UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant |
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Filed by a party other than the Registrant |
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Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under § 240.14a-12 |
Aditxt, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check all boxes that
apply):
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No fee required |
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Fee paid previously with preliminary materials. |
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a- 6(i)(1) and 0-11 |
2569 Wyandotte Street, Suite 101
Mountainview, CA 94043
June [*], 2024
NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on July 10, 2024
Dear Stockholder:
We are pleased to invite
you to attend the annual meeting of stockholders (the “Annual Meeting”) of Aditxt, Inc. (the “Company”), which
will be held on July 10, 2024 at 12:00 PM ET.
The Annual Meeting will
be held in a virtual-only meeting format at www.virtualshareholdermeeting.com/ADTX2024.
In addition to voting by submitting
your proxy prior to the Annual Meeting, you also will be able to vote your shares electronically during the Annual Meeting. Further details
regarding the virtual meeting are included in the accompanying proxy statement. At the Annual Meeting, the holders of our outstanding
common stock will act on the following matters:
| 1. | To elect five (5) members to our board of directors; |
| 2. | To ratify the appointment of dbbmckennon as our independent
registered public accounting firm for the fiscal year ending December 31, 2024; |
| 3. | To approve, for the purpose of Nasdaq Marketplace Rule 5635(d),
the issuance of shares of common stock underlying shares of Series A-1 Convertible Preferred Stock originally issued by the Company in
December 2023 (the “Series A-1 Proposal”); |
| 4. | To approve, for the purpose of Nasdaq Marketplace Rule 5635(d),
the issuance of shares of common stock underlying shares of Series B-1 Convertible Preferred Stock originally issued by the Company in
January 2024 (the “Series B-1 Proposal”); |
| 5. | To approve, for
the purpose of Nasdaq Marketplace Rule 5635(d), the issuance of shares of common stock
underlying shares of Series B-2 Convertible Preferred Stock originally issued by the Company
in December 2023 (the “Series B-2 Proposal”); |
| 6. | To approve, for
the purpose of Nasdaq Marketplace Rule 5635(d), the issuance of shares of common stock
under the Company’s equity line of credit pursuant to the Company’s Common Stock
Purchase Agreement with an equity line investor pursuant to which such investor has agreed
to purchase from the Company from time to time shares of common stock having a total maximum
aggregate purchase price of $150 million (the “ELOC Proposal”); |
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7. |
To
approve an increase to the number of authorized shares of common stock of the Company from 100,000,000 shares to 1,000,000,000 shares
(the “Authorized Share Increase Proposal”); |
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8. |
To
grant discretionary authority to our board of directors to (i) amend our certificate of incorporation to combine outstanding
shares of our common stock into a lesser number of outstanding shares, or a “reverse stock split,” at a specific ratio
within a range of one-for-five (1:5) to a maximum of a one-for-two hundred (1:200) split, with the exact ratio to be determined by
our board of directors in its sole discretion; and (ii) effect the reverse stock split, if at all, within one year of the date
the proposal is approved by stockholders (the “Reverse Split Proposal”); |
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9. |
To
approve an amendment to our 2021 Omnibus Equity Incentive Plan (the “2021 Plan”) to increase the number of shares of
common stock issuable thereunder to 500,000 shares from 37,500 shares; |
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10. |
To
authorize the adjournment of the Annual Meeting if necessary or appropriate, including to solicit additional proxies in the event
that there are not sufficient votes at the time of the Annual Meeting or adjournment or postponement thereof to approve any of the
foregoing proposals; and |
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11. |
To
transact such other matters as may properly come before the Annual Meeting and any adjournment or postponement thereof. |
Our board of directors
has fixed June 4, 2024 as the record date (the “Record Date”) for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting and at any adjournment or postponement of the meeting.
IF YOU PLAN TO ATTEND:
To be admitted to the Annual
Meeting at you must have your control number available and follow the instructions found on your proxy card or voting instruction form.
You may vote during the Annual Meeting by following the instructions available on the meeting website during the meeting. Please allow
sufficient time before the Annual Meeting to complete the online check-in process. Your vote is very important.
If you have any questions
or need assistance voting your shares, please call Kingsdale Advisors at:
Strategic Stockholder Advisor and Proxy Solicitation
Agent
745 Fifth Avenue, 5th Floor, New York, NY 10151
North American Toll Free Phone:
+1-866-851-3212
Email: contactus@kingsdaleadvisors.com
Call Collect Outside North America: +1-646-491-9096
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BY
ORDER OF THE BOARD OF DIRECTORS |
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June
[*], 2024 |
/s/
Amro Albanna |
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Amro
Albanna
Chief Executive Officer and
Chairman of the Board of Directors |
Whether or not you expect
to attend the Annual Meeting virtually, we urge you to vote your shares via proxy at your earliest convenience. This will ensure the presence
of a quorum at the Annual Meeting. Promptly voting your shares will save the Company the expenses and extra work of additional solicitation.
Submitting your proxy now will not prevent you from voting your shares electronically at the Annual Meeting if you desire to do so, as
your proxy is revocable at your option. Your vote is important, so please act today!
2569 Wyandotte St., Suite 101
Mountain View, CA 94043
PROXY STATEMENT FOR THE
2024 ANNUAL MEETING OF STOCKHOLDERS
To be held on July 10, 2024
The board of directors
of Aditxt, Inc. (“Aditxt” or the “Company”) is soliciting your proxy to vote at the Annual Meeting of Stockholders
(the “Annual Meeting”) to be held on July 10, 2024, at 12:00 PM ET, in a virtual-only format online by accessing www.virtualshareholdermeeting.com/ADTX2024
and at any adjournment thereof.
This proxy statement contains
information relating to the Annual Meeting. This year’s Annual Meeting of stockholders will be held as a virtual meeting. Stockholders
attending the virtual meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting.
You will be able to attend
and participate in the Annual Meeting online via a live webcast by visiting www.virtualshareholdermeeting.com/ADTX2024. In addition
to voting by submitting your proxy prior to the Annual Meeting, you also will be able to vote your shares electronically during the Annual
Meeting.
Important Notice Regarding the Availability
of Proxy Materials
for the Annual Meeting of Stockholders to be Held on July 10, 2024:
The Notice of Meeting, Proxy Statement, and
2023 Annual Report on Form 10-K are available at:
www.proxyvote.com |
ADITXT, INC.
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT
AND VOTING
What is a proxy?
A proxy is the legal designation
of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written
document, that document is also called a proxy or a proxy card. By completing, signing and returning the accompanying proxy card, you
are designating Amro Albanna, Chief Executive Officer, and Thomas J. Farley, Chief Financial Officer, as your proxies for the Annual
Meeting and you are authorizing Mr. Albanna and Mr. Farley to vote your shares at the Annual Meeting as you have instructed
on the proxy card. This way, your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual
Meeting, we urge you to vote in one of the ways described below so that your vote will be counted even if you are unable or decide not
to attend the Annual Meeting.
What is a proxy statement?
A proxy statement is a document
that we are required by regulations of the U.S. Securities and Exchange Commission, or “SEC,” to give you when we ask
you to sign a proxy card designating Amro Albanna and Mr. Farley as proxies to vote on your behalf.
Why did you send me this proxy statement?
We sent you this proxy statement
and proxy card because our board of directors is soliciting your proxy to vote at the Annual Meeting and any adjournment and postponement
thereof. This proxy statement summarizes information related to your vote at the Annual Meeting. All stockholders who find it convenient
to do so are cordially invited to attend the Annual Meeting virtually. However, you do not need to attend the meeting to vote your shares.
Instead, you may simply complete, sign and return the proxy card or vote over the Internet, by phone, or by fax.
What Does it Mean if I Receive More than
one set of proxy materials?
If you receive more than one
set of proxy materials, your shares may be registered in more than one name or in different accounts. Please complete, sign, and return
each proxy card to ensure that all of your shares are voted.
How do I attend the Annual Meeting?
The Annual Meeting will
be held on July 10, 2024, at 12:00 PM ET in a virtual format online by accessing www.virtualshareholdermeeting.com/ADTX2024. Information
on how to vote in person at the Annual Meeting is discussed below.
Who is Entitled to Vote?
The board of directors
has fixed the close of business on June 4, 2024 as the record date (the “Record Date”) for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof. On the Record Date, there were
1,993,682 shares of common stock outstanding. Each share of common stock represents one vote that may be voted on each proposal that
may come before the Annual Meeting.
What is the Difference Between Holding Shares
as a Record Holder and as a Beneficial Owner (Holding Shares in Street Name)?
If your shares are registered
in your name with our transfer agent, VStock Transfer, LLC, you are the “record holder” of those shares. If you are a record
holder, these proxy materials have been provided directly to you by the Company.
If your shares are held in
a stock brokerage account, a bank or other holder of record, you are considered the “beneficial owner” of those shares held
in “street name.” If your shares are held in street name, the Notice has been forwarded to you by that organization. The organization
holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner,
you have the right to instruct this organization on how to vote your shares. See “How Will my Shares be Voted if I Give No
Specific Instruction?” below for information on how shares held in street name will be voted without instructions provided.
Who May Attend the Annual Meeting?
Only record holders and beneficial
owners of our common stock, or their duly authorized proxies, may attend the Annual Meeting. If your shares of common stock are held in
street name, you will need to provide a copy of a brokerage statement or other documentation reflecting your stock ownership as of the
Record Date.
What am I Voting on?
There are eleven (10) matters
scheduled for a vote:
| 1. | To elect five (5) members to our board of directors; |
| 2. | To ratify the appointment of dbbmckennon as our independent
registered public accounting firm for the fiscal year ending December 31, 2024; |
| 3. | To approve, for the purposes of Nasdaq Marketplace Rule 5635(d),
the issuance of shares of common stock underlying shares of Series A-1 Convertible Preferred Stock originally issued by the Company in
December 2023 (the “Series A-1 Proposal”); |
| 4. | To approve, for the purpose of Nasdaq Marketplace Rule 5635(d),
the issuance of shares of common stock underlying shares of Series B-1 Convertible Preferred Stock originally issued by the Company in
January 2024 (the “Series B-1 Proposal”); |
| 5. | To approve, for the purpose of Nasdaq Marketplace Rule 5635(d),
the issuance of shares of common stock underlying shares of Series B-2 Convertible Preferred Stock originally issued by the Company in
January 2024 (the “Series B-2 Proposal”); |
| 6. | To approve, for
the purpose of Nasdaq Marketplace Rule 5635(d), the issuance of shares of common stock
under the Company’s equity line of credit pursuant to the Company’s Common Stock
Purchase Agreement with an equity line investor pursuant to which such investor has agreed
to purchase from the Company from time to time shares of common stock having a total maximum
aggregate purchase price of $150 million (the “ELOC Proposal”); |
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7. |
To
approve an increase to the number of authorized shares of common stock of the Company from 100,000,000 shares to 1,000,000,000 shares
(the “Authorized Share Increase Proposal”); |
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8. |
To
grant discretionary authority to our board of directors to (i) amend our certificate of incorporation to combine outstanding
shares of our common stock into a lesser number of outstanding shares, or a “reverse stock split,” at a specific ratio
within a range of one-for-five (1:5) to a maximum of a one-for-two hundred (1:200) split, with the exact ratio to be determined by
our board of directors in its sole discretion; and (ii) effect the reverse stock split, if at all, within one year of the date
the proposal is approved by stockholders. |
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9. |
To
approve an amendment to our 2021 Omnibus Equity Incentive Plan (the “2021 Plan”) to increase the number of shares of
common stock issuable thereunder to 500,000 shares from 37,500 shares; |
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10. |
To
authorize the adjournment of the Annual Meeting if necessary or appropriate, including to solicit additional proxies in the event
that there are not sufficient votes at the time of the Annual Meeting or adjournment or postponement thereof to approve any of the
foregoing proposals; |
What if another matter is properly brought
before the Annual Meeting?
The board of directors knows
of no other matters that will be presented for consideration at the Annual Meeting. The proxies also have discretionary authority to vote
to adjourn the Annual Meeting, including for the purpose of soliciting votes in accordance with our Board’s recommendations. If
any other matters are properly brought before the Annual Meeting, it is the intention of the person named in the accompanying proxy to
vote on those matters in accordance with his best judgment.
How Do I Vote?
MAIL |
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INTERNET |
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PHONE |
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ONLINE AT THE MEETING |
Mailing your signed
proxy card or voter
instruction card to:
Vote Processing
c/o Broadridge
51 Mercedes Way
Edgewood, NY 11717 |
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Using the Internet at:
www.proxyvote.com |
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1-800-690-6903 |
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You can vote at the meeting at: |
Stockholders of Record
If you are a registered stockholder,
you may vote by mail, fax, Internet, phone or online at the Annual Meeting by following the instructions in the Notice. You also may submit
your proxy by mail by following the instructions included with your proxy card. The deadline for submitting your proxy by Internet is
11:59 p.m. Eastern Time on July 9, 2024. Our Board’s designated proxies, Mr. Albanna and Mr. Farley, will vote your
shares according to your instructions. If you attend the live webcast of the Annual Meeting you also will be able to vote your shares
electronically at the meeting up until the time the polls are closed.
Beneficial Owners of Shares Held in Street
Name
If you are a street name holder,
your broker or nominee firm is the legal, registered owner of the shares, and it may provide you with the Notice. Follow the instructions
on the Notice to access our proxy materials and vote or to request a paper or email copy of our proxy materials. The materials include
a voting instruction card so that you can instruct your broker or nominee how to vote your shares. Please check the Notice or voting instruction
card or contact your broker or other nominee to determine whether you will be able to deliver your voting instructions by Internet in
advance of the meeting and whether, if you attend the live webcast of the Annual Meeting, you will be able to vote your shares electronically
at the meeting up until the time the polls are closed.
All shares entitled to vote
and represented by a properly completed and executed proxy received before the Annual Meeting and not revoked will be voted at the Annual
Meeting as instructed in a proxy delivered before the Annual Meeting. We provide Internet proxy voting to allow you to vote your shares
online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware
that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone
companies.
How Many Votes do I Have?
Holders of record of
shares of our common stock will be entitled to one vote for each share of common stock held by them on the Record Date and have the right
to vote on all matters brought before the Annual Meeting. The holder of record of the 4,186 outstanding shares of our Series D-1
preferred stock will be entitled to an aggregate of 418,600,000 votes for each share of our Series D-1 preferred stock held on the
Record Date, and has the right to vote only on the Authorized Share Increase Proposal (“Proposal No. 7”), provided that
such votes must be counted in the same proportion as the shares of common stock voted on Proposal No. 7. As an example, if 50.5%
of the shares of common stock are voted FOR Proposal No. 7, 50.5% of the votes cast by the holders of the Series D-1 preferred
stock will be cast as votes FOR Proposal No. 7. Holders of common stock and Series D-1 preferred stock will vote on Proposal 7
as a single class.
Is My Vote Confidential?
Yes, your vote is confidential.
Only the inspector of elections, individuals who help with processing and counting your votes and persons who need access for legal reasons
will have access to your vote. This information will not be disclosed, except as required by law.
What Constitutes a Quorum?
To carry on business
at the Annual Meeting, we must have a quorum. A quorum is present when one-third of the shares entitled to vote, as of the Record Date,
are represented in person or by proxy. Thus, 664,561 shares must be represented in person or by proxy to have a quorum at the Annual
Meeting. Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your
broker, bank or other nominee) or if you vote in person at the Annual Meeting. Abstentions and broker non-votes will be counted towards
the quorum requirement. Shares owned by the Company are not considered outstanding or considered to be present at the Annual Meeting.
If there is not a quorum at the Annual Meeting, either the chairperson of the Annual Meeting or our stockholders entitled to vote at
the Annual Meeting may adjourn the Annual Meeting.
How Will my Shares be Voted if I Give
No Specific Instruction?
We must vote your shares as
you have instructed. If there is a matter on which a stockholder of record has given no specific instruction but has authorized us generally
to vote the shares, they will be voted as follows:
| 1. | “For” the election of five (5) members to
our board of directors; |
| 2. | “For” the ratification of the appointment of
dbbmckennon as our independent registered public accounting firm for the fiscal year ending December 31, 2024; |
| 3. | “For” the approval, for purposes of Nasdaq Marketplace
Rule 5635(d), the issuance of shares of common stock underlying shares of Series A-1 Convertible Preferred Stock originally issued
by the Company in December 2023 (the “Series A-1 Proposal”); |
| 4. | “For” for the purpose of Nasdaq Marketplace Rule 5635(d),
the issuance of shares of common stock underlying shares of Series B-1 Convertible Preferred Stock originally issued by the Company in
January 2024 (the “Series B-1 Proposal”); |
| 5. | “For” for the purpose of Nasdaq Marketplace Rule 5635(d),
the issuance of shares of common stock underlying shares of Series B-2 Convertible Preferred Stock originally issued by the Company in
January 2024 (the “Series B-2 Proposal”); |
| 6. | To approve, for
the purpose of Nasdaq Marketplace Rule 5635(d), the issuance of shares of common stock
under the Company’s equity line of credit pursuant to the Company’s Common Stock
Purchase Agreement with an equity line investor pursuant to which such investor has agreed
to purchase from the Company from time to time shares of common stock having a total maximum
aggregate purchase price of $150 million (the “ELOC Proposal”); |
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7. |
To
approve an increase to the number of authorized shares of common stock of the Company from 100,000,000 shares to 1,000,000,000 shares
(the “Authorized Share Increase Proposal”); |
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8. |
“For”
the grant of discretionary authority to our board of directors to (i) amend our certificate of incorporation to combine outstanding
shares of our common stock into a lesser number of outstanding shares, or a “reverse stock split,” at a specific ratio
within a range of one-for-five (1:5) to a maximum of a one-for-two hundred (1:200) split, with the exact ratio to be determined by
our board of directors in its sole discretion; and (ii) effect the reverse stock split, if at all, within one year of the date
the proposal is approved by stockholders; and |
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9. |
“For”
the approval of an amendment to our 2021 Omnibus Equity Incentive Plan (the “2021 Plan”) to increase the number of shares
of common stock issuable thereunder to 500,000 shares from 37,500 shares. |
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10. |
“For”
the authorization to adjourn the Annual Meeting if necessary or appropriate, including to solicit additional proxies in the event
that there are not sufficient votes at the time of the Annual Meeting or adjournment or postponement thereof to approve any of the
foregoing proposals. |
This authorization would exist,
for example, if a stockholder of record merely signs, dates and returns the proxy card but does not indicate how its shares are to be
voted on one or more proposals. If other matters properly come before the Annual Meeting and you do not provide specific voting instructions,
your shares will be voted at the discretion of Amro Albanna and Thomas J. Farley, the board of directors’ designated proxies.
