| Item 5.03. |
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
In connection with the Initial Closing, on November 18, 2022, the Company
filed with the Secretary of the State of Delaware the previously disclosed form of Certificate of Designation, Preferences and Rights
of the Series A Convertible Preferred Stock (the “Certificate of Designations”), designating 1,000,000 shares as Series A
Convertible Preferred Stock and designating the rights, preferences and limitations of such shares, which became effective on November
18, 2022.
The Preferred Stock will, with respect to dividend rights, rights on
the distribution of assets on any liquidation, dissolution or winding up of the affairs of the Company and redemption rights, rank: (a) on
a parity basis with each other class or series of any equity interests (“Capital Stock”) of the Company now or hereafter existing,
the terms of which expressly provide that such class or series ranks on a parity basis with the Preferred Stock as to such matters (such
Capital Stock, “Parity Stock”); (b) junior to each other class or series of Capital Stock of the Company now or hereafter
existing, the terms of which expressly provide that such class or series ranks senior to the Preferred Stock as to such matters (such
Capital Stock, “Senior Stock”); and (c) senior to the Common Stock and each other class or series of Capital Stock of
the Company now or hereafter existing, the terms of which do not expressly provide that such class or series ranks on a parity basis with,
or senior to, the Preferred Stock as to such matters (such Capital Stock, “Junior Stock”).
In the event of any liquidation, dissolution or winding up of the affairs
of the Company, the holders of Preferred Stock will be entitled, out of assets legally available therefor, before any distribution or
payment to the holders of any Junior Stock, and subject to the rights of the holders of any Senior Stock or Parity Stock and the rights
of the Company’s existing and future creditors, to receive in full a liquidating distribution in cash and in the amount per share
of Preferred Stock equal to the greater of (1) the sum of $100 per share plus the accrued unpaid dividends with respect to such share
and (2) the amount the holder would have received had it converted such share into Common Stock immediately prior to the date of
such event.
Holders of the Preferred Stock will be entitled to receive dividends
at a rate equal to 8% per annum, which accrue and accumulate whether or not declared. Such dividends compound quarterly and are payable
quarterly in arrears. In addition, the holders of the Preferred Stock participate with any dividends payable in respect of any Junior
Stock or Parity Stock.
All holders of shares of Preferred Stock will be entitled to vote with
the holders of Common Stock on all matters submitted to a vote of stockholders of the Company as a single class with each share of Preferred
Stock entitled to a number of votes equal to the number of shares of Common Stock into which such share could be converted; provided,
that no holder of shares of Preferred Stock will be entitled to vote (i) until the expiration or termination of any applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, if applicable, or (ii) to the extent that such
holder would have the right to a number of votes in respect of such holder’s shares of Common Stock, Preferred Stock or other capital
stock that would exceed (A) prior to the Subsequent Common Closing, 9.99% of the capital stock
of the Company that is entitled to vote generally in any election of directors of the Company (“Voting Power”), (B) prior
to the time the Company obtains the approval of stockholders contemplated by Rule 5635 of the Nasdaq listing rules as in effect
on November 7, 2022 with respect to certain equity issuances, 19.99% of the Voting Power (collectively, the “Ownership Limitations”).
Pursuant to the Certificate of Designation, commencing on the later
of (1) May 7, 2023, and (2) the earlier of (x) the date of the Subsequent Common Closing and (y) November 7,
2023 (the “Conversion Right Date”), the Preferred Stock is convertible at the option of the holder into shares of Common Stock
at a conversion price of $1.936 (the “Conversion Price”), subject to customary adjustments. At any time following the third
anniversary of the date of issuance, the Company can cause the Preferred Stock to be converted if the volume-weighted average price of
the Common Stock exceeds 200% of the Conversion Price for a period of at least twenty trading days in any period of thirty consecutive
trading days. Foxconn’s ability to convert is limited by the Ownership Limitations. Upon a change of control, Foxconn can cause
the Company to purchase any or all of its Preferred Stock at a purchase price equal to the greater of its liquidation preference (including
any unpaid accrued dividends) and the amount of cash and other property that it would have received had it converted its Preferred Stock
prior to the change of control transaction.
The foregoing description does not purport
to be complete and is subject to, and qualified in its entirety by, the full text of the Certificate of Designations, a copy of which
is attached as Exhibit 3.1 hereto and incorporated herein by reference.
