Instructions. On or prior to the date hereof, the Company shall issue irrevocable instructions to its transfer agent (the “Transfer
Agent”) and, prior to obtaining any subsequent transfer agent, the Company shall issue irrevocable instructions to any subsequent
transfer agent, in each case, in a form acceptable to the Holder (the “Irrevocable Transfer Agent Instructions”) to
issue certificates or credit shares to the applicable balance accounts at the Depository Trust Company (“DTC”), registered
in the name of the Holder or its respective nominee(s), for the New Conversion Shares in such amounts as specified from time to time by
the Holder to the Company upon the conversion of the New Preferred Shares. The Company represents and warrants that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section 21(b) will be given by the Company to its Transfer Agent
with respect to the New Conversion Shares, and that the New Conversion Shares shall otherwise be freely transferable on the books and
records of the Company, as applicable, to the extent provided in this Agreement and the other Exchange Documents. If the Holder effects
a sale, assignment or transfer of the New Conversion Shares, the Company shall permit the transfer and shall promptly instruct its Transfer
Agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations
as specified by the Holder to effect such sale, transfer or assignment. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder. Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 21(b) will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section 21(b) that the Holder shall be entitled, in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond
or other security being required. The Company shall cause its counsel to issue each legal opinion referred to in the Irrevocable Transfer
Agent Instructions to the Transfer Agent as follows: (i) upon each conversion of the New Preferred Shares (unless such issuance is covered
by a prior legal opinion previously delivered to the Transfer Agent), and (ii) on each date a registration statement with respect to the
issuance or resale of any of the New Conversion Shares is declared effective by the SEC. Any fees (with respect to the Transfer Agent,
counsel to the Company or otherwise) associated with the issuance of such opinions or the removal of any legends on any of the New Conversion
Shares shall be borne by the Company.
(c)Legends.
The Holder understands that the New Preferred Shares have been issued (or will be issued in the case of the New Conversion Shares) pursuant
to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth below,
the New Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially
the following form (and a stop-transfer order may be placed against transfer of such stock certificates):
[NEITHER THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY
THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR
ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
(d)Removal
of Legends. Certificates evidencing New Securities shall not be required to contain the legend set forth in Section 21(c) above or
any other legend (i) while a registration statement covering the resale of such New Securities is effective under the 1933 Act, (ii) following
any sale of such New Securities pursuant to Rule 144 (assuming neither the transferor nor the transferee is an affiliate of the Company),
(iii) if such New Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that the Holder provides the Company
with reasonable assurances that such New Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include
an opinion of Holder’s counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided
that the Holder provides the Company with an opinion of counsel to the Holder, in a generally acceptable form, to the effect that such
sale, assignment or transfer of the New Securities may be made without registration under the applicable requirements of the 1933 Act
or (v) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial
interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing with respect to such New
Securities, the Company shall no later than one (1) Trading Day (or such earlier date as required pursuant to the 1934 Act or other applicable
law, rule or regulation for the settlement of a trade initiated on the date the Holder delivers such legended certificate representing
such New Securities to the Company) following the delivery by the Holder to the Company or the transfer agent (with notice to the Company)
of a legended certificate representing such New Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise
in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from the Holder as may
be required above in this Section 21(d), as directed by the Holder, either: (A) provided that the Company’s transfer agent is participating
in the DTC Fast Automated Securities Transfer Program and such New Securities are New Conversion Shares, credit the aggregate number of
shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through
its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated
Securities Transfer Program (“FAST”), issue and deliver (via reputable overnight courier) to the Holder, a certificate
representing such New Securities that is free from all restrictive and other legends, registered in the name of the Holder or its designee
(the date by which such credit is so required to be made to the balance account of the Holder’s or the Holder’s nominee with
DTC or such certificate is required to be delivered to the Holder pursuant to the foregoing is referred to herein as the “Required
Delivery Date”, and the date such shares of Common Stock are actually delivered without restrictive legend to the Holder or
the Holder’s designee with DTC, as applicable, the “Share Delivery Date”). The Company shall be responsible for
any transfer agent fees or DTC fees with respect to any issuance of New Securities or the removal of any legends with respect to any New
Securities in accordance herewith.