If your shares are held in
street name, see “What is a Broker Non-Vote?” below regarding the ability of banks, brokers and other such holders of record
to vote the uninstructed shares of their customers or other beneficial owners in their discretion.
How are Votes Counted?
Votes will be counted by the
inspector of election appointed for the Annual Meeting, who will separately count, for the election of directors, “For,” “Withhold”
and broker non-votes; and, with respect to the other proposals, votes “For” and “Against,” abstentions and broker
non-votes. Broker non-votes will not be included in the tabulation of the voting results of any of the proposals and, therefore, will
have no effect on such proposals.
What is a Broker Non-Vote?
A “broker non-vote”
occurs when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a proposal because
(1) the broker has not received voting instructions from the stockholder who beneficially owns the shares and (2) the broker
lacks the authority to vote the shares at their discretion.
Our common stock is listed
on the Nasdaq Capital Market. However, under current New York Stock Exchange (“NYSE”) rules and interpretations that
govern broker non-votes: (i) Proposal No. 1 for the election of directors is considered a non-discretionary matter, and a broker
will lack the authority to vote uninstructed shares at their discretion on such proposal; (ii) Proposal No. 2 for the ratification
of the appointment of dbbmckennon as our independent registered public accounting firm is considered a discretionary matter, and
a broker will be permitted to exercise its discretion to vote uninstructed shares on the proposal; (iii) Proposal No. 3 for
the approval of, for the purpose of Nasdaq Marketplace Rule 5635(d), the issuance of shares of common stock underlying shares of
Series A-1 Convertible Preferred Stock originally issued by the Company in December 2023 (the “Series A-1 Proposal”) is considered
a non-discretionary matter, and a broker will not be permitted to exercise its discretion to vote uninstructed shares on the proposal;
(iv) Proposal No. 4 for the approval of, for the purpose of Nasdaq Marketplace Rule 5635(d), the issuance of shares of
common stock underlying shares of Series B-1 Convertible Preferred Stock originally issued by the Company in January 2024 (the “Series
B-1 Proposal”) is considered a non-discretionary matter, and a broker will not be permitted to exercise its discretion to vote
uninstructed shares on the proposal; (v) Proposal No. 5 for approval of, the purpose of Nasdaq Marketplace Rule 5635(d),
the issuance of shares of common stock underlying shares of Series B-2 Convertible Preferred Stock originally issued by the Company in
January 2024 (the “Series B-2 Proposal”) is considered a non-discretionary matter, and a broker will not be permitted
to exercise its discretion to vote uninstructed shares on the proposal; (vi) Proposal No. 6 for the approval, for the purpose of Nasdaq
Marketplace Rule 5635(d), the issuance of shares of common stock under the Company’s equity line of credit pursuant to the
Company’s Common Stock Purchase Agreement with an equity line investor pursuant to which such investor has agreed to purchase from
the Company from time to time shares of common stock having a total maximum aggregate purchase price of $150 million (the “ELOC
Proposal”), is considered a non-discretionary matter, and a broker will lack the authority to vote uninstructed shares at their
discretion on such proposal; (vii) Proposal No. 7 for the approval of an increase to the number of authorized shares of common stock
of the Company from 100,000,000 shares to 1,000,000,000 shares (the “Authorized Share Increase Proposal”) is considered a
non-discretionary matter, and a broker will lack the authority to vote uninstructed shares at their discretion on such proposal; (viii) Proposal No.
8 for the approval of the reverse stock split is considered a discretionary matter, and a broker will be permitted to exercise its discretion
to vote uninstructed shares on the proposal; (ix) Proposal No. 9 for the approval of an amendment our 2021 Plan to increase
the number of shares of common stock issuable thereunder, is considered a non-discretionary matter, and a broker will lack the authority
to vote uninstructed shares at their discretion on such proposal; and (x) Proposal No. 10 for the authorization to adjourn
the Annual Meeting if necessary or appropriate, including to solicit additional proxies in the event that there are not sufficient votes
at the time of the Annual Meeting or adjournment or postponement thereof to approve any of the foregoing proposals is considered a non-discretionary
matter, and a broker will not be permitted to exercise its discretion to vote uninstructed shares on the proposal. Because NYSE rules
apply to all brokers that are members of the NYSE, this prohibition applies to the Annual Meeting even though our common stock is listed
on the Nasdaq Capital Market.
What is an Abstention?
An abstention is a stockholder’s
affirmative choice to decline to vote on a proposal. Under Delaware law, abstentions are counted as shares present and entitled to vote
at the Annual Meeting. Generally, unless provided otherwise by applicable law, our amended and restated bylaws (the “Bylaws”)
provide that an action of our stockholders (other than the election of directors) is approved if a majority of the number of shares of
stock entitled to vote thereon and present (either in person or by proxy) vote in favor of such action. Therefore, abstentions will have
no effect with respect to Proposals 1 through 11.
How many votes are required to approve each
proposal?
The table below summarizes
the proposals that will be voted on, the vote required to approve each item and how votes are counted:
Proposal |
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Votes Required |
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Voting Options |
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Impact of
“Withhold” or
“Abstain” Votes |
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Broker
Discretionary
Voting
Allowed |
Proposal No. 1:
Election of Directors |
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The plurality of the votes cast. This means that the nominees receiving the highest number of affirmative “FOR” votes will be elected as directors. |
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“FOR” “WITHHOLD” |
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None(1) |
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No(3) |
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Proposal No. 2:
Ratification of Appointment of Independent Registered Public Accounting Firm |
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The affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions) at the Annual Meeting by the holders entitled to vote thereon. |
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“FOR” “AGAINST” “ABSTAIN” |
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None(2) |
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Yes(4) |
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Proposal No. 3:
Approval of, for purposes of Nasdaq Rule 5635(d), the issuance of shares of common stock underlying shares of Series A-1 Convertible Preferred Stock originally issued by the Company in December 2023 (the “Series A-1 Proposal”) |
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The affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions) at the Annual Meeting by the holders entitled to vote thereon. |
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“FOR” “AGAINST” “ABSTAIN” |
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None(2) |
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No(3) |
Proposal No. 4:
Approval of, for purposes of Nasdaq Rule 5635(d), the issuance of shares of common stock underlying shares of Series B-1 Convertible Preferred Stock originally issued by the Company in January 2024 (the “Series B-1 Proposal”) |
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The affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions) at the Annual Meeting by the holders entitled to vote thereon. |
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“FOR” “AGAINST” “ABSTAIN” |
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None(2) |
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No(3) |
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Proposal No. 5:
Approval of, for purposes of Nasdaq Rule 5635(d), the issuance of shares of common stock underlying shares of Series B-2 Convertible Preferred Stock originally issued by the Company in January 2024 (the “Series B-2 Proposal”) |
|
The affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions) at the Annual Meeting by the holders entitled to vote thereon. |
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“FOR” “AGAINST” “ABSTAIN” |
|
None(2) |
|
No(3) |
|
|
|
|
|
|
|
|
|
Proposal No.
6:
Approval of, for the purpose of Nasdaq Marketplace Rule 5635(d), the issuance of shares of common stock under the Company’s
equity line of credit pursuant to the Company’s Common Stock Purchase Agreement with an equity line investor pursuant to which
such investor has agreed to purchase from the Company from time to time shares of common stock having a total maximum aggregate purchase
price of $150 million (the “ELOC Proposal”); |
|
The
affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions)
at the Annual Meeting by the holders entitled to vote thereon. |
|
“FOR”
“AGAINST” “ABSTAIN” |
|
None(2) |
|
No(3) |
Proposal No.
7:
Approval of an increase to the number of authorized shares of common stock of the Company from 100,000,000 shares to 1,000,000,000
shares (the “Authorized Share Increase Proposal”); |
|
The
affirmative vote of the holders of a majority in voting power of the votes cast affirmatively
or negatively (excluding abstentions) of the outstanding shares of Common Stock and Preferred
Stock of the Company entitled to vote, voting together as a single class. |
|
“FOR”
“AGAINST” “ABSTAIN” |
|
None(2) |
|
Yes(4) |
|
|
|
|
|
|
|
|
|
Proposal No.
8:
Authorization of the reverse stock split |
|
The affirmative
vote of the holders of a majority in voting power of the votes cast affirmatively or negatively
(excluding abstentions) at the Annual Meeting by the holders entitled to vote thereon. |
|
“FOR”
“AGAINST” “ABSTAIN” |
|
None(2) |
|
No(3) |
|
|
|
|
|
|
|
|
|
Proposal No.
9:
Approval of an increase in number of shares of common stock issuable under the 2021 Plan |
|
The
affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions)
at the Annual Meeting by the holders entitled to vote thereon. |
|
“FOR”
“AGAINST” “ABSTAIN” |
|
None(2) |
|
No(3) |
|
|
|
|
|
|
|
|
|
Proposal No.
10:
To authorize the adjournment of the Annual Meeting if necessary or appropriate |
|
The
affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions)
at the Annual Meeting by the holders entitled to vote thereon. |
|
“FOR”
“AGAINST” “ABSTAIN” |
|
None(2) |
|
No(3) |
| (1) | Votes that are “withheld” will have the same effect
as an abstention and will not count as a vote “FOR” or “AGAINST” a director, because directors are elected by
plurality voting. |
| (2) | A vote marked as an “Abstention” is not considered
a vote cast and will, therefore, not affect the outcome of this proposal. |
| (3) | As this proposal is not considered a discretionary matter, brokers
lack authority to exercise their discretion to vote uninstructed shares on this proposal. |
| (4) | As this proposal is considered a discretionary matter, brokers
are permitted to exercise their discretion to vote uninstructed shares on this proposal. |
What Are the Voting Procedures?
In voting by proxy with regard
to the election of directors, you may vote in favor of all nominees, withhold your votes as to all nominees, or withhold your votes as
to specific nominees. With regard to other proposals, you may vote in favor of or against the proposal, or you may abstain from voting
on the proposal. You should specify your respective choices on the accompanying proxy card or your vote instruction form.
Is My Proxy Revocable?
You may revoke your proxy
and reclaim your right to vote at any time before your proxy is voted by giving written notice to the Corporate Secretary of the Company
by delivering a properly completed, later-dated proxy card or vote instruction form or by voting in person at the Annual Meeting. All
written notices of revocation and other communications with respect to revocations of proxies should be addressed to: Aditxt, Inc., 2569
Wyandotte St., Suite 101, Mountain View, CA 94043. Attention: Corporate Secretary. Your most current proxy card or Internet proxy is
the one that will be counted.
Who is Paying for the Expenses Involved in
Preparing and Mailing this Proxy Statement?
All of the expenses involved
in preparing, assembling and mailing these proxy materials and all costs of soliciting proxies will be paid by us. In addition to the
solicitation by mail, proxies may be solicited by our officers and other employees by telephone or in person. Such persons will receive
no compensation for their services other than their regular salaries. Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries to forward solicitation materials to the beneficial owners of the shares held of record by such persons, and
we may reimburse such persons for reasonable out of pocket expenses incurred by them in forwarding solicitation materials. We have retained
Kingsdale Advisors as our strategic stockholder advisor and proxy solicitation agent in connection with the solicitation of proxies for
the Annual Meeting. If you have any questions or require any assistance with completing your proxy, please contact Kingsdale Advisors
by telephone (toll-free within North America) at 1-866-851-3212 or (call collect outside North America) at +1-646-491-9096 or by
email at contactus@kingsdaleadvisors.com.
Do I Have Dissenters’ Rights of
Appraisal?
Stockholders do not have appraisal
rights under Delaware law or under the Company’s governing documents with respect to the matters to be voted upon at the Annual
Meeting.
How can I Find out the Results of the
Voting at the Annual Meeting?
Preliminary voting results
will be announced at the Annual Meeting. In addition, final voting results will be disclosed in a Current Report on Form 8-K that
we expect to file with the SEC within four business days after the Annual Meeting. If final voting results are not available to us
in time to file a Form 8-K with the SEC within four business days after the Annual Meeting, we intend to file a Form 8-K
to publish preliminary results and, within four business days after the final results are known to us, file an amended Form 8-K
to publish the final results.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
Board Size and Structure
Our amended and restated Certificate
of incorporation, as amended (the “Certificate of Incorporation”), and our Bylaws provide that our business is to be managed
under the direction of our board of directors. Our board of directors is required to consist of not less than one (1) director but
not more than nine (9) directors. The number of directors is currently fixed at five (5) by resolution of the board of directors.
Our board of directors currently
consists of five (5) directors. Our Certificate of Incorporation provides that the number of directors on our board of directors
shall be fixed exclusively by resolution adopted by our board of directors or by our stockholders. At each annual meeting, directors shall
be elected by the stockholders for a term of one (1) year. Each director shall serve until his or her successor is duly elected and
qualified or until the director’s earlier death, resignation or removal.
When considering whether directors
have the experience, qualifications, attributes or skills, taken as a whole, to enable our board of directors to satisfy its oversight
responsibilities effectively in light of our business and structure, the board of directors focuses primarily on each person’s background
and experience as reflected in the information discussed in each of the directors’ individual biographies set forth below. We believe
that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business.
Pursuant to Delaware law and
our Certificate of Incorporation, directors may be removed, with or without cause, by the affirmative vote of the holders of a majority
of the shares then entitled to vote at an election of directors.
Nominees for Election
Amro Albanna, Shahrokh Shabahang,
D.D.S., MS, Ph.D., Brian Brady, Charles Nelson, and Jeffrey Runge, M.D. have been nominated by the board of directors to stand for election
at the Annual Meeting. If elected by the stockholders at the Annual Meeting, Messrs. Albanna, Brady, Nelson, Dr. Shabahang, and Dr. Runge
will serve for a term expiring at the annual meeting to be held in 2025 (the “2025 Annual Meeting”) and the election and qualification
of their successors or until their earlier death, resignation, or removal.
Each person nominated for election
has agreed to serve if elected, and management has no reason to believe that any nominee will be unable to serve. If, however, prior to
the Annual Meeting, the board of directors should learn that any nominee will be unable to serve for any reason, the proxies that otherwise
would have been voted for this nominee will be voted for a substitute nominee as selected by the board of directors. Alternatively, the
proxies, at the board of directors’ discretion, may be voted for that fewer number of nominees as results from the inability of
any nominee to serve. The board of directors has no reason to believe that any nominee will be unable to serve.
Information About Board Nominees
The following pages contain
certain biographical information for the nominees for director, including all positions currently held, their principal occupation and
business experience for the past five years, and the names of other publicly-held companies of which such nominee currently serves
as a director or has served as a director during the past five years.
Amro Albanna. Mr. Albanna
has been our Chief Executive Officer and a Director since we were formed in 2017. He also served as our President from our inception through
September 2021. In 2010, Mr. Albanna co-founded Innovation Economy Corporation (“IEC”), formed to license and commercialize
innovations and create a group of life and health subsidiaries. From 2010 until 2017, Mr. Albanna was Chief Executive Officer and
a Director of IEC and Olfactor Laboratories, Inc., a majority-owned subsidiary of IEC. From 2010 to August 2016, he was the
Chief Executive Officer and a Director of Nano Engineered Applications, Inc., another majority-owned subsidiary of IEC. In 2003,
Mr. Albanna founded Qmotions, Inc. (subsequently renamed Deal A Day Group Corp.). He served as its Chief Executive Officer and a
Director until 2011. Qmotions, Inc. used 3-D spatial tracking and pattern recognition technologies to develop motion-capturing video game
controllers. In 2002, Mr. Albanna was a co-founder of Digital Angel Corporation — a company formed via the merger
of three private companies (one being TTC below) into a fourth publicly traded company (American Stock Exchange) and was placed in charge
of commercializing its GPS/wireless technologies. Around that time, Mr. Albanna co-founded an incubator for startups at the University
of California, Riverside Research Park which was acquired in 2007. In 1997, he founded Timely Technology Corporation (“TTC”),
which designed and developed e-commerce software for education, retail and finance. TTC was acquired in 2000 by a Nasdaq-listed company.
Mr. Albanna graduated from California State University San Bernardino in 1991 with a B.S. in Business Administration with concentration
in Computer Information Systems. He completed graduate coursework in Computer Science and Engineering at California State University,
Long Beach from 1992 to 1993. In 2019, Mr. Albanna completed coursework in Immunology and Genetics at Harvard Medical School HMX
online learning platform. We believe that Mr. Albanna’s expertise leading technology companies across various sectors, leading
private and public financing, and in positioning companies for mergers and acquisitions, qualifies him to serve as a director of our Company.
Shahrokh Shabahang, D.D.S.,
MS, Ph.D. Dr. Shabahang has been our Chief Innovation Officer and Director since our inception. In 2009,
Dr. Shabahang co-founded Sekris Biomedical Inc. to incubate immunotherapy technologies. He served as its Chairman of the board and
Chief Executive Officer since its inception. In 2004, Dr. Shabahang joined Genelux Corporation (“Genelux”) to lead its
clinical development program and to serve as board secretary. Genelux developed an oncolytic virus technology for treatment of cancer,
co-invented by Dr. Shabahang. During his tenure from 2004-2007, Genelux raised $20M+ and obtained regulatory approval to initiate
First-In-Human clinical studies in Europe with patients who had not responded to chemotherapy. In 2001, Dr. Shabahang became the
Director of the Microbiology and Molecular Biology Lab at Loma Linda University (“LLU”). He led the research and development
of an antimicrobial therapeutic agent for treatment of dental infections, which was licensed and marketed by one of the largest dental
distribution companies. Dr. Shabahang attended the University of California, Santa Barbara from 1982 to 1984 and later received his
D.D.S. from the University of the Pacific in 1987. He earned his Ph.D. in Microbiology and Molecular Genetics at LLU in 2001. During the
same year, he established his laboratory at LLU to study infectious diseases and host immune responses. We believe that Dr. Shabahang’s
experience leading biotech startups, leading clinical development programs, and his expertise in immunology and immune tolerance qualifies
him to serve as a director of our Company.
Brian Brady. Mr. Brady
has served as a Director since December 1, 2018. Mr. Brady has also been the Director of Investments at a large hospital system
since March 2016, where he is responsible for the management of investment activity related to the organization and personal investments
of the family that owns that company. From December 2011 to March 2016, Mr. Brady was the Vice President/Portfolio Manager
at a wealth advisory firm, where he served in an investment advisory role, including asset and portfolio management. Mr. Brady graduated
in 2001 with a Bachelor’s degree in Finance from the University of Illinois at Chicago and in 2014 with a Master of Business Administration
degree from the University of Chicago. We believe that Mr. Brady’s extensive experience with financial markets and management
of investment activities qualifies him to serve as a director of our Company.
Charles
Nelson. Mr. Nelson has served as a director since November 2023.
Prior to his appointment as a member of the Board, Mr. Nelson was a consultant to the Company from September 2020 through September 2023.
He began his financial career as a market representative with American International Group and in 1979 joined Dean Witter Reynolds as
a Financial Advisor, working with high net worth and institutional clients. In 1980, he joined Drexel Burnham and Lambert, and subsequently,
at Ladenberg Thalmann and then at Auerbach Pollack and Richardson originating equity and investment banking transactions. Over the last
20 years, Mr. Nelson has been involved with financing companies in the fintech, healthcare and bio-pharma spaces through private equity
and public financing including listings on the Nasdaq and the NYSE. We believe that Mr. Nelson’s extensive experience in capital
markets qualifies him to serve as a director of our Company.
Jeffrey Runge, M.D. Dr. Runge
has served as a director since July 2020. From 2008 to the present, Dr. Runge has been the President and founder of Biologue,
Inc., which provides consulting in biodefense, medical preparedness and injury control. From 2001 through August of 2008, Dr. Runge
served in the Bush administration, first as the head of the National Highway Traffic Safety Administration, and, beginning in September 2005,
as the Department of Homeland Security’s (DHS) first Chief Medical Officer. Dr. Runge founded the DHS Office of Health Affairs
and was confirmed by the United States Senate as DHS’ first Assistant Secretary for Health Affairs in December of 2007. Dr. Runge
also served as Acting DHS Undersecretary for Science and Technology from February through August 2006. In his role at DHS, Dr. Runge
oversaw the operations of the department’s biodefense activities, medical preparedness and workforce health protection, as well
as fulfilling DHS’ responsibilities in medical countermeasure development. Prior to his government service, Dr. Runge was Assistant
Chairman and Director of Clinical Research in the Department of Emergency Medicine at Carolinas Medical Center in Charlotte, NC, from
1984 through 2001. Additionally, Dr. Runge is a Senior Advisor at The Chertoff Group, a firm providing advisory services in business
risk management, security and homeland defense. Since 2010, Dr. Runge has served on the boards of two public companies, including
their Audit and Compensation committees, both of which underwent strategic acquisitions. He has also served as President and CEO of a
SEC-regulated startup company in the health sector. Dr. Runge earned his medical degree from the Medical University of South Carolina
and his undergraduate degree from the University of the South. We believe that Dr. Runge’s experience in medicine, medical
research, public service, business and his prior service on public corporate boards qualifies him to serve as a director of our Company.
Board Leadership Structure and Risk Oversight
The Board oversees our business
and considers the risks associated with our business strategy and decisions. The Board currently implements its risk oversight function
as a whole. Each of the Board committees, when established, will also provide risk oversight in respect of its areas of concentration
and reports material risks to the Board for further consideration.
Term of Office
Officers hold office until
his or her successor is elected and qualified. Directors are appointed to serve for one year until the meeting of the Board following
the annual meeting of stockholders and until their successors have been elected and qualified.
Director Independence
We use the definition of “independence”
of The Nasdaq Stock Exchange LLC (“Nasdaq”) listing rules to make this determination. Nasdaq listing rules provide that an
“independent director” is one who the board “affirmatively determines” has no “material relationship”
with the company “either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company.
Nasdaq listing rules provide that a director cannot be considered independent if:
| ● | the director is, or has been within the last three (3) years,
an employee of the Company or an immediate family member of director is, or has been within the last three (3) years, an executive
officer of the Company; |
| ● | the director has received, or has an immediate family member
who is an executive officer of the Company and has received, during any twelve-month period within the last three (3) years, more
than $120,000 compensation directly from the Company (not including compensation received for director service, pension plan payments
or deferred compensation for prior service not contingent on continued service); |
| ● | the director or an immediate family member is a current partner
of the Company’s internal or external auditor; the director is a current employee of the auditor; an immediate family member is
a current employee of the auditor and personally works on the Company’s audit; or the director or an immediate family member was
within the last three (3) years a partner or employee of the auditor and personally worked on the Company’s audit within that
time; |
| ● | the director or an immediate family member is, or has been
within the last three (3) years, employed as an executive officer of another company where any of the Company’s present executive
officers at the same time serves or served on that company’s compensation committee; or |
| ● | the director is a current employee, or an immediate family
member is a current executive officer, of an organization that has made to or received from the Company payments for property or services
in an amount which, in any of the last three fiscal (3) years, exceeds greater of 2% of such other company’s consolidated
gross revenues or $1 million. Charitable contributions not considered “payments” for purposes of this prohibition but
contributions meeting these thresholds must be disclosed on the Company’s website or in its annual proxy statement or its Annual
Report on Form 10-K. |
Under such definitions, we
consider Mr. Nelson, Mr. Brady, and Dr. Runge to be “independent.” Nasdaq listing rules permits a phase-in period
of up to one year for an issuer registering securities in an initial public offering to comply with its requirement that a majority of
the board of directors be made up of independent directors. However, our common stock is not currently quoted or listed on any national
exchange or interdealer quotation system with requirement that a majority of our Board be independent and, therefore, the Company is not
subject to any director independence requirements. We are subject to Nasdaq’s director independence requirements and are required
to structure our board of directors accordingly.
Committees of the Board
Our board of directors has
established three standing committees: Audit, Compensation, and Nominating and Corporate Governance. Each of these standing committees
operate pursuant to its respective charter. The committee charters are reviewed annually by the Nominating and Corporate Governance Committee.
If appropriate, and in consultation with the chairs of the other committees, the Nominating and Corporate Governance Committee may propose
revisions to the charters. The responsibilities of each committee are described in more detail below.
Nasdaq listing rules permits
a phase-in period for an issuer registering securities in an initial public offering to meet the Audit Committee, Compensation Committee
and Nominating and Corporate Governance Committee independence requirements. Under the initial public offering phase-in period, only one
member of each committee is required to satisfy the heightened independence requirements at the time our registration statement becomes
effective, a majority of the members of each committee must satisfy the heightened independence requirements within 90 days following
the effectiveness of our registration statement, and all members of each committee must satisfy the heightened independence requirements
within one year from the effectiveness of our registration statement.
The composition and functions
of each committee are described below.
Name |
|
Independent |
|
Audit |
|
Compensation |
|
Nominating
and
Corporate
Governance |
Amro Albanna |
|
|
|
|
|
|
|
|
Shahrokh Shabahang, D.D.S., MS, Ph.D. |
|
|
|
|
|
|
|
|
Brian Brady |
|
X |
|
X* |
|
X |
|
X |
Charles Nelson |
|
X |
|
X |
|
X* |
|
X |
Jeffrey Runge, M.D. |
|
X |
|
X |
|
X |
|
X* |
| * | Chairman of the committee |
Audit Committee
The Audit Committee, among
other things, is responsible for:
| ● | appointing; approving the compensation of; overseeing the
work of; and assessing the independence, qualifications, and performance of the independent auditor; |
| ● | reviewing the internal audit function, including its independence,
plans, and budget; |
| ● | approving, in advance, audit and any permissible non-audit
services performed by our independent auditor; |
| ● | reviewing our internal controls with the independent auditor,
the internal auditor, and management; |
| ● | reviewing the adequacy of our accounting and financial controls
as reported by the independent auditor, the internal auditor, and management; |
| ● | overseeing our financial compliance system; and |
| ● | overseeing our major risk exposures regarding the Company’s
accounting and financial reporting policies, the activities of our internal audit function, and information technology. |
The Board has affirmatively
determined that each member of the Audit Committee meets the additional independence criteria applicable to audit committee members under
SEC rules and Nasdaq listing rules. The Board has adopted a written charter setting forth the authority and responsibilities of the Audit
Committee. The Board has affirmatively determined that each member of the Audit Committee is financially literate, and that Mr. Brady
meets the qualifications of an Audit Committee financial expert.
The Audit Committee consists
of Mr. Brady, Mr. Nelson, and Dr. Runge. Mr. Brady chairs the Audit Committee.
Compensation Committee
The Compensation Committee
is responsible for:
| ● | reviewing and making recommendations to the Board with respect
to the compensation of our officers and directors, including the CEO; |
| ● | overseeing and administering the Company’s executive
compensation plans, including equity-based awards; |
| ● | negotiating and overseeing employment agreements with officers
and directors; and |
| ● | overseeing how the Company’s compensation policies
and practices may affect the Company’s risk management practices and/or risk-taking incentives. |
The Board has adopted a written
charter setting forth the authority and responsibilities of the Compensation Committee.
The Compensation Committee
consists of Mr. Brady, Mr. Nelson, and Dr. Runge. Mr. Nelson serves as chairman of the Compensation Committee. The Board has
affirmatively determined that each member of the Compensation Committee meets the independence criteria applicable to compensation committee
members under SEC rules and Nasdaq listing rules.
Nominating and Corporate Governance Committee
The Nominating and Corporate
Governance Committee, among other things, is responsible for:
| ● | reviewing and assessing the development of the executive
officers and considering and making recommendations to the Board regarding promotion and succession issues; |
| ● | evaluating and reporting to the Board on the performance
and effectiveness of the directors, committees and the Board as a whole; |
| ● | working with the Board to determine the appropriate and desirable
mix of characteristics, skills, expertise and experience, including diversity considerations, for the full Board and each committee; |
| ● | annually presenting to the Board a list of individuals recommended
to be nominated for election to the Board; |
| ● | reviewing, evaluating, and recommending changes to the Company’s
Corporate Governance Principles and Committee Charters; |
| ● | recommending to the Board individuals to be elected to fill
vacancies and newly created directorships; |
| ● | overseeing the Company’s compliance program, including
the Code of Conduct; and |
| ● | overseeing and evaluating how the Company’s corporate
governance and legal and regulatory compliance policies and practices, including leadership, structure, and succession planning, may
affect the Company’s major risk exposures. |
The Board of Directors has
adopted a written charter setting forth the authority and responsibilities of the Nominating and Corporate Governance Committee.
The Nominating and Corporate
Governance Committee consists of Dr. Runge, Mr. Brady, and Mr. Nelson. Dr. Runge serves as chairman of the Nominating and
Corporate Governance Committee. The Company’s Board of Directors has determined that each member of the Nominating and Corporate
Governance Committee is independent within the meaning of the independent director guidelines of Nasdaq listing rules.
Compensation Committee Interlocks and Insider
Participation
None of the Company’s
executive officers serves, or in the past has served, as a member of the board of directors or compensation committee, or other committee
serving an equivalent function, of any entity that has one or more executive officers who serve as members of the Company’s board
of directors or its compensation committee. None of the members of the Company’s compensation committee is, or has ever been, an
officer or employee of the Company.
Code of Business Conduct and Ethics
The Company’s board of
directors adopted a code of business conduct and ethics applicable to its employees, directors and officers, in accordance with applicable
U.S. federal securities laws and the corporate governance rules of the Nasdaq Capital Market. The code of business conduct and ethics
is publicly available on the Company’s website. Any substantive amendments or waivers of the code of business conduct and ethics
or code of ethics for senior financial officers may be made only by the Company’s board of directors and will be promptly disclosed
as required by applicable U.S. federal securities laws and the corporate governance rules of the Nasdaq Capital Market.
Corporate Governance Guidelines
The Company’s board of
directors has adopted corporate governance guidelines in accordance with the corporate governance rules of the Nasdaq Capital Market.
Involvement in Certain Legal Proceedings
To our knowledge, none of our
current directors or executive officers has, during the past ten years:
| ● | been convicted in a criminal proceeding or been subject to
a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| ● | had any bankruptcy petition filed by or against the business
or property of the person, or of any partnership, corporation or business association of which he or she was a general partner or executive
officer, either at the time of the bankruptcy filing or within two years prior to that time; |
| ● | been subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining,
barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking,
savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; |
| ● | been found by a court of competent jurisdiction in a civil
action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and
the judgment has not been reversed, suspended, or vacated; |
| ● | been the subject of, or a party to, any federal or state
judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement
of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law
or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary
or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order,
or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity;
or |
| ● | been the subject of, or a party to, any sanction or order,
not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the
Securities Exchange Act of 1934, as amended (the Exchange Act)), any registered entity (as defined in Section 1(a)(29) of
the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over
its members or persons associated with a member. |
Except as set forth above and
in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers
has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required
to be disclosed pursuant to the rules and regulations of the SEC.
We are not currently
a party to any legal proceedings, the adverse outcome of which, individually or in the aggregate, we believe will have a material adverse
effect on our business, financial condition or operating results.
Director Compensation
The Company accrued or paid
compensation to its directors for serving in such capacity, as shown in the table below.
Director | |
Year | |
Option Awards | | |
Restricted Stock Unit Awards | | |
Fees Earned or Paid in Cash | | |
All Other Compensation ($)2 | | |
Total | |
Amro Albanna | |
2023 | |
$ | — | | |
$ | — | | |
$ | — | | |
| | | |
$ | — | |
Shahrokh Shabahang, D.D.S., MS, Ph.D. | |
2023 | |
$ | — | | |
$ | — | | |
$ | — | | |
| | | |
$ | — | |
Brian Brady | |
2023 | |
$ | 2,355 | | |
$ | — | | |
$ | — | | |
$ | 1,500 | | |
$ | 3,855 | |
Namvar Kiaie | |
2023 | |
$ | 2,355 | | |
$ | — | | |
$ | — | | |
$ | 1,500 | | |
$ | 3,855 | |
Jeffrey Runge, M.D. | |
2023 | |
$ | 2,355 | | |
$ | — | | |
$ | — | | |
$ | 1,500 | | |
$ | 3,855 | |
Namvar Kiaie1 | |
2023 | |
$ | 5,010 | | |
$ | — | | |
$ | — | | |
| — | | |
$ | 5,010 | |
| 1 | Mr. Kiaie departed the board of directors on November 3, 2023 |
| 2 | All other compensation is inclusive of Pearsanta, Inc. option
grants to Mr. Brady, Mr. Kiaie, and Dr. Runge. |
Option awards represent granted
options at the fair market value as of the date of grant. Restricted stock unit awards represent granted restricted stock unit awards
at the fair market value as of the grant date.
On September 18, 2021,
the Board of Directors adopted a director compensation program for the Company’s independent directors consisting of both cash and
equity compensation, beginning in October 2021 and concluding in June 2022. The program consisted of the following compensation for
directors:
Cash Compensation (payable quarterly)
| ● | Board service — $11,000 per year |
| ● | Chairperson of the Audit Committee — additional
$4,000 per year |
| ● | Chairperson of the Compensation Committee — additional
$4,000 per year |
| ● | Chairperson of the Nominating and Corporate Governance Committee — additional
$4,000 per year |
Members of the Board of Directors
did not receive any cash compensation during the year ended December 31, 2023. The Board of Directors has refrained from adopting a new
director compensation program in order to preserve cash resources but may, in its discretion, adopt a new program in future periods.
Required Vote for Approval
A plurality of the votes cast
at the Annual Meeting is required to elect a nominee as a director.
Board Recommendation
The board of directors unanimously
recommends a vote “FOR” the election of Amro Albanna, Shahrokh Shabahang, D.D.S., MS, Ph.D., Brian Brady, Charles
Nelson, and Jeffrey Runge, M.D. as directors of the Company.
EXECUTIVE OFFICERS
The table below identifies
and sets forth certain biographical and other information regarding our executive officers as of date of this proxy statement. Other than
as disclosed below, there are no family relationships among any of our executive officers or directors.
Name |
|
Age |
|
Positions |
Amro Albanna |
|
54 |
|
Chief Executive Officer, Director |
Corinne Pankovcin |
|
57 |
|
Chief Mergers & Acquisitions Officer |
Shahrokh Shabahang, D.D.S., MS, Ph.D. |
|
61 |
|
Chief Innovation Officer, Director |
Rowena Albanna |
|
58 |
|
Chief Operating Officer |
Thomas J. Farley |
|
51 |
|
Chief Financial Officer |
See “Proposal No. 1 — Election
of Directors” for biographical and other information regarding Mr. Albanna and Dr. Shabahang.
Corinne Pankovcin — Chief
Commercialization Officer
Ms. Pankovcin has been our
Chief Mergers and Acquisitions Officer since January 2024. Ms. Pankovcin served as our Chief Commercialization Officer from April 2023
through December 2023. Prior those roles, Ms. Pankovcin serves as our President from September 2021 through April 2023. Ms.
Pankovcin served as our Chief Financial Officer from July 2020 through August 2021. From December 2015 to July 2019,
Ms. Pankovcin was the Chief Financial Officer and Managing Director and Treasurer of Business Development Corporation of America (“BDCA”),
a business development company. Prior thereto, from January 2011 to August 2015, Ms. Pankovcin was the Chief Financial Officer
and Treasurer of Blackrock Capital Investment Corporation (NASDAQ: BKCC), and a Managing Director of Finance at BlackRock Investment
Management LLC. Prior to joining BlackRock, Ms. Pankovcin was a senior member of Finance & Accounting of Alternative Investments
and served as Chief Financial Officer for the Global Emerging Markets products group at AIG Capital Partners. Ms. Pankovcin began her
career with PricewaterhouseCoopers LLP, where she ultimately held the role of Senior Manager of Business Assurance for Consumer Products,
Manufacturing, and Middle Market industries from 1991 to 2001. Ms. Pankovcin earned her B.S. in Accounting from Dowling College and her
Master’s Degree in Business Administration from Hofstra University. She is a Certified Public Accountant.