(e)Failure
to Timely Deliver; Buy-In. If the Company fails, for any reason or for no reason, to issue and deliver (or cause to be delivered)
to the Holder (or its designee) by the Required Delivery Date, if the Transfer Agent is not participating in FAST, a certificate for
the number of New Conversion Shares to which the Holder is entitled and register such New Conversion Shares on the Company’s share
register or, if the Transfer Agent is participating in FAST, to credit the balance account of the Holder or the Holder’s designee
with DTC for such number of New Conversion Shares submitted for legend removal by the Holder pursuant to Section 21(d) above (a “Delivery
Failure”), then, in addition to all other remedies available to the Holder, the Company shall pay in cash to the Holder on
each day after the Share Delivery Date and during such Delivery Failure an amount equal to 1% of the product of (A) the sum of the number
of shares of Common Stock not issued to the Holder on or prior to the Required Delivery Date and to which the Holder is entitled, and
(B) any trading price of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning on the
date of the delivery by the Holder to the Company of the applicable New Conversion Shares and ending on the applicable Share Delivery
Date. In addition to the foregoing, if on or prior to the Required Delivery Date if the Transfer Agent is not participating in FAST,
the Company shall fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the Company’s
share register or, if the Transfer Agent is participating in FAST, credit the balance account of the Holder or the Holder’s designee
with DTC for the number of shares of Common Stock to which the Holder submitted for legend removal by the Holder pursuant to Section
21(d) above, and if on or after such Trading Day the Holder acquires (in an open market transaction, stock loan or otherwise) shares
of Common Stock corresponding to all or any portion of the number of shares of Common Stock issuable upon such exercise that the Holder
is entitled to receive from the Company and has not received from the Company in connection with such Delivery Failure (a “Buy-In”),
then the Company shall, within one (1) Trading Day after the Holder’s request and in the Holder’s discretion, either (i)
pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, stock loan costs
and other out-of-pocket expenses, if any, for the shares of Common Stock so acquired) (the “Buy-In Price”), at which
point the Company’s obligation to so deliver such certificate or credit the Holder’s balance account shall terminate and
such shares shall be cancelled, or (ii) promptly honor its obligation to so deliver to the Holder a certificate or certificates or credit
the balance account of the Holder or the Holder’s designee with DTC representing such number of shares of Common Stock that would
have been so delivered if the Company timely complied with its obligations hereunder and pay cash to the Holder in an amount equal to
the excess (if any) of the Buy-In Price over the product of (A) such number of shares of New Conversion Shares that the Company was required
to deliver to the Holder by the Required Delivery Date multiplied by (B) the lowest Closing Sale Price (as defined in the New Certificate
of Designations) of the Common Stock on any Trading Day during the period commencing on the date of the delivery by the Holder to the
Company of the applicable New Conversion Shares and ending on the date of such delivery and payment under this clause (ii). Nothing shall
limit the 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 Company’s failure to timely deliver certificates
representing shares of Common Stock (or to electronically deliver such shares of Common Stock) as required pursuant to the terms hereof.
Notwithstanding anything herein to the contrary, with respect to any given Delivery Failure, this Section 21(e) shall not apply to the
applicable Holder the extent the Company has already paid such amounts in full to the Holder with respect to such Delivery Failure pursuant
to the analogous sections of the New Certificate of Designations.
(f)FAST
Compliance. While the New Preferred Shares remain outstanding, the Company shall maintain a transfer agent that participates in the
DTC Fast Automated Securities Transfer Program.
[The remainder of the page is
intentionally left blank]
IN WITNESS WHEREOF, Holders
and the Company have executed this Agreement as of the date set forth on the signature page of the Holder below.
|
COMPANY:
ACLARION, INC.
By:
Name:John Lorbiecki
Title: Chief Financial
Officer |
IN WITNESS WHEREOF, Holders
and the Company have executed this Agreement as of August 14, 2024.
|
HOLDER:
___________________________________
By:
Name:
Title:
Date of Securities Purchase
Agreement pursuant to which the Original Note was issued:
SPA Date: 5/16/2023
Issue Date: 9/1/2023
Outstanding Amount of Exchange
Note:
____________________
Aggregate Number of New
Preferred Shares:
____________________ |
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Aclarion (NASDAQ:ACON)
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부터 9월(9) 2024 으로 10월(10) 2024
Aclarion (NASDAQ:ACON)
과거 데이터 주식 차트
부터 10월(10) 2023 으로 10월(10) 2024