Rowena Albanna — Chief Operating
Officer
Ms. Albanna has been our Chief
Operating Officer since July 2020. From 2017 to immediately prior to her appointment as Chief Operating Officer, Ms. Albanna was
an independent operations consultant for the Company. Prior thereto, from 2013 to 2017, Ms. Albanna was the Chief Operating Officer of
Innovation Economy Corporation (“IEC”), formed to license and commercialize innovations and create a group of life and health
subsidiaries. From 2010 to 2013, Ms. Albanna was Senior Vice President of IEC. From 2004 to 2009, Ms. Albanna was the founder and
principal of Weezies, an online-based business focused on building and operating e-commerce stores and affiliate marketing sites. From
2003 to 2004, Ms. Albanna was the head of Product Development and Engineering of Qmotions Inc. Qmotions, Inc. used 3-D spatial tracking
and pattern recognition technologies to develop motion-capturing video game controllers. In 2002, Ms. Albanna was VP of Product Development
at Digital Angel Systems where she led the development of devices which combined GPS, wireless, and biosensing. Prior to that, Ms. Albanna
held multiple product development roles with increasing responsibilities for various technology companies in the areas of financial, medical,
telecommunications, integrated circuit layout design, and defense. Ms. Albanna is a co-inventor of two patents related to systems for
localizing, monitoring, and sensing objects. Ms. Albanna received a Bachelor of Science degree in Computer Science with a minor in Mathematics
from California State University, San Bernardino in 1988. Ms. Albanna is the wife of Amro Albanna, our Chief Executive Officer.
Thomas J. Farley, CPA — Chief
Financial Officer
Mr. Farley has been the
Chief Financial Officer since September 2021. Prior to this, Mr. Farley was the Principal Accounting Officer and Controller
from October of 2020 to September 2021. From December 2015 to June 2020, Mr. Farley was the Controller of Business
Development Corporation of America (“BDCA”), a publicly listed business development company. Prior thereto, from January 2011
to August 2015, Mr. Farley was the Senior Controller of Blackrock Capital Investment Corporation (NASDAQ: BKCC). Prior
to joining BlackRock Capital Investment Corporation, Mr. Farley was a Senior Controller for PineBridge Investments Emerging Markets
practice. Mr. Farley was also an Accounting Manager for Bessemer Venture Partners prior to his tenure at PineBridge. Mr. Farley
began his career with PricewaterhouseCoopers LLP, from 1996 to 2001. Mr. Farley earned his B.S. in Accounting from Long Island University
and is a Certified Public Accountant.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table represents
information regarding the total compensation for the named executive officers of the Company as of December 31, 2023 and 2022:
Name and Principal Position | |
Year | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards ($) | | |
Option Awards ($) | | |
Restricted Stock Units ($) | | |
All Other Compensation ($)(3) | | |
Total ($) | |
Amro Albanna | |
2023 | |
| 432,119 | | |
| — | | |
| — | | |
| 47,114 | | |
| — | | |
| 40,000 | | |
| 519,233 | |
President, and Director, Former President(1) | |
2022 | |
| 500,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 500,000 | |
Shahrokh Shabahang, D.D.S., MS, Ph.D. | |
2023 | |
| 293,502 | | |
| — | | |
| — | | |
| 35,336 | | |
| — | | |
| 30,000 | | |
| 358,837 | |
Chief Innovation Officer | |
2022 | |
| 325,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 325,000 | |
Corinne Pankovcin | |
2023 | |
| 346,774 | | |
| — | | |
| — | | |
| 23,557 | | |
| — | | |
| 20,000 | | |
| 390,331 | |
Chief Commercialization Officer, Former President, Former Chief Financial Officer(1) | |
2022 | |
| 385,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 385,000 | |
Thomas J. Farley | |
2023 | |
| 337,894 | | |
| — | | |
| — | | |
| 23,557 | | |
| — | | |
| 20,000 | | |
| 381,451 | |
Chief Financial Officer | |
2022 | |
| 360,833 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| 360,833 | |
Matthew Shatzkes | |
2023 | |
| 198,670 | | |
| 890,893 | | |
| — | | |
| — | | |
| — | | |
| 34,076 | | |
| 1,123,639 | |
Chief Legal Officer & General Counsel(2) | |
2022 | |
| 368,958 | | |
| 246,697 | | |
| — | | |
| — | | |
| 218,064 | | |
| — | | |
| 833,719 | |
Option awards represent granted
options at the fair market value as of the date of grant. Restricted stock units represent granted restricted stock units at the fair
market value as of the date of grant.
| (1) | Ms. Pankovcin served as
the Company’s Chief Financial Officer from July 2020 through September 25, 2021. She was appointed as our President on September
25, 2021. Ms. Pankovcin’s title was changed from President to Chief Commercialization Officer effective April 2023. Ms. Pankovcin’s
title was changed from Chief Commercialization Officer to Chief Mergers and Acquisitions Officer in January of 2024 |
| (2) | Mr. Shatzkes joined Aditxt in January of 2022. Mr. Shatzkes
departed Aditxt in July of 2023. |
| (3) | All other compensation
is inclusive of Pearsanta, Inc. option grants to Mr. Albanna, Dr. Shabahang, Ms. Pankovcin, and Mr. Farley. Mr. Shatzkes received consideration
in connection with the Separation and General Release agreement. |
Employment Agreements
Amro Albanna, Chief Executive Officer
On November 14, 2021,
the Company entered into an Amended and Restated Employment Agreement with Mr. Amro Albanna, the Chief Executive Officer of the Company
(the “Amro Employment Agreement”). Pursuant to the Amro Employment Agreement, Mr. Albanna will receive (i) a base
salary at the annual rate of $280,000 for the remainder of calendar year 2021, and effective January 1, 2022, $500,000 (prorated
for any partial year) payable in bimonthly installments (ii) the opportunity to earn an annual bonus of 2% of the Company’s
earnings before interest, taxes, depreciation, and amortization (EBITDA) with respect to an applicable year for which the bonus is payable,
provided that such bonus will not exceed two (2) times Mr. Albanna’s base salary, and (iii) eligible to earn an annual
discretionary bonus as determined by the Board or its Compensation Committee in their sole discretion. In addition, for calendar year
2021, Mr. Albanna will be eligible to earn an additional discretionary bonus as determined by the Company.
The term of Mr. Albanna’s
engagement under the Amro Employment Agreement commences as of the Effective Date (as defined in the Amro Employment Agreement) and continues
until November 14, 2023, unless earlier terminated in accordance with the terms of the Amro Employment Agreement. The term of Mr. Albanna’s
Employment Agreement is automatically renewed for successive one (1) year periods until terminated by Mr. Albanna or the Company.
Under the Amro Employment Agreement,
termination of Mr. Albanna by the Company for “Cause,” “Death,” or “Disability,” (as such terms
are defined in the Amro Employment Agreement), or resignation by Mr. Albanna without “Good Reason” (as defined in the
Amro Employment Agreement), will not require the Company to pay severance to Mr. Albanna. Upon any such termination, Mr. Albanna
will be entitled to receive any Accrued Compensation (as defined in the Amro Employment Agreement), which in the case of termination by
the Company for Cause or resignation by Mr. Albanna for Good Reason will not include payment of pro rata bonus; provided,
however, if termination of Mr. Albanna by the Company without “Cause” or resignation by Mr. Albanna
for “Good Reason,” then under the Amro Employment Agreement will require the Company to pay severance to Mr. Albanna.
Upon any such termination, Mr. Albanna will be entitled to receive any Accrued Compensation and, subject to Mr. Albanna’s
execution of an irrevocable release, receive (i) on the sixtieth day (60th) day following termination, a lump
sum amount equal to twelve (12) months base salary then in effect as of the date of termination, less applicable taxes and withholdings;
(ii) provide reimbursement to Mr. Albanna’s medical insurance premiums for a period of twelve (12) months following
the date of termination; and (iii) cause any equity awards granted prior to the Effective Date (as defined in the Amro Employment
Agreement), that are then outstanding and unvested to immediately vest and, with respect to all options and stock appreciation rights,
to become fully exercisable.
Notwithstanding the foregoing,
under the Amro Employment Agreement, termination of Mr. Albanna by the Company without Cause or resignation by Mr. Albanna for
Good Reason and a Change of Control (as defined in the Amro Employment Agreement) of the Company occurs within six (6) months after
such termination, or within twenty-four (24) months prior to such termination, the Company will pay severance to Mr. Albanna
in connection to such termination. Upon such termination, Mr. Albanna will be entitled to receive any Accrued Compensation, and subject
to Mr. Albanna’s execution of an irrevocable release, receive (i) on the sixtieth (60th) day of termination,
a lump sum cash-payment equal to the product of three times Mr. Albanna’s salary then in effect as of the date of termination,
less applicable taxes and withholdings; (ii) provide reimbursement to Mr. Albanna’s medical insurance premiums for a period
of twenty-four (24) months following the date of termination; and (iii) notwithstanding any provision of any stock incentive
plan, stock option agreement, realization bonus, restricted stock agreement or other agreement relating to capital stock of the Company,
cause any equity awards granted prior to the that are then outstanding and unvested to immediately vest and, with respect to all options
and stock appreciation rights, to become fully exercisable for twenty-four (24) months (but not later than when the award would otherwise
expire).
The Amro Employment Agreement
also contains customary non-solicitation and non-competition covenants, which covenants remain in effect for twelve (12) months following
any cessation of employment with respect to Mr. Albanna. To the extent any of the payments or benefits provided for under the Amro
Employment Agreement or any other agreement or arrangement between Mr. Albanna and the Company (collectively, the “Payments”),
(a) constitute an “excess parachute payment” within the meaning of Section 280G (“Section 280G”)
of the Internal Revenue Code of 1986, as amended and restated (the “Code”), and (b) would otherwise be subject to the
excise tax imposed by Section 4999 of the Code (“Section 4999”), then the Company will pay or provide the greater
(whichever gives Mr. Albanna the highest net after-tax amount) of (i) all of the Payments or (ii) the portion of Payments
not in excess of the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Section 4999.
Corinne Pankovcin, Chief Mergers and Acquisitions
Officer
On November 14, 2021,
the Company entered into a new employment agreement (the “Pankovcin Employment Agreement”) with the Company’s President,
Corinne Pankovcin, pursuant to which Ms. Pankovcin will continue to serve as the Company’s President and Secretary until the date
upon which Ms. Pankovcin’s employment may be terminated in accordance with the terms of the Pankovcin Employment Agreement. In February 2023,
the Company formed a wholly-owned subsidiary, Pearsanta, Inc. in order to accelerate the growth of the Company’s AditxtScore program
through future strategic revenue and growth oriented transactions. In connection with the formation of Pearsanta, Inc. and Ms. Pankovcin’s
anticipated role in driving such strategic revenue and growth oriented transactions, Ms. Pankovcin’ s title was changed from President
to Chief Commercialization Officer, effective April 12, 2023.
The term of Ms. Pankovcin’s
engagement under the Pankovcin Employment Agreement commences as of the Effective Date (as defined in the Pankovcin Employment Agreement)
and continues until November 14, 2023, unless earlier terminated in accordance with the terms of the Pankovcin Employment Agreement.
The term of Ms. Pankovcin’s Employment Agreement is automatically renewed for successive one (1) year periods until terminated
by Ms. Pankovcin or the Company.
Pursuant to the Pankovcin Employment
Agreement, Ms. Pankovcin will receive: (i) a base salary at the annual rate of $250,000 for the remainder of calendar year 2021,
and effective January 1, 2022, $385,000 (prorated for any partial year) payable in bimonthly installments and (ii) eligible
to earn an annual discretionary bonus with a target amount of 45% of Base Compensation, which is based on the achievement of performance
objectives, which will be determined by the Board and Compensation Committee. In addition, for calendar year 2021, Ms. Pankovcin shall
be eligible to earn an additional discretionary bonus as determined by the Company.
Under the Pankovcin Employment
Agreement, termination of Ms. Pankovcin by the Company for “Cause,” “Death,” or “Disability,” (as
such terms are defined in the Pankovcin Employment Agreement), or resignation by Ms. Pankovcin for “Good Reason” (as
defined in the Pankovcin Employment Agreement), will not require the Company to pay severance to Ms. Pankovcin. Upon any such termination,
Ms. Pankovcin will be entitled to receive any Accrued Compensation (as defined in the Pankovcin Employment Agreement), which in the case
of termination by the Company for Cause or resignation by Ms. Pankovcin for Good Reason will not include payment of pro rata bonus; provided,
however, if termination of Ms. Pankovcin by the Company without “Cause” or resignation by Ms. Pankovcin for
“Good Reason,” then under the Pankovcin Employment Agreement will require the Company to pay severance to Ms. Pankovcin. Upon
any such termination, Ms. Pankovcin will be entitled to receive any Accrued Compensation and, subject to Ms. Pankovcin’s execution
of an irrevocable release, receive: (i) on the sixtieth day (60th) day following termination, a lump sum amount
equal to twelve (12) months base salary then in effect as of the date of termination, less applicable taxes and withholdings; (ii) provide
reimbursement to Ms. Pankovcin’s medical insurance premiums for a period of twelve (12) months following the date of termination;
and (iii) cause any equity awards granted prior to the Effective Date (as defined in the Pankovcin Employment Agreement), that are
then outstanding and unvested to immediately vest and, with respect to all options and stock appreciation rights, to become fully exercisable.
Notwithstanding the foregoing,
under the Pankovcin Employment Agreement, termination of Ms. Pankovcin by the Company without Cause or resignation by Ms. Pankovcin for
Good Reason and a Change of Control (as defined in the Pankovcin Employment Agreement) of the Company occurs within six (6) months
after such termination, or within twenty-four (24) months prior to such termination, the Company will pay severance to Ms. Pankovcin
in connection to such termination. Upon such termination, Ms. Pankovcin will be entitled to receive any Accrued Compensation, and subject
to Ms. Pankovcin’s execution of an irrevocable release, receive (i) on the sixtieth (60th) day of termination,
a lump sum cash-payment equal to the sum of (A) the product of two times Ms. Pankovcin’s salary then in effect as of the date
of termination, less applicable taxes and withholdings, and (B) the product of two times Ms. Pankovcin’s Target Bonus; (ii) provide
reimbursement to Ms. Pankovcin’s medical insurance premiums for a period of twenty-four (24) months following the date of termination;
and (iii) notwithstanding any provision of any stock incentive plan, stock option agreement, realization bonus, restricted stock
agreement or other agreement relating to capital stock of the Company, cause any equity awards granted prior to the that are then outstanding
and unvested to immediately vest and, with respect to all options and stock appreciation rights, to become fully exercisable for twenty-four
(24) months (but not later than when the award would otherwise expire).
The Pankovcin Employment Agreement
also contains customary non-solicitation and non-competition covenants, which covenants remain in effect for twelve (12) months following
any cessation of employment with respect to Ms. Pankovcin. To the extent any of the payments or benefits provided for under the Pankovcin
Employment Agreement or any other agreement or arrangement between Ms. Pankovcin and the Company (collectively, the “Payments”),
(a) constitute an “excess parachute payment” within the meaning of Section 280G (“Section 280G”)
of the Internal Revenue Code of 1986, as amended and restated (the “Code”), and (b) would otherwise be subject to the
excise tax imposed by Section 4999 of the Code (“Section 4999”), then the Company will pay or provide the greater
(whichever gives Ms. Pankovcin the highest net after-tax amount) of (i) all of the Payments or (ii) the portion of Payments
not in excess of the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Section 4999.
Thomas J. Farley, Chief Financial Officer
On November 14, 2021,
Aditxt, Inc. the Company entered into a new employment agreement (the “Farley Employment Agreement”) with the Company’s
Chief Financial Officer, Thomas Farley, pursuant to which Mr. Farley will continue to serve as the Company’s Chief Financial
Officer until the date upon which Mr. Farley’s employment may be terminated in accordance with the terms of the Farley Employment
Agreement.
The term of Mr. Farley’s
engagement under the Farley Employment Agreement commences as of the Effective Date (as defined in the Farley Employment Agreement) and
continues until November 14, 2023, unless earlier terminated in accordance with the terms of the Farley Employment Agreement. The
term of Mr. Farley’s Employment Agreement is automatically renewed for successive one (1) year periods until terminated
by Mr. Farley or the Company.
Pursuant to the Farley Employment
Agreement, Mr. Farley will receive: (i) a base salary at the annual rate of $225,000 for the remainder of calendar year 2021,
and effective January 1, 2022, $355,000 (prorated for any partial year) payable in bimonthly installments and, (ii) eligible
to earn an annual discretionary bonus with a target amount of 40% of Base Compensation, which is based on the achievement of performance
objectives, which will be determined by the Board and Compensation Committee. In addition, for calendar year 2021, Mr. Farley will
be eligible to earn an additional discretionary bonus as determined by the Company.
Under the Farley Employment
Agreement, termination of Mr. Farley by the Company for “Cause,” “Death,” or “Disability,” (as
such terms are defined in the Farley Employment Agreement), or resignation by Mr. Farley without “Good Reason” (as defined
in the Farley Employment Agreement), will not require the Company to pay severance to Mr. Farley. Upon any such termination, Mr. Farley
will be entitled to receive any Accrued Compensation (as defined in the Farley Employment Agreement which in the case of termination by
the Company for Cause or resignation by Mr. Farley for Good Reason will not include payment of pro rata bonus; provided,
however, if termination of Mr. Farley by the Company without “Cause” or resignation by Mr. Farley
for “Good Reason,” then under the Farley Employment Agreement will require the Company to pay severance to Mr. Farley.
Upon any such termination, Mr. Farley will be entitled to receive any Accrued Compensation and, subject to Mr. Farley’s
execution of an irrevocable release, receive (i) on the sixtieth day (60th) day following termination, a lump
sum cash-payment equal to the sum of (A) the product of two times Mr. Farley’s salary then in effect as of the date of
termination, less applicable taxes and withholdings, and (B) the product of two times Mr. Farley’s Target Bonus (as defined
in the Farley Employment Agreement); (ii) provide reimbursement to Mr. Farley’s medical insurance premiums for a period
of twelve (12) months following the date of termination; and (iii) cause any equity awards granted prior to the Effective Date
(as defined in the Farley Employment Agreement), that are then outstanding and unvested to immediately vest and, with respect to all options
and stock appreciation rights, to become fully exercisable.
Notwithstanding the foregoing,
under the Farley Employment Agreement, termination of Mr. Farley by the Company without Cause or resignation by Mr. Farley for
Good Reason and a Change of Control (as defined in the Farley Employment Agreement) of the Company occurs within six (6) months after
such termination, or within twenty-four (24) months prior to such termination, the Company will pay severance to Mr. Farley
in connection to such termination. Upon such termination, Mr. Farley will be entitled to receive any Accrued Compensation, and subject
to Mr. Farley’s execution of an irrevocable release, receive (i) on the sixtieth (60th) day of termination,
a lump sum cash-payment equal to the product of two times Mr. Farley’s salary then in effect as of the date of termination,
less applicable taxes and withholdings; (ii) provide reimbursement to Mr. Farley’s medical insurance premiums for a period
of twelve (12) months following the date of termination; and (iii) notwithstanding any provision of any stock incentive plan,
stock option agreement, realization bonus, restricted stock agreement or other agreement relating to capital stock of the Company, cause
any equity awards granted prior to the that are then outstanding and unvested to immediately vest and, with respect to all options and
stock appreciation rights, to become fully exercisable (but not later than when the award would otherwise expire).
The Farley Employment Agreement
also contains customary non-solicitation and non-competition covenants, which covenants remain in effect for twelve (12) months following
any cessation of employment with respect to Mr. Farley. To the extent any of the payments or benefits provided for under the Farley
Employment Agreement or any other agreement or arrangement between Mr. Farley and the Company (collectively, the “Payments”),
(a) constitute an “excess parachute payment” within the meaning of Section 280G (“Section 280G”)
of the Internal Revenue Code of 1986, as amended and restated (the “Code”), and (b) would otherwise be subject to the
excise tax imposed by Section 4999 of the Code (“Section 4999”), then the Company will pay or provide the greater
(whichever gives Mr. Farley the highest net after-tax amount) of (i) all of the Payments or (ii) the portion of Payments
not in excess of the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Section 4999.
Shahrokh Shabahang, Chief Innovation Officer
On November 14, 2021,
the “Company entered into a new employment agreement (the “Shabahang Employment Agreement”) with the Company’s
Chief Innovation Officer, Shahrokh Shabahang, pursuant to which Mr. Shabahang will continue to serve as the Company’s Chief
Innovation Officer until the date upon which Mr. Shabahang’s employment may be terminated in accordance with the terms of the
Shabahang Employment Agreement.
The term of Mr. Shabahang’s
engagement under the Shabahang Employment Agreement commences as of the Effective Date (as defined in the Shabahang Employment Agreement)
and continues until November 14, 2023, unless earlier terminated in accordance with the terms of the Shabahang Employment Agreement.
The term of Mr. Shabahang’s Employment Agreement is automatically renewed for successive one (1) year periods until terminated
by Mr. Shabahang or the Company.
Pursuant to the Shabahang Employment
Agreement, Mr. Shabahang will receive: (i) a base salary at the annual rate of $210,000 for the remainder of calendar year 2021,
and effective January 1, 2022, $325,000 (prorated for any partial year) payable in bimonthly installments, and (ii) eligible
to earn an annual discretionary bonus with a target amount of 40% of Base Compensation, which is based on the achievement of performance
objectives, which will be determined by the Board and Compensation Committee. In addition, for calendar year 2021, Mr. Shabahang
will be eligible to earn an additional discretionary bonus as determined by the Company.
Under the Shabahang Employment
Agreement, termination of Mr. Shabahang by the Company for “Cause,” “Death,” or “Disability,”
(as such terms are defined in the Shabahang Employment Agreement), or resignation by Mr. Shabahang without “Good Reason”
(as defined in the Shabahang Employment Agreement), will not require the Company to pay severance to Mr. Shabahang. Upon any such
termination, Mr. Shabahang will be entitled to receive any Accrued Compensation (as defined in the Shabahang Employment Agreement),
which in the case of termination by the Company for Cause or resignation by Mr. Shabahang for Good Reason will not include payment
of pro rata bonus; provided, however, if termination of Mr. Shabahang by the Company without “Cause”
or resignation by Mr. Shabahang for “Good Reason,” then under the Shabahang Employment Agreement will require the Company
to pay severance to Mr. Shabahang. Upon any such termination, Mr. Shabahang will be entitled to receive any Accrued Compensation
and, subject to Mr. Shabahang’s execution of an irrevocable release, receive: (i) on the sixtieth day (60th) day
following termination, a lump sum cash-payment equal to the sum of (A) the product of two times Mr. Shabahangs’s salary
then in effect as of the date of termination, less applicable taxes and withholdings, and (B) the product of two times Mr. Shabahang’s
Target Bonus (as defined in the Shabahang Employment Agreement); (ii) provide reimbursement to Mr. Shabahang’s medical
insurance premiums for a period of twelve (12) months following the date of termination; and (iii) cause any equity awards granted
prior to the Effective Date (as defined in the Shabahang Employment Agreement), that are then outstanding and unvested to immediately
vest and, with respect to all options and stock appreciation rights, to become fully exercisable.
Notwithstanding the foregoing,
under the Shabahang Employment Agreement, termination of Mr. Shabahang by the Company for without Cause or resignation by Mr. Shabahang
for Good Reason and a Change of Control (as defined in the Shabahang Employment Agreement) of the Company occurs within six (6) months
after such termination, or within twenty-four (24) months prior to such termination, the Company will pay severance to Mr. Shabahang
in connection to such termination. Upon such termination, Mr. Shabahang will be entitled to receive any Accrued Compensation, and
subject to Mr. Shabahang’s execution of an irrevocable release, receive: (i) on the sixtieth (60th) day
of termination, a lump sum cash-payment equal to the product of two times Mr. Shabahang’s salary then in effect as of the date
of termination, less applicable taxes and withholdings; (ii) provide reimbursement to Mr. Shabahang’s medical insurance
premiums for a period of twenty-four (24) months following the date of termination; and (iii) notwithstanding any provision
of any stock incentive plan, stock option agreement, realization bonus, restricted stock agreement or other agreement relating to capital
stock of the Company, cause any equity awards granted prior to the that are then outstanding and unvested to immediately vest and, with
respect to all options and stock appreciation rights, to become fully exercisable for twenty-four (24) months (but not later than
when the award would otherwise expire).
The Shabahang Employment Agreement
also contains customary non-solicitation and non-competition covenants, which covenants remain in effect for twelve (12) months following
any cessation of employment with respect to Mr. Shabahang. To the extent any of the payments or benefits provided for under the Shabahang
Employment Agreement or any other agreement or arrangement between Mr. Shabahang and the Company (collectively, the “Payments”),
(a) constitute an “excess parachute payment” within the meaning of Section 280G (“Section 280G”)
of the Internal Revenue Code of 1986, as amended and restated (the “Code”), and (b) would otherwise be subject to the
excise tax imposed by Section 4999 of the Code (“Section 4999”), then the Company will pay or provide the greater
(whichever gives Mr. Shabahang the highest net after-tax amount) of (i) all of the Payments or (ii) the portion of Payments
not in excess of the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Section 4999.
Rowena Albanna, Chief Operating Officer
On November 14, 2021,
Aditxt, Inc. (the “Company”) entered into a new employment agreement (the “Rowena Employment Agreement”) with
the Company’s Chief Operating Officer, Rowena Albanna, pursuant to which Ms. Albanna will continue to serve as the Company’s
Chief Operating Officer until the date upon which Ms. Albanna’s employment may be terminated in accordance with the terms of the
Rowena Employment Agreement.
The term of Ms. Albanna’s
engagement under the Rowena Employment Agreement commences as of the Effective Date (as defined in the Rowena Employment Agreement) and
continues until November 14, 2023, unless earlier terminated in accordance with the terms of the Rowena Employment Agreement. The
term of Ms. Albanna’s Employment Agreement is automatically renewed for successive one (1) year periods until terminated by
Ms. Albanna or the Company.
Pursuant to the Rowena Employment
Agreement, Ms. Albanna will receive: (i) a base salary at the annual rate of $210,000 for the remainder of calendar year 2021 and
effective January 1, 2022, $325,000 (prorated for any partial year) payable in bimonthly installments, and (ii) eligible to
earn an annual discretionary bonus with a target amount of 40% of Base Compensation, which is based on the achievement of performance
objectives, which will be determined by the Board and Compensation Committee. In addition, for calendar year 2021, Ms. Albanna will be
eligible to earn an additional discretionary bonus as determined by the Company.
Under the Rowena Employment
Agreement, termination of Ms. Albanna by the Company for “Cause,” “Death,” or “Disability,” (as such
terms are defined in the Rowena Employment Agreement), or resignation by Ms. Albanna for “Good Reason” (as defined in the
Rowena Employment Agreement), will not require the Company to pay severance to Ms. Albanna. Upon any such termination, Ms. Albanna will
be entitled to receive any Accrued Compensation (as defined in the Rowena Employment Agreement), which in the case of termination by the
Company for Cause or resignation by Ms. Albanna for Good Reason will not include payment of pro rata bonus; provided, however,
if termination of Ms. Albanna by the Company without “Cause” or resignation by Ms. Albanna for “Good Reason” (as
such terms are defined in the Rowena Employment Agreement), then under the Rowena Employment Agreement will require the Company to pay
severance to Ms. Albanna. Upon any such termination, Ms. Albanna will be entitled to receive any Accrued Compensation and, subject
to Ms. Albanna’s execution of an irrevocable release, receive: (i) on the sixtieth day (60th) day following
termination, a lump sum amount equal to twelve (12) months base salary then in effect as of the date of termination, less applicable
taxes and withholdings; (ii) provide reimbursement to Ms. Albanna’s medical insurance premiums for a period of twelve
(12) months following the date of termination; and (iii) cause any equity awards granted prior to the Effective Date (as defined
in the Rowena Employment Agreement), that are then outstanding and unvested to immediately vest and, with respect to all options and stock
appreciation rights, to become fully exercisable.
Notwithstanding the foregoing, under the Rowena
Employment Agreement, termination of Ms. Albanna by the Company without Cause or resignation by Ms. Albanna for Good Reason and a Change
of Control (as defined in the Rowena Employment Agreement) of the Company occurs within six (6) months after such termination, or
within twenty-four (24) months prior to such termination, the Company will pay severance to Ms. Albanna in connection to such termination.
Upon such termination, Ms. Albanna will be entitled to receive any Accrued Compensation, and subject to Ms. Albanna’s execution
of an irrevocable release, receive: (i) on the sixtieth (60th) day of termination, a lump sum cash-payment equal
to the sum of (A) the product of two times Ms. Albanna’s salary then in effect as of the date of termination, less applicable
taxes and withholdings, and (B) the product of two times Ms. Albanna’s Target Bonus; (ii) provide reimbursement to Ms.
Albanna’s medical insurance premiums for a period of twenty-four (24) months following the date of termination; and (iii) notwithstanding
any provision of any stock incentive plan, stock option agreement, realization bonus, restricted stock agreement or other agreement relating
to capital stock of the Company, cause any equity awards granted prior to the that are then outstanding and unvested to immediately vest
and, with respect to all options and stock appreciation rights, to become fully exercisable for twenty-four (24) months (but not
later than when the award would otherwise expire).
The Rowena Employment Agreement
also contains customary non-solicitation and non-competition covenants, which covenants remain in effect for twelve (12) months following
any cessation of employment with respect to Ms. Albanna. To the extent any of the payments or benefits provided for under the Rowena
Employment Agreement or any other agreement or arrangement between Ms. Albanna and the Company (collectively, the “Payments”),
(a) constitute an “excess parachute payment” within the meaning of Section 280G (“Section 280G”)
of the Internal Revenue Code of 1986, as amended and restated (the “Code”), and (b) would otherwise be subject to the
excise tax imposed by Section 4999 of the Code (“Section 4999”), then the Company will pay or provide the greater
(whichever gives Ms. Albanna the highest net after-tax amount) of (i) all of the Payments or (ii) the portion of Payments
not in excess of the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Section 4999.
Matthew Shatzkes, Former Chief Legal Officer
and General Counsel
On January 28, 2022, Aditxt,
Inc. (the “Company”) entered into an employment agreement (the “Employment Agreement”) with Matthew Shatzkes,
the Chief Legal Officer and General Counsel of the Company. Pursuant to the Employment Agreement, Mr. Shatzkes will (i) receive
a base salary at the annual rate of $385,000 (the “Base Compensation”) payable in bimonthly installments, (ii) receive
a one-time sign-on bonus (the “Sign-on Bonus”), (iii) a minimum 2022 quarterly bonus (the “Minimum 2022 Bonus”),
and (iv) will be entitled to earn an annual discretionary bonus beginning in fiscal year 2022.
Following the first anniversary
of the Employment Agreement (the “Anniversary Date”), in addition to Mr. Shatzkes’ Base Compensation, Mr. Shatzkes
will be entitled to a minimum quarterly bonus (the “Subsequent Year Minimum Bonus”). Following the Anniversary Date, in addition
to Mr. Shatzkes’ Base Compensation and Subsequent Year Minimum Bonus, Mr. Shatzkes will also be eligible to earn an annual
discretionary bonus.
Under the Employment Agreement,
Mr. Shatzkes will also receive (i) a restricted stock unit award that will entitle Mr. Shatzkes to receive 150,000 shares
of the Company’s common stock which shall vest immediately, and (ii) a restricted stock unit award of an additional 330,000
shares of the Company’s common stock, which shall vest ratably over eight successive equal quarterly installments over a two-year
period commencing on March 1, 2022 and ending on December 1, 2023.
The term of Mr. Shatzkes
engagement under the Employment Agreement commences on the Effective Date (as defined in the Employment Agreement) and continues until
January 16, 2024, unless earlier terminated in accordance with the terms of the Employment Agreement. The term of Mr. Shatzkes’
Employment Agreement is automatically renewed for successive one-year periods until terminated by Mr. Shatzkes or the Company.
Under the Employment Agreement, termination of
Mr. Shatzkes by the Company for “Cause,” “Death,” or “Disability,” (as such terms are defined
in the Employment Agreement), or resignation by Mr. Shatzkes without “Good Reason” (as defined in the Employment Agreement),
will not require the Company to pay severance to Mr. Shatzkes. Upon any such termination, Mr. Shatzkes will be entitled to receive
any Accrued Compensation (as defined in the Employment Agreement), which in the case of termination by the Company for Cause or resignation
by Mr. Shatzkes for Good Reason will not include payment of pro rata bonus. If, however, termination of Mr. Shatzkes by the
Company without “Cause”, resignation by Mr. Shatzkes for “Good Reason” or and a Change of Control (as defined
in the Employment Agreement) event occurs, then the Employment Agreement will require the Company to pay severance to Mr. Shatzkes.
Upon any such termination, Mr. Shatzkes will be entitled to receive any Accrued Compensation and, subject to Mr. Shatzkes’
execution of an irrevocable release, (i) on the sixtieth day following termination, a lump sum amount equal (a) twelve months
of his Base Compensation, Sign-on Bonus and Minimum 2022 Bonus if his Employment Agreement is terminated prior to December 31, 2022,
or (b) his Base Compensation and Subsequent Year Minimum Bonus if his Employment Agreement is terminated after December 31,
2022; (ii) provide reimbursement to Mr. Shatzkes’ medical insurance premiums for a period of twelve months following
the date of termination; and (iii) notwithstanding any provision of any stock incentive plan, stock option agreement, realization
bonus, restricted stock agreement or other agreement relating to capital stock of the Company, cause any equity awards granted prior to
that termination that are then outstanding and unvested to immediately vest and, with respect to all options and stock appreciation rights,
to become fully exercisable.
To the extent any of the payments
or benefits provided for under the Employment Agreement or any other agreement or arrangement between Mr. Shatzkes and the Company
(collectively, the “Payments”), (a) constitute an “excess parachute payment” within the meaning of Section 280G
(“Section 280G”) of the Internal Revenue Code of 1986, as amended and restated (the “Code”), and (b) would
otherwise be subject to the excise tax imposed by Section 4999 of the Code (“Section 4999”), then the Company will
pay or provide the greater (whichever gives Mr. Shatzkes the highest net after-tax amount) of (i) all of the Payments or (ii) the
portion of Payments not in excess of the greatest amount of Payments that can be paid that would not result in the imposition of the excise
tax under Section 4999.
On
July 21, 2023, Matthew Shatzkes tendered his resignation as Chief Legal Officer, General Counsel and Corporate Secretary of the Company.
In connection with his resignation, the Company entered into a Separation Agreement and General Release (the “Separation Agreement”).
Pursuant to the Separation Agreement, Mr. Shatzkes employment with the Company terminated on August 4, 2023 (the “Termination Date”).
In addition, the Company agreed to pay Mr. Shatzkes within seven days after the Termination Date: (i) $122,292.32, representing all accrued
salary and wages (inclusive of Base Compensation and earned Subsequent Quarterly Bonus amounts, as those terms are defined in Mr. Shatzkes
employment agreement), and (ii) $32,575.84, representing Mr. Shatzkes accrued, but unused paid time off. The Company also agreed to pay
Mr. Shatzkes: (i) $385,000, representing 12 months of Mr. Shatzkes Base Compensation (as that term is defined in Mr. Shatzkes employment
agreement), and (ii) $290,000, representing Mr. Shatzkes Subsequent Year Minimum Bonus (as such term is defined in Mr. Shatzkes employment
agreement), on the 60th day following the Termination Date. In addition, the Company shall reimburse Mr. Shatzkes COBRA premium for a
period of 12 months and shall cause any restricted stock units granted to Mr. Shatzkes to immediately vest as of the Termination Date.
On
August 15, 2023, the Company entered into an Amendment to Separation Agreement and General Release with Mr. Shatzkes (the “Separation
Agreement Amendment”). Pursuant to the Separation Agreement Amendment, the Company was required to pay Mr. Shatzkes, upon the earlier
of (i) September 1, 2023 or (ii) two business days following the closing of a capital raise by the Company, an amount equal to $91,060.16,
which amount represents the balance of Mr. Shatzkes’ Accrued Salary and Wages and Accrued PTO plus an additional $1,000 to serve
as consideration for entering into the Separation Agreement Amendment. In addition, under the Separation Agreement Amendment, the Company
was required to pay Mr. Shatzkes the Severance Base Compensation and the Severance Bonus upon the earlier of (i) the 60th day
following the Termination Date or (ii) two business days following the closing of a capital raise by the Company.
Outstanding Equity Awards at Fiscal Year-End
The following table presents
information concerning unexercised options and unvested restricted stock awards for each Named Executive Officer outstanding as of December 31,
2023 for Aditxt, Inc.
| |
Option Awards | |
Restricted Stock Awards | | |
Restricted Stock Units | |
Name | |
Number of securities underlying unexercised options (#) exercisable | | |
Number of securities underlying unexercised options (#) unexercisable | | |
Option Exercise Price | | |
Option
Expiration Date | |
Number of securities underlying unexercised restricted stock awards (#) exercisable | | |
Number of securities underlying unexercised restricted stock awards (#) unexercisable | | |
Number of securities underlying unexercised restricted stock units (#) exercisable | | |
Number of securities underlying unexercised restricted stock units (#) unexercisable | |
Amro Albanna | |
| 100 | | |
| — | | |
$ | 8,000.00 | | |
October 5, 2027 | |
| — | | |
| — | | |
| — | | |
| — | |
Amro Albanna | |
| 200 | | |
| — | | |
$ | 8,000.00 | | |
October 5, 2027 | |
| — | | |
| — | | |
| — | | |
| — | |
Amro Albanna | |
| 9,404 | | |
| | | |
$ | 5.01 | | |
November 8, 2033 | |
| — | | |
| — | | |
| — | | |
| — | |
Corinne Pankovcin | |
| 83 | | |
| — | | |
$ | 8,040.00 | | |
March 20, 2025 | |
| — | | |
| — | | |
| — | | |
| — | |
Corinne Pankovcin | |
| 4 | | |
| — | | |
$ | 22,000.00 | | |
March 20, 2025 | |
| — | | |
| — | | |
| — | | |
| — | |
Corinne Pankovcin | |
| 83 | | |
| — | | |
$ | 3,840.00 | | |
November 2, 2030 | |
| — | | |
| — | | |
| — | | |
| — | |
Corinne Pankovcin | |
| 8 | | |
| — | | |
$ | 3,840.00 | | |
November 2, 2030 | |
| — | | |
| — | | |
| — | | |
| — | |
Corinne Pankovcin | |
| 4,702 | | |
| — | | |
$ | 5.01 | | |
November 8, 2033 | |
| | | |
| | | |
| | | |
| | |
Thomas J. Farley | |
| 30 | | |
| — | | |
$ | $3,840 | | |
November 2, 2030 | |
| — | | |
| — | | |
| — | | |
| — | |
Thomas J. Farley | |
| 4,702 | | |
| — | | |
$ | $5.01 | | |
November 8, 2033 | |
| — | | |
| — | | |
| — | | |
| — | |
The following table presents information concerning
unexercised options and unvested restricted stock awards for each Named Executive Officer outstanding as of December 31, 2023 for
Pearsanta, Inc.
| |
Option Awards | |
Restricted Stock Awards | | |
Restricted Stock Units | |
Name | |
Number of securities underlying unexercised options (#) exercisable | | |
Number of securities underlying unexercised options (#) unexercisable | | |
Option Exercise Price | | |
Option
Expiration Date | |
Number of securities underlying unexercised restricted stock awards (#) exercisable | | |
Number of securities underlying unexercised restricted stock awards (#) unexercisable | | |
Number of securities underlying unexercised restricted stock units (#) exercisable | | |
Number of securities underlying unexercised restricted stock units (#) unexercisable | |
Amro Albanna | |
| 2,000,000 | | |
| — | | |
$ | 0.02 | | |
December 18, 2033 | |
| — | | |
| — | | |
| — | | |
| — | |
Corinne Pankovcin | |
| 1,000,000 | | |
| — | | |
$ | 0.02 | | |
December 18, 2033 | |
| — | | |
| — | | |
| — | | |
| — | |
Thomas J. Farley | |
| 1,000,000 | | |
| — | | |
$ | 0.02 | | |
December 18, 2033 | |
| — | | |
| — | | |
| — | | |
| — | |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets
forth certain information regarding beneficial ownership of shares of our common stock as of the Record Date, based on 1,993,682 shares
issued and outstanding by (i) each person known to beneficially own more than 5% of our outstanding common stock, (ii) each
of our directors, (iii) our executive officers and (iv) all directors and executive officers as a group. Shares are beneficially
owned when an individual has voting and/or investment power over the shares or could obtain voting and/or investment power over the shares
within 60 days of the Record Date. Except as otherwise indicated, the persons named in the table have sole voting and investment
power with respect to all shares beneficially owned, subject to community property laws, where applicable. Unless otherwise indicated,
the address of each beneficial owner listed below is c/o Aditxt, Inc., 2569 Wyandotte Street, Suite 101, Mountainview, CA 94043.
| |
Number
of shares of Common Stock Beneficially Owned | | |
Percentage | |
Directors and Officers: | |
| | |
| |
Amro Albanna(1) | |
| 10,103 | | |
| * | % |
Shahrokh Shabahang, D.D.S.,
MS, Ph.D.(2) | |
| 7,780 | | |
| * | % |
Corinne Pankovcin(3) | |
| 4,966 | | |
| * | % |
Rowena Albanna(4) | |
| 4,956 | | |
| * | % |
Brian Brady(5) | |
| 488 | | |
| * | % |
Jeffrey Runge, M.D.(6) | |
| 483 | | |
| * | % |
Thomas J. Farley(7) | |
| 4,812 | | |
| * | % |
Charles Nelson(8) | |
| 731 | | |
| * | % |
All directors and executive officers as a group (8 persons) | |
| 34,319 | | |
| 1.72 | % |
| (1) | Includes (i) 9,704 shares
issuable pursuant to options that are fully vested; (ii) 228 shares beneficially owned by the Albanna Family Trust, of which Mr. Albanna
is the Trustee; (iii) 151 shares directly owned by Mr. Albanna; and (iv) 20 Series A Warrants issued as part of the conversion of outstanding
accrued compensation through March 31, 2020. Mr. Albanna may be deemed to beneficially own the securities held by his wife Rowena Albanna,
the Company’s Chief Operating Officer. |
| (2) | Includes (i) 7,108 beneficially
owned by Shabahang-Hatami Family Trust, of which Shahrokh Shabahang, D.D.S., MS, Ph.D. is the Trustee; (ii) warrants to purchase 111
shares, including 24 Series A Warrants issued as part of the conversion of outstanding accrued compensation through March 31, 2020, and
87 warrants beneficially owned by the Shabahang-Hatami Family Trust; (iii) 561 shares directly owned by Mr. Shabahang. |
| (3) | Includes (i) 86 shares
held directly by Ms. Pankovcin; and (ii) 4,880 shares issuable pursuant to options that are fully vested. |
| (4) | Includes (i) 86 shares held directly by Ms. Albanna; (ii) 4,852
shares issuable pursuant to options that are fully vested; and (iii) 18 Series A Warrants issued as part of the conversion of outstanding
accrued compensation through March 31, 2020. Ms. Albanna may be deemed to beneficially own the securities held by her husband Amro Albanna,
the Company’s Chief Executive Officer. |
| (5) | Includes (i) 13 shares
held directly by Mr. Brady; and (ii) 475 shares issuable pursuant to options that are fully vested. |
| (6) | Includes (i) 2 shares held by Biologue, Inc., over which Dr.
Runge has voting and dispositive control; (ii) 6 shares held directly by Dr. Runge; and (iii) 475 shares issuable pursuant to options
that are fully vested. |
| (7) | Includes (i) 80 shares held directly by Mr. Farley and (ii)
4,732 shares issuable pursuant to options that are fully vested. |
| (8) | Includes (i) 261 shares held by Siu Kim Athle International,
LLC., over which Mr. Nelson has voting and dispositive control and (ii) 470 shares issuable pursuant to options that are fully vested. |
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of
the Exchange Act requires our directors, executive officers and holders of more than 10% of our common stock to file with the SEC
initial reports of ownership and reports of changes in the ownership of our common stock and other equity securities. Such persons are
required to furnish us copies of all Section 16(a) filings. Based solely upon a review of the copies of the forms furnished
to us, we believe that our officers, directors and holders of more than 10% of our common stock complied with all applicable filing requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AND DIRECTOR INDEPENDENCE
Except as described below and
except for employment arrangements which are described under “executive compensation,” since January 1, 2018, there has
not been, nor is there currently proposed, any transaction in which we are or were a participant, the amount involved exceeds the lesser
of $120,000 or 1% of the average of the total assets at December 31, 2023 and 2022, and any of our directors, executive officers,
holders of more than 5% of our common stock or any immediate family member of any of the foregoing had or will have a direct or indirect
material interest.
On
February 29, 2024, Amro Albanna, the Chief Executive Officer of the Company, and Shahrokh Shabahang, the Chief Innovation Officer of the
Company, loaned $117,000 and $115,000, respectively, to the Company. The loans were evidenced by an unsecured promissory note (the “February
29th Notes”). Pursuant to the terms of the February 29th Notes, it will accrue interest at the Prime rate of eight and one-half
percent (8.5%) per annum and is due on the earlier of August 29, 2024 or an event of default, as defined therein.
On February 15, 2024, Amro Albanna, the Chief
Executive Officer of the Company loaned $205,000 to the Company. The loan was evidenced by an unsecured promissory note (the “February
15th Note”). Pursuant to the terms of the February 15th Note, it will accrue interest at the Prime rate of eight and one-half percent
(8.5%) per annum and is due on the earlier of August 15, 2024 or an event of default, as defined therein. As of March 31, 2024 the note
has an outstanding principal balance of $205,000.
On
February 7, 2024, Amro Albanna, the Chief Executive Officer of the Company loaned $30,000 to the Company. The loan was evidenced by an
unsecured promissory note (the “February Note”). Pursuant to the terms of the February Note, it will accrue interest at the
Prime rate of eight and one-half percent (8.5%) per annum and is due on the earlier of August 7, 2024 or an event of default, as defined
therein.
On
December 6, 2023, Amro Albanna, the Chief Executive Officer of the Company loaned $200,000 to the Company. The loan was evidenced by an
unsecured promissory note (the “December Note”). Pursuant to the terms of the December Note, it will accrue interest at the
Prime rate of eight and one-half percent (8.5%) per annum and is due on the earlier of June 6, 2024 or an event of default, as defined
therein.
On
November 30, 2023, Amro Albanna, the Chief Executive Officer of the Company loaned $10,000 to the Company. The loan was evidenced by an
unsecured promissory note (the “November Note”). Pursuant to the terms of the November Note, it will accrue interest at the
Prime rate of eight and one-half percent (8.5%) per annum and is due on the earlier of May 30, 2024 or an event of default, as defined
therein.
On
June 12, 2023, Amro Albanna, the Chief Executive Officer of the Company and Shahrokh Shabahang, the Chief Innovation Officer of the Company,
loaned $200,000 and $100,000, respectively, to the Company. The loans were evidenced by an unsecured promissory note (the “June
Notes”). Pursuant to the terms of the June Notes, each of the June Notes will accrue interest at the Prime rate of eight and one-quarter
percent (8.25%) per annum and is due on the earlier of December 12, 2023 or an event of default, as defined therein.
On
April 21, 2023, Amro Albanna, the Chief Executive Officer of the Company, and Shahrokh Shabahang, the Chief Innovation Officer of the
Company, loaned $87,523 and $100,000, respectively, to the Company. The loans were each evidenced by an unsecured promissory note
(the “April Note”). Pursuant to the terms each April Note, it will accrue interest at the Prime rate of eight percent (8.00%)
per annum and is due on the earlier of October 21, 2023, or an event of default, as defined therein. As of September 30, 2023, the note
was fully paid off.
On
May 25, 2023, Amro Albanna, the Chief Executive Officer of the Company, loaned $200,000 to the Company. The loan was evidenced by
an unsecured promissory note (the “May Note”). Pursuant to the terms of the May Note, it will accrue interest at a rate of
eight and one-quarter percent (8.25%) per annum, the Prime rate on the date of signing, and is due on the earlier of November 25, 2023
or an event of default, as defined therein. As of September 30, 2023, the note was fully paid off.
On
June 12, 2023, Amro Albanna, the Chief Executive Officer of the Company, and Shahrokh Shabahang, the Chief Innovation Officer of the Company,
loaned $200,000 and $100,000, respectively, to the Company. The loans were evidenced by an unsecured promissory note (the “June
Note”). Pursuant to the terms of the June Note, it will accrue interest at the Prime rate of eight and one-quarter percent (8.25%)
per annum and is due on the earlier of December 12, 2023, or an event of default, as defined therein. As of September 30, 2023, the June
Note was fully paid off.
On
July 11, 2023, we entered into a Subscription and Investment Representation Agreement (the “Subscription Agreement”) with
Amro Albanna, its Chief Executive Officer, who is an accredited investor (the “Purchaser”), pursuant to which the Company
agreed to issue and sell one (1) share of the Company’s Series C Preferred Stock, par value $0.001 per share (the “Preferred
Stock”), to the Purchaser for $1,000.00 in cash. The sale closed on July 11, 2023.
On
July 19, 2022, we entered into a Subscription and Investment Representation Agreement (the “Subscription Agreement”) with
Amro Albanna, its Chief Executive Officer, who is an accredited investor (the “Purchaser”), pursuant to which the Company
agreed to issue and sell one (1) share of the Company’s Series B Preferred Stock, par value $0.001 per share (the “Preferred
Stock”), to the Purchaser for $20,000.00 in cash. The sale closed on July 19, 2022. The one share of Series B Preferred Stock was
redeemed by the Company on Pctober 7, 2022 for $20,000 following the approval of the 2022 reverse stock split.
During the years ended
December 31, 2019 and 2018, Rowena Albanna, the wife of Amro Albanna, our Chief Executive Officer, provided the Company with operations
consulting services. In July 2020, Ms. Albanna joined the Company as its Chief Operating Officer. As of December 31, 2018, $112,000
was accrued as compensation. An additional $180,000 was expensed as compensation during the year ended December 31, 2019, and $17,000
was paid on the accrued balance. As of December 31, 2019, $275,000 remained accrued and outstanding.
On January 22, 2018, the
Company issued an unsecured promissory note to Sekris for $40,000 that accrued interest of 4% annually. The note was due on the earlier
of July 22, 2018 or in the event of default, as defined in the agreement. This note has been repaid as of December 31, 2019.
On February 12, 2018,
the Company issued an unsecured promissory note to Sekris for $50,000 that accrued interest of 4% annually. The note was due on the earlier
of August 12, 2018 or in the event of default, as defined in the agreement. This note has been repaid as of December 31, 2019.
On March 2, 2018, the
Company issued an unsecured promissory note to Sekris for $10,000 that accrued interest of 4% annually. The note was due on the earlier
of September 2, 2018 or in the event of default, as defined in the agreement. This note has been repaid as of December 31, 2019.
On March 8, 2018, we entered
into an Assignment Agreement (the “Assignment Agreement”) with Sekris. See “Summary — Overview — License
Agreement with Loma Linda University.” Dr. Shabahang, our Chief Innovative Officer, was the Chief Executive Officer of Sekris.
Sekris was subsequently dissolved in 2019.
On March 8, 2018, we issued
a warrant to purchase up to 10,000 shares of our common stock to Sekris. On March 2, 2018, we issued a 4% unsecured promissory note
to Sekris in the principal amount of $10,000. Principal and interest was due on September 2, 2018 or immediately upon an event of
default. On February 12, 2018, we issued a 4% unsecured promissory note to Sekris in the principal amount of $50,000. Principal and
interest was due on August 12, 2018 or immediately upon an event of default. On January 22, 2018, we issued a 4% unsecured promissory
note to Sekris in the principal amount of $40,000. Principal and interest was due on July 22, 2018 or immediately upon an event of
default.
On June 18, 2018, the
Company issued an unsecured promissory note to Sekris for $17,502 that accrued interest of 4% annually. The note was due on the earlier
of December 18, 2018 or in the event of default, as defined in the agreement. This note has been repaid as of December 31, 2019.
On January 1, 2019, we
entered into a consulting agreement with Rowena Albanna, the wife of Amro Albanna, our Chief Executive Officer, to perform operations
consulting services. As part of this agreement, we pay Ms. Albanna $15,000 per month for her services. This agreement terminated on June 30,
2020. In July 2020, Ms. Albanna joined the Company as its Chief Operating Officer.
On March 21, 2019, we
issued a promissory note to Dr. Shabahang, our Chief Innovative Officer. The note has a principal amount of $10,000, was due on September 21,
2019, and bears an interest rate of 4% per year. This note remains outstanding.
During the year ended December 31,
2019, we assumed an aggregate of $189,625 of liabilities from Sekris in exchange for the return of 94,813 shares of our common stock.
On January 20, 2020, we
issued a promissory note to Brian Brady, a member of our board of directors. The note has a principal amount of $50,000, was due on the
earlier of April 19, 2020 or within 10 days of the closing of our initial public offering. This note carried an original issue
discount of $25,000. The note was amended on April 23, 2020 to extend the maturity date to the earlier of June 30, 2020 or within
10 days of the closing of our initial public offering. This note was repaid in July 2020.
In July 2020, we issued
units of securities to the related parties listed below in conversion of their outstanding accrued compensation through March 31,
2020. The units were the same type and form of the units offered in the IPO.
| ● | 762 units to Amro Albanna, our Chairman and Chief Executive
Officer, in conversion of $342,500 in accrued compensation through March 31, 2020; |
| ● | 945 units to Shahrokh Shabahang, D.D.S., MS, Ph.D.,
our Chief Innovation Officer and Director, in conversion of $425,000 in accrued compensation through March 31, 2020; and |
| ● | 712 units to Rowena Albanna, the wife of our Chief Executive
Officer and an independent contractor providing services to the Company, in conversion of $320,000 in accrued compensation through March 31,
2020. In July 2020, Ms. Albanna joined the Company as its Chief Operating Officer. |
Review, Approval and Ratification of Related
Party Transactions
Given our small size and limited
financial resources, we have not adopted formal policies and procedures for the review, approval or ratification of transactions, such
as those described above, with our executive officer(s), Director(s) and significant stockholders. We intend to establish formal
policies and procedures in the future, once we have sufficient resources and have appointed additional Directors, so that such transactions
will be subject to the review, approval or ratification of our Board of Directors, or an appropriate committee thereof. On a moving forward
basis, our Directors will continue to approve any related party transaction.
AUDIT COMMITTEE REPORT
The following Audit Committee
Report shall not be deemed to be “soliciting material,” deemed “filed” with the SEC or subject to the liabilities
of Section 18 of the Exchange Act. Notwithstanding anything to the contrary set forth in any of the Company’s previous
filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act that might
incorporate by reference future filings, including this Proxy Statement, in whole or in part, the following Audit Committee Report shall
not be incorporated by reference into any such filings.
The Audit Committee is comprised
of three independent directors (as defined under Nasdaq Listing Rule 5605(a)(2)). The Audit Committee operates under a written charter,
which is available on our website at https://aditxt.com/investor-relations/2325-2/.
We have reviewed and discussed
with management and the Company’s auditors, the Company’s audited financial statements as of and for the fiscal year ended
December 31, 2023.
We have discussed with dbbmckennon,
the Company’s independent registered public accounting firm, the matters as required to be discussed by the Public Company Accounting
Oversight Board (the “PCAOB”) Auditing Standard No. 1301 (Communications with Audit Committees).
We have received the written
disclosures and the letter from dbbmckennon required by applicable requirements of the PCAOB regarding dbbmckennon’s communications
with the Audit Committee concerning independence, and have discussed with dbbmckennon, their independence from management and the
Company.
Based on the review and discussions
referred to above, we recommended to the Board that the financial statements referred to above be included in the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2023 for filing with the SEC.
|
Submitted by the Audit Committee |
|
|
|
Brian Brady, Chairman |
|
Charles Nelson |
|
Jeffrey Runge, M.D. |
PROPOSAL NO. 2:
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Our board of directors has
selected dbbmckennon to audit our financial statements for the fiscal year ending December 31, 2024. dbbmckennon has
audited our financial statements since fiscal year 2018.
Although stockholder approval
of the selection of dbbmckennon is not required by law, our board of directors believes it is advisable to give stockholders an
opportunity to ratify this selection. If this proposal is not approved at the Annual Meeting, the board of directors may reconsider its
selection of dbbmckennon.
Fees of Independent Registered Public Accounting
Firm
dbbmckennon acted as
the Company’s independent registered public accounting firm for the years ended December 31, 2023 and 2022 and for the
interim periods in such fiscal years. The following table shows the fees that were incurred by the Company for audit and other services
provided by dbbmckennon for the years ended December 31, 2023 and 2022.
| |
Year Ended December 31, | |
| |
2023 | | |
2022 | |
Audit Fees(a) | |
$ | 125,735 | | |
$ | 111,250 | |
Tax Fees(b) | |
$ | — | | |
$ | — | |
Other Fees(c) | |
$ | 33,325 | | |
$ | 7,400 | |
Total | |
$ | 161,083 | | |
$ | 118,650 | |
| (a) | Audit fees represent fees for professional services provided
in connection with the audit of the Company’s annual financial statements and the review of its financial statements included in
the Company’s Quarterly Reports on Form 10-Q and services that are normally provided in connection with statutory or regulatory
filings. |
| (b) | Tax fees represent fees for professional services related to
tax compliance, tax advice and tax planning. |
| (c) | Other fees represent fees related to our filing of certain Registration
Statements. |
Pre-Approval Policies and Procedures
All audit related services,
tax services and other services rendered by dbbmckennon were pre-approved by the Company’s Board of Directors. Commencing
in 2020, the Audit Committee was charged with all pre-approval activities with respect to the Company’s independent registered public
accounting firm. The Audit Committee has adopted a pre-approval policy that provides for the pre-approval of all services performed for
the Company by its independent registered public accounting firm. Our independent registered public accounting firm and management are
required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public
accounting firm in accordance with this pre-approval policy, and the fees for the services performed to date.
Interests of Officers and Directors in this
Proposal
Our officers and directors
do not have any substantial interest, direct or indirect, in in this proposal.
Required Vote of Stockholders
The affirmative vote of a majority
of the votes cast at the Annual Meeting is required to ratify the appointment of the independent registered public accounting firm.
Board Recommendation
The board of directors unanimously
recommends a vote “FOR” Proposal No. 2.
PROPOSAL NO. 3:
THE SERIES A-1 PROPOSAL
Background
On
December 22, 2023, we entered into an Exchange Agreement (the “Exchange Agreement”) with the holders (the “Holders”)
of an aggregate of 22,280 shares of Series F-1 Convertible Preferred Stock of Evofem Biosciences, Inc. (the “Evofem Series F-1
Preferred Stock”), pursuant to which the Holders agreed to exchange their respective shares of Evofem Series F-1 Preferred Stock
for an aggregate of 22,280 shares of a new series of convertible preferred stock of the Company designated as Series A-1 Convertible
Preferred Stock, $0.001 par value, (the “Series A-1 Preferred Stock”).
The
Exchange Agreement requires that we call and hold a meeting of our stockholders for the purpose of requesting approval of (i) the
an increase of the authorized shares of common stock of the Company from 100,000,000 to 1,000,000,000 (the “Increase in Authorized”)
and/or a reverse stock split of the issued and outstanding shares of common stock of the Company resulting in a similar impact on the
Company’s authorized but unissued shares of common stock and (ii) the approval of any matters requiring stockholder approval pursuant
to the listing requirements of the Nasdaq Capital Market including, without limitation the issuance of more than 20% of the outstanding
shares of Common Stock, in connection with the transaction.
Nasdaq Listing Rule 5635(d) provides
that stockholder approval is required prior to the issuance of securities in a transaction, other than a public offering, involving the
sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable for common stock),
which equals 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance, at a price less than
the lower of: (i) the closing price immediately preceding the signing of the binding agreement, or (ii) the average closing
price of the common stock for the five trading days immediately preceding the signing of the binding agreement for the transaction.
See “— Reasons for Stockholder Approval” below.
In light of this rule, the
Certificate of Designations of the Series A-1 Preferred Stock provides that, unless we obtain the approval of our stockholders as required
by Nasdaq, the Company is prohibited from issuing any shares of common stock pursuant to the terms of the Series A-1 Preferred Stock,
if (i) the issuance of such shares of common stock upon conversion of the Series A-1 Preferred Stock would exceed 19.99% of the Company’s
outstanding shares of common stock as of December 22, 2023, or, (ii) if such issuance would otherwise exceed the aggregate number
of shares of common stock which the Company may issue without breaching its obligations under the rules and regulations of Nasdaq.
Accordingly, at the Annual
Meeting, stockholders will vote on the approval of the issuance of securities in the transaction contemplated by the Exchange Agreement
and the Series A-1 Preferred Stock, including the shares of common stock issuable upon conversion of the Series A-1 Preferred Stock.
The following is a summary
of the material features of the Series A-1 Preferred Stock. This summary is qualified in its entirety by the full text of the Certificate
of Designations of the Series A-1 Preferred Stock, a copy of which is attached to this Proxy Statement as Appendix A.
The Series A-1 Preferred Stock
Designation,
Amount, and Par Value. The number of Series A-1 Preferred Stock designated is 22,280 shares. The shares of Series A-1 Preferred
Stock have a par value of $0.001 per share and a stated value of $1,000 per share.
Conversion
Price. The Series A-1 Preferred Stock will be convertible into shares of Common Stock at an initial conversion price of $4.44
(subject to adjustment pursuant to the Series A-1 Certificate of Designations) (the “Conversion Price”). The
Certificate of Designations also provides that in the event of certain Triggering Events (as defined below) any holder may, at any time,
convert any or all of such holder’s Series A-1 Preferred Stock at an alternate conversion rate equal to the product of (i) the Alternate
Conversion Price (as defined below) and (ii) the quotient of (x) the 25% redemption premium multiplied by (y) the amount of Series A-1
Preferred Stock subject to such conversion. “Triggering Events” include, among others, (i) a suspension of trading or the
failure to be traded or listed on an eligible market for five consecutive days or more, (ii) the failure to remove restrictive legends
when required, (iii) the Company’s default in payment of indebtedness in an aggregate amount of $500,000 or more, (iv) proceedings
for a bankruptcy, insolvency, reorganization or liquidation, which are not dismissed with 30 days, (v) commencement of a voluntary bankruptcy
proceeding, and (viii) final judgments against the Company for the payment of money in excess of $100,000. “Alternate Conversion
Price” means the lowest of (i) the applicable conversion price the in effect, (ii) the greater of (x) $0.888 (the “Floor
Price”) and (y) 80% of the volume weighted average price (“VWAP”) of the Common Stock on the trading day immediately
preceding the delivery of the applicable conversion notice. Further, the Series A-1 Certificate of Designations provides that if on any
of the 90th and 180th day after each of the occurrence of any Stock Combination Event (as defined in the Series
A-1 Certificate of Designations) and the Applicable Date (as defined in the Series A-1 Certificate of Designations), the conversion price
then in effect is greater than the market price then in effect (the “Adjustment Price”), on such date then the conversion
price shall automatically lower to the Adjustment Price.
Dividends.
Holders of the Series A-1 Preferred Stock shall be entitled to receive dividends when and as declared by the Board, from time to time,
in its sole discretion, which Dividends shall be paid by the Company out of funds legally available therefor, payable, subject to the
conditions and other terms hereof, in cash, in securities of the Company or any other entity, or using assets as determined by the Board
on the Stated Value of such Preferred Share.
Liquidation. In
the event of a Liquidation Event (as defined in the Series A-1 Certificate of Designation), the holders the Series A-1 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 other shares
of capital stock of the Company, equal to the greater of (A) 125% of the Conversion Amount (as defined in the Series A-1 Certificate of
Designation) on the date of such payment and (B) the amount per share such holder of Series A-1 Preferred Stock would receive if they
converted such share of Series A-1 Preferred Stock into Common Stock immediately prior to the date of such payment
Company
Redemption. The Company may redeem all, or any portion, of the Series A-1 Preferred Stock for cash, at a price per share
of Series A-1 Preferred Stock equal to 115% of the greater of (i) the Conversion Amount (as defined in the Series A-1 Certificate of Designation)being
redeemed as of the Company Optional Redemption Date (as defined in the Series A-1 Certificate of Designation) and (ii) the product of
(1) the Conversion Rate (as defined in the Series A-1 Certificate of Designation) with respect to the Conversion Amount being redeemed
as of the Company Optional Redemption Date multiplied by (2) the greatest Closing Sale Price (as defined in the Certificate of Designation)
of the Common stock on any Trading Day during the period commencing on the date immediately preceding such Company Optional Redemption
Notice Date (as defined in the Certificate of Designation) and ending on the Trading Day immediately prior to the date the Company makes
the entire payment required to be made under the Certification of Designation.
Maximum
Percentage. Holders of Series A-1 Preferred Stock are prohibited from converting shares of Series A-1 Preferred Stock into shares
of Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own in excess of 4.99%
(the “Maximum Percentage”) of the total number of shares of Common Stock issued and outstanding immediately after giving effect
to such conversion.
Voting
Rights. The holders of the Series A-1 Preferred Stock 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 expressly provided in the Certificate of Designations and where required by the DGCL.
Effect on Current Stockholders
The issuance of shares of common
stock upon conversion of the Series A-1 Preferred Stock will not affect the rights of the holders of outstanding common stock, but such
issuances will have a dilutive effect on the existing stockholders, including the voting power and economic rights of the existing stockholders.
The Certificate of Designations
of Series A-1 Preferred Stock provides that the holder is prohibited from converting the Series A-1 Preferred Stock to the extent the
holder would beneficially own more than 4.99% of the Company’s outstanding shares of common stock after such conversion.
Unlike Nasdaq Rule 5635(d),
which limits the aggregate number of shares the Company may issue to the holder of the Series A-1 Preferred Stock, this beneficial ownership
limitation limits the number of shares the holder may beneficially own at any one time. Consequently, the number of shares the holder
may beneficially own in compliance with the beneficial ownership limitation may increase over time as the number of outstanding shares
of common stock increases over time. In addition, the holder may sell some or all of the shares it receives upon conversion of the Series
A-1 Preferred Stock, permitting it to acquire additional shares in compliance with the beneficial ownership limitation.
Description of Common Stock
The Company is currently authorized
to issue 100,000,000 shares of common stock, par value $0.001, and 3,000,000 shares of preferred stock, par value $0.001.
Common Stock
Voting
The holders of our common stock
are entitled to one vote for each share held on all matters to be voted on by the Company’s stockholders. There is no cumulative
voting.
Liquidation
In the event of any voluntary
or involuntary liquidation, dissolution or winding up of our affairs, the holders of our common stock will be entitled to share ratably
in the net assets legally available for distribution to stockholders after the payment of or provision for all of our debts and other
liabilities.
Fully Paid and Non-assessable
All outstanding shares of common
stock are duly authorized, validly issued, fully paid and non-assessable.
Dividends
The Company has not paid any
cash dividends on its common stock to date. Any future decisions regarding dividends will be made by its board of directors. The Company
does not anticipate paying dividends in the foreseeable future but expect to retain earnings to finance the growth of its business. The
Company’s board of directors has complete discretion on whether to pay dividends. Even if the Company’s board of directors
decides to pay dividends, the form, frequency and amount will depend upon the Company’s future operations and earnings, capital
requirements and surplus, general financial condition, contractual restrictions and other factors the board of directors may deem relevant.
Market
The Company’s common
stock is traded on the Nasdaq Capital Market under the symbol “ADTX.”
Anti-Takeover Provisions
Provisions of the General Corporation
Law of the State of Delaware (“DGCL”) and the Company’s Certificate of Incorporation and Bylaws could make it more difficult
to acquire the Company by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These
provisions, summarized below, are expected to discourage certain types of coercive takeover practices and takeover bids that the Company’s
board of directors may consider inadequate and to encourage persons seeking to acquire control of the Company to first negotiate with
its board of directors. The Company believes that the benefits of increased protection of its ability to negotiate with the proponent
of an unfriendly or unsolicited proposal to acquire or restructure the Company outweigh the disadvantages of discouraging takeover or
acquisition proposals because, among other things, negotiation of these proposals could result in improved terms for its stockholders.
Delaware Anti-Takeover Statute. We
may become subject to Section 203 of the DGCL, which prohibits persons deemed to be “interested stockholders” from engaging
in a “business combination” with a publicly-held Delaware corporation for three years following the date these persons
become interested stockholders unless the business combination is, or the transaction in which the person became an interested stockholder
was, approved in a prescribed manner or another prescribed exception applies. Generally, an “interested stockholder” is a
person who, together with affiliates and associates, owns, or within three years prior to the determination of interested stockholder
status did own, 15% or more of a corporation’s voting stock. Generally, a “business combination” includes a merger,
asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. The existence of this provision
may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors. A Delaware corporation
may “opt out” of these provisions with an express provision in its original certificate of incorporation or an express provision
in its certificate of incorporation or bylaws resulting from a stockholders’ amendment approved by at least a majority of the outstanding
voting shares. We have not opted out of these provisions. As a result, mergers or other takeover or change in control attempts of us may
be discouraged or prevented.
Vacancies in the Board of
Directors. Our Certificate of Incorporation and Bylaws provide that, subject to limitations, any vacancy occurring
in its board of directors for any reason may be filled by a majority of the remaining members of its board of directors then in office.
Each director elected to fill a vacancy resulting from the death, resignation or removal of a director shall hold office until the expiration
of the term of the director whose death, resignation or removal created the vacancy.
Advance Notice of Nominations
and Stockholder Proposals. Our Bylaws establish an advance notice procedure for stockholder proposals to be
brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors.
At an annual meeting, stockholders may only consider proposals or nominations specified in the notice of meeting or brought before the
meeting by or at the direction of our board of directors. Stockholders may also consider a proposal or nomination by a person who was
a stockholder at the time of giving notice and at the time of the meeting, who is entitled to vote at the meeting and who has complied
with the notice requirements of our Bylaws in all respects. Our Bylaws do not give our board of directors the power to approve or disapprove
stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting of our stockholders.
However, our Bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed.
These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s
own slate of directors or otherwise attempting to obtain control of our company.
No Cumulative Voting. The
DGCL provides that stockholders are denied the right to cumulate votes in the election of directors unless our Certificate of Incorporation
provides otherwise. Our Certificate of Incorporation does not provide for cumulative voting.
Calling of a Stockholder
Meeting. Our Bylaws provide that a special meeting of our stockholders may be called only by our Chairman or
by resolution adopted by a majority of our board of directors. Because our stockholders do not have the right to call a special meeting,
a stockholder could not force stockholder consideration of a proposal over the opposition of our board of directors by calling a special
meeting of stockholders prior to such time as a majority of our board of directors, the chairperson of our board of directors, the president
or the chief executive officer believed the matter should be considered or until the next annual meeting provided that the requestor
met the notice requirements. The restriction on the ability of stockholders to call a special meeting means that a proposal to replace
our board of directors also could be delayed until the next annual meeting.
Exclusive Forum. Our
Certificate of Incorporation provides that unless the Company consents in writing to the selection of an alternative forum, the State
of Delaware is the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of us, (ii) any action
asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any
action asserting a claim against the us, our directors, officers or employees arising pursuant to any provision of the DGCL or our Certificate
of Incorporation or the Bylaws, or (iv) any action asserting a claim against us, our directors, officers, employees or agents governed
by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery
determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party
does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested
in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject
matter jurisdiction.
Additionally, our Bylaws provide
that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America
will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Any person
or entity purchasing or otherwise acquiring any interest in shares of our capital stock are deemed to have notice of and consented to
this provision. The Supreme Court of Delaware has held that this type of exclusive federal forum provision is enforceable. There may be
uncertainty, however, as to whether courts of other jurisdictions would enforce such a provision, if applicable.
Reasons for Stockholder Approval
Our common stock is listed
on The Nasdaq Capital Market, and, as such, we are subject to the Nasdaq Listing Rules. Nasdaq Listing Rule 5635(d) requires
stockholder approval prior to the issuance of securities in a transaction, other than a public offering, involving the sale, issuance
or potential issuance by us of common stock (or securities convertible into or exercisable for common stock), which equals 20% or more
of the common stock or 20% or more of the voting power outstanding before the issuance, at a price less than the lower of: (i) the
closing price immediately preceding the signing of the binding agreement, or (ii) the average closing price of the common stock for
the five trading days immediately preceding the signing of the binding agreement for the transaction.
The board has determined that
the ability to issue securities pursuant to the Certificate of Designations of the Series A-1 Preferred Stock is in the best interests
of the Company and its stockholders in order to comply with the terms of the Exchange Agreement and to receive the benefits of the Series
A-1 Preferred Stock upon conversion thereof.
Effect of Failure to Obtain Stockholder Approval
Pursuant to the Exchange Agreement
we are obligated to cause stockholder meetings to be held until Stockholder Approval is obtained.
Effect of Approval
Upon obtaining Stockholder
Approval requested in this proposal, we would no longer be bound by Nasdaq Listing Rule 5635(d)’s restriction on the number
or shares of common stock we are able to issue upon conversion of the Series A-1 Preferred Stock. As the conversion price of the Series
A-1 Preferred Stock could be adjusted downwards upon the occurrence of certain events in the future, we are unable to accurately predict
how many shares of common stock may be issuable upon full conversion of the Series A-1 Preferred Stock. As such, the additional shares
that the Company could issue to the holders of the Series A-1 Preferred Stock may result in significant dilution to existing stockholders,
a decline in our share price, or greater price volatility.
Each additional common share
that would be issuable to the holders of Series A-1 Preferred Stock would have the same rights and privileges as each of our currently
authorized common shares. See “— Description of Common Stock” above.
Interests of Officers and Directors in this
Proposal
Our officers and directors
do not have any substantial interest, direct or indirect, in in this proposal.
Required Vote of Stockholders
The affirmative vote of a majority
of the votes cast at the Annual Meeting is required to approve Proposal No. 3.
Board Recommendation
The board of directors unanimously
recommends a vote “FOR” Proposal No. 3.
PROPOSAL NO. 4:
THE SERIES B-1 PROPOSAL
Background
On
January 24, 2024, we entered into an Assignment and Assumption Agreement (the “Assignment
Agreement”) with the agent (the “Agent”) of certain secured creditors (the “Brain Creditors”) of Brain Scientific,
Inc., a Nevada corporation (“Brain Scientific”) and Philip J. von Kahle (the “Seller”), as assignee of Brain Scientific
and certain affiliated entities (collectively, the “Brain Companies”) under an assignment for the benefit of creditors pursuant
to Chapter 727 of the Florida Statutes. Pursuant to the Assignment Agreement, the Agent assigned its rights under that certain Asset Purchase
and Settlement Agreement dated October 31, 2023 between the Seller and the Agent (the “Asset Purchase Agreement”) to the Company
in consideration for the issuance by the Company of an aggregate of 6,000 shares of a new series of convertible preferred stock of
the Company, designated as Series B-1 Convertible Preferred Stock, $0.001 par value (the “Series B-1 Preferred Stock”). The
shares of Series B-1 Preferred Stock were issued pursuant to a Securities Purchase Agreement entered into by and between the Company and
each of the purchasers signatory thereto (the “Purchase Agreement”).
The
Purchase Agreement requires that we call and hold a meeting of our stockholders for the purpose of requesting the approval of any
matters requiring stockholder approval pursuant to the listing requirements of the Nasdaq Capital Market including, without limitation
the issuance of more than 20% of the outstanding shares of Common Stock, in connection with the transaction.
Nasdaq Listing Rule 5635(d) provides
that stockholder approval is required prior to the issuance of securities in a transaction, other than a public offering, involving the
sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable for common stock),
which equals 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance, at a price less than
the lower of: (i) the closing price immediately preceding the signing of the binding agreement, or (ii) the average closing
price of the common stock for the five trading days immediately preceding the signing of the binding agreement for the transaction.
See “— Reasons for Stockholder Approval” below.
In light of this rule, the
Certificate of Designations of the Series B-1 Preferred Stock provides that, unless we obtain the approval of our stockholders as required
by Nasdaq, the Company is prohibited from issuing any shares of common stock pursuant to the terms of the Series B-1 Preferred Stock,
if (i) the issuance of such shares of common stock upon conversion of the Series B-1 Preferred Stock would exceed 19.99% of the Company’s
outstanding shares of common stock as of January 24, 2024, or, (ii) if such issuance would otherwise exceed the aggregate number
of shares of common stock which the Company may issue without breaching its obligations under the rules and regulations of Nasdaq.
Accordingly, at the Annual
Meeting, stockholders will vote on the approval of the issuance of securities in the transaction contemplated by the Exchange Agreement
and the Series B-1 Preferred Stock, including the shares of common stock issuable upon conversion of the Series B-1 Preferred Stock.
The following is a summary
of the material features of the Series B-1 Preferred Stock. This summary is qualified in its entirety by the full text of the Certificate
of Designations of the Series B-1 Preferred Stock, a copy of which is attached to this Proxy Statement as Appendix B.
The Series B-1 Preferred Stock
Designation,
Amount, and Par Value. The number of Series B-1 Preferred Stock designated is 6,000 shares. The shares of Series B-1 Preferred
Stock have a par value of $0.001 per share and a stated value of $1,000 per share.
Conversion
Price. The Series B-1 Preferred Stock will be convertible into shares of Common Stock at an initial conversion price of $4.06
(subject to adjustment pursuant to the Series B-1 Certificate of Designations) (the “Conversion Price”). The
Series B-1 Certificate of Designations also provides that in the event of certain Triggering Events (as defined below) any holder may,
at any time, convert any or all of such holder’s Series B-1 Preferred Stock
at an alternate conversion rate equal to the product of (i) the Alternate Conversion Price (as defined below) and (ii) the quotient of
(x) the 125% redemption premium multiplied by (y) the amount of Series B-1 Preferred
Stock subject to such conversion. “Triggering Events” include, among others, (i) a suspension of trading or the failure to
be traded or listed on an eligible market for five consecutive days or more, (ii) the failure to remove restrictive legends when required,
(iii) the Company’s default in payment of indebtedness in an aggregate amount of $500,000 or more, (iv) proceedings for a bankruptcy,
insolvency, reorganization or liquidation, which are not dismissed with 30 days, (v) commencement of a voluntary bankruptcy proceeding,
and (viii) final judgments against the Company for the payment of money in excess of $500,000. “Alternate Conversion Price”
means the lowest of (i) the applicable conversion price the in effect, (ii) the greater of (x) $0.9420 (the “Floor Price”)
and (y) 80% of the lowest volume weighted average price (“VWAP”) of the Common Stock during the five consecutive trading day
period ending and including the trading day immediately preceding the delivery of the applicable conversion notice. Further, the Series B-1 Certificate
of Designations provides that if on any of the 90th and 180th day after each of the occurrence of any
Stock Combination Event (as defined in the Series B-1 Certificate of Designations)
and the Applicable Date (as defined in the Series B-1 Certificate of Designations),
the conversion price then in effect is greater than the market price then in effect (the “Adjustment Price”), on such date
then the conversion price shall automatically lower to the Adjustment Price.
Dividends.
Holders of the Series B-1 Preferred Stock shall be entitled to receive dividends when and as declared by the Board, from time to time,
in its sole discretion, which Dividends shall be paid by the Company out of funds legally available therefor, payable, subject to the
conditions and other terms hereof, in cash, in securities of the Company or any other entity, or using assets as determined by the Board
on the Stated Value of such Preferred Share.
Liquidation. In
the event of a Liquidation Event (as defined in the Series B-1 Certificate of Designations), the holders the Series B-1 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 other shares
of capital stock of the Company, equal to the greater of (A) 125% of the Conversion Amount (as defined in the Series B-1 Certificate of
Designation) on the date of such payment and (B) the amount per share such holder of Series B-1 Preferred Stock would receive if they
converted such share of Series B-1 Preferred Stock into Common Stock immediately prior to the date of such payment.
Company
Redemption. The Company may redeem all, or any portion, of the Series B-1 Preferred Stock for cash, at a price per share
of Series B-1 Preferred Stock equal to 115% of the greater of (i) the Conversion Amount (as defined in the Series B-1 Certificate of
Designations) being redeemed as of the Company Optional Redemption Date (as defined in the Series B-1 Certificate of Designations) and
(ii) the product of (1) the Conversion Rate (as defined in the Series B-1 Certificate of Designations) with respect to the Conversion
Amount being redeemed as of the Company Optional Redemption Date multiplied by (2) the greatest Closing Sale Price (as defined in the
Series B-1 Certificate of Designations) of the Common Stock on any Trading Day during the period commencing on the date immediately preceding
such Company Optional Redemption Notice Date (as defined in the Series B-1 Certificate of Designations) and ending on the Trading Day
immediately prior to the date the Company makes the entire payment required to be made under the Certification of Designation.
Maximum
Percentage. Holders of Series B-1 Preferred Stock are prohibited from converting shares of Series B-1 Preferred Stock into shares
of Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own in excess of 4.99%
(the “Maximum Percentage”) of the total number of shares of Common Stock issued and outstanding immediately after giving effect
to such conversion.
Voting
Rights. The holders of the Series B-1 Preferred Stock 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 expressly provided in the Series B-1 Certificate of Designations and where required by the DGCL.
Effect on Current Stockholders
The issuance of shares of common
stock upon conversion of the Series B-1 Preferred Stock will not affect the rights of the holders of outstanding common stock, but such
issuances will have a dilutive effect on the existing stockholders, including the voting power and economic rights of the existing stockholders.
The Certificate of Designations
of Series B-1 Preferred Stock provides that the holder is prohibited from converting the Series B-1 Preferred Stock to the extent the
holder would beneficially own more than 4.99% of the Company’s outstanding shares of common stock after such conversion.
Unlike Nasdaq Rule 5635(d),
which limits the aggregate number of shares the Company may issue to the holder of the Series B-1 Preferred Stock, this beneficial ownership
limitation limits the number of shares the holder may beneficially own at any one time. Consequently, the number of shares the holder
may beneficially own in compliance with the beneficial ownership limitation may increase over time as the number of outstanding shares
of common stock increases over time. In addition, the holder may sell some or all of the shares it receives upon conversion of the Series
B-1 Preferred Stock, permitting it to acquire additional shares in compliance with the beneficial ownership limitation.
Reasons for Stockholder Approval
Our common stock is listed
on The Nasdaq Capital Market, and, as such, we are subject to the Nasdaq Marketplace Rules. Nasdaq Marketplace Rule 5635(d) requires
stockholder approval prior to the issuance of securities in a transaction, other than a public offering, involving the sale, issuance
or potential issuance by us of common stock (or securities convertible into or exercisable for common stock), which equals 20% or more
of the common stock or 20% or more of the voting power outstanding before the issuance, at a price less than the lower of: (i) the
closing price immediately preceding the signing of the binding agreement, or (ii) the average closing price of the common stock for
the five trading days immediately preceding the signing of the binding agreement for the transaction.
The board has determined
that the ability to issue securities pursuant to the Certificate of Designations of the Series B-1 Preferred Stock is in the best interests
of the Company and its stockholders in order to comply with the terms of the Purchase Agreement and to receive the benefits of the Series
B-1 Preferred Stock upon conversion thereof.
Effect of Failure to Obtain Stockholder Approval
Pursuant to the Purchase Agreement
we are obligated to cause stockholder meetings to be held until stockholder approval is obtained.
Effect of Approval
Upon obtaining stockholder
approval requested in this proposal, we would no longer be bound by Nasdaq Listing Rule 5635(d)’s restriction on the number
or shares of common stock we are able to issue upon conversion of the Series B-1 Preferred Stock.
Each additional common share
that would be issuable to the holders of Series B-1 Preferred Stock would have the same rights and privileges as each of our currently
authorized common shares. See “— Description of Common Stock” under Proposal No. 3 above.
Interests of Officers and Directors in this
Proposal
Our officers and directors
do not have any substantial interest, direct or indirect, in in this proposal.
Required Vote of Stockholders
The affirmative vote of a majority
of the votes cast at the Annual Meeting is required to approve Proposal No. 4.
Board Recommendation
The board of directors unanimously
recommends a vote “FOR” Proposal No. 4.
PROPOSAL NO. 5:
THE SERIES B-2 PROPOSAL
Background
On
July 28, 2023, we entered into a Securities Purchase Agreement with an accredited investor
(the “Noteholder”), pursuant to which we issued and sold a secured promissory note in the principal amount of $2,625,000
(the “Note”). On December 29, 2023, we entered into an Exchange Agreement (the “Note Exchange Agreement”)
with the Noteholder, pursuant to which the Noteholder agreed, subject to the terms and conditions set forth therein, to exchange the Note,
including all accrued but unpaid interest thereon, for an aggregate of 2,625 shares of a new series of convertible preferred stock of
the Company, designated as Series B-2 Convertible Preferred Stock, $0.001 par value (the “Series B-2 Preferred Stock”).
The
Note Exchange Agreement requires that we call and hold a meeting of our stockholders for the purpose of requesting the approval
of any matters requiring stockholder approval pursuant to the listing requirements of the Nasdaq Capital Market including, without limitation
the issuance of more than 20% of the outstanding shares of Common Stock, in connection with the transaction.
Nasdaq Listing Rule 5635(d) provides
that stockholder approval is required prior to the issuance of securities in a transaction, other than a public offering, involving the
sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable for common stock),
which equals 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance, at a price less than
the lower of: (i) the closing price immediately preceding the signing of the binding agreement, or (ii) the average closing
price of the common stock for the five trading days immediately preceding the signing of the binding agreement for the transaction.
See “— Reasons for Stockholder Approval” below.
In light of this rule, the
Certificate of Designations of the Series B-2 Preferred Stock provides that, unless we obtain the approval of our stockholders as required
by Nasdaq, the Company is prohibited from issuing any shares of common stock pursuant to the terms of the Series B-2 Preferred Stock,
if (i) the issuance of such shares of common stock upon conversion of the Series B-2 Preferred Stock would exceed 19.99% of the Company’s
outstanding shares of common stock as of December 29, 2023, or, (ii) if such issuance would otherwise exceed the aggregate number
of shares of common stock which the Company may issue without breaching its obligations under the rules and regulations of Nasdaq.
Accordingly, at the Annual
Meeting, stockholders will vote on the approval of the issuance of securities in the transaction contemplated by the Note Exchange Agreement
and the Series B-2 Preferred Stock, including the shares of common stock issuable upon conversion of the Series B-2 Preferred Stock.
The following is a summary
of the material features of the Series B-2 Preferred Stock. This summary is qualified in its entirety by the full text of the Certificate
of Designations of the Series B-2 Preferred Stock, a copy of which is attached to this Proxy Statement as Appendix C.
The Series B-2 Preferred Stock
Designation,
Amount, and Par Value. The number of Series B-2 Preferred Stock designated is 2,625 shares. The shares of Series B-2 Preferred
Stock have a par value of $0.001 per share and a stated value of $1,000 per share.
Conversion
Price. The Series B-2 Preferred Stock will be convertible into shares of Common Stock at an initial conversion price of $4.71
(subject to adjustment pursuant to the Series B-2 Certificate of Designations) (the “Conversion Price”). The
Series B-2 Certificate of Designations also provides that in the event of certain Triggering Events (as defined below) any holder may,
at any time, convert any or all of such holder’s Series B-2 Preferred Stock
at an alternate conversion rate equal to the product of (i) the Alternate Conversion Price (as defined below) and (ii) the quotient of
(x) the 125% redemption premium multiplied by (y) the amount of Series B-2 Preferred
Stock subject to such conversion. “Triggering Events” include, among others, (i) a suspension of trading or the failure to
be traded or listed on an eligible market for five consecutive days or more, (ii) the failure to remove restrictive legends when required,
(iii) the Company’s default in payment of indebtedness in an aggregate amount of $500,000 or more, (iv) proceedings for a bankruptcy,
insolvency, reorganization or liquidation, which are not dismissed with 30 days, (v) commencement of a voluntary bankruptcy proceeding,
and (viii) final judgments against the Company for the payment of money in excess of $500,000. “Alternate Conversion Price”
means the lowest of (i) the applicable conversion price the in effect, (ii) the greater of (x) $0.9420 (the “Floor Price”)
and (y) 80% of the lowest volume weighted average price (“VWAP”) of the Common Stock during the five consecutive trading day
period ending and including the the trading day immediately preceding the delivery of the applicable conversion notice. Further, the Series B-2 Certificate
of Designations provides that if on any of the 90th and 180th day after each of the occurrence of any Stock Combination
Event (as defined in the Series B-2 Certificate of Designations) and the Applicable
Date (as defined in the Series B-2 Certificate of Designations), the conversion
price then in effect is greater than the market price then in effect (the “Adjustment Price”), on such date then the
conversion price shall automatically lower to the Adjustment Price.
Dividends.
Holders of the Series B-2 Preferred Stock shall be entitled to receive dividends when and as declared by the Board, from time to time,
in its sole discretion, which Dividends shall be paid by the Company out of funds legally available therefor, payable, subject to the
conditions and other terms hereof, in cash, in securities of the Company or any other entity, or using assets as determined by the Board
on the Stated Value of such Preferred Share.
Liquidation. In
the event of a Liquidation Event (as defined in the Series B-2 Certificate of Designations), the holders the Series B-2 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 other shares
of capital stock of the Company, equal to the greater of (A) 125% of the Conversion Amount (as defined in the Series B-2 Certificate of
Designation) on the date of such payment and (B) the amount per share such holder of Series B-2 Preferred Stock would receive if they
converted such share of Series B-2 Preferred Stock into Common Stock immediately prior to the date of such payment.
Company
Redemption. The Company may redeem all, or any portion, of the Series B-2 Preferred Stock for cash, at a price per share
of Series B-2 Preferred Stock equal to 115% of the greater of (i) the Conversion Amount (as defined in the Series B-2 Certificate of Designations)
being redeemed as of the Company Optional Redemption Date (as defined in the Series B-2 Certificate of Designations) and (ii) the product
of (1) the Conversion Rate (as defined in the Series B-2 Certificate of Designations) with respect to the Conversion Amount being redeemed
as of the Company Optional Redemption Date multiplied by (2) the greatest Closing Sale Price (as defined in the Series B-2 Certificate
of Designations) of the Common Stock on any Trading Day during the period commencing on the date immediately preceding such Company Optional
Redemption Notice Date (as defined in the Series B-2 Certificate of Designations) and ending on the Trading Day immediately prior to the
date the Company makes the entire payment required to be made under the Certification of Designation.
Maximum
Percentage. Holders of Series B-2 Preferred Stock are prohibited from converting shares of Series B-2 Preferred Stock into shares
of Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own in excess of 4.99%
(the “Maximum Percentage”) of the total number of shares of Common Stock issued and outstanding immediately after giving
effect to such conversion.
Voting
Rights. The holders of the Series B-2 Preferred Stock 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 expressly provided in the Series B-2 Certificate of Designations and where required by the DGCL.
Effect on Current Stockholders
The issuance of shares of common
stock upon conversion of the Series B-2 Preferred Stock will not affect the rights of the holders of outstanding common stock, but such
issuances will have a dilutive effect on the existing stockholders, including the voting power and economic rights of the existing stockholders.
The Certificate of Designations
of Series B-2 Preferred Stock provides that the holder is prohibited from converting the Series B-2 Preferred Stock to the extent the
holder would beneficially own more than 4.99% of the Company’s outstanding shares of common stock after such conversion.
Unlike Nasdaq Rule 5635(d),
which limits the aggregate number of shares the Company may issue to the holder of the Series B-2 Preferred Stock, this beneficial ownership
limitation limits the number of shares the holder may beneficially own at any one time. Consequently, the number of shares the holder
may beneficially own in compliance with the beneficial ownership limitation may increase over time as the number of outstanding shares
of common stock increases over time. In addition, the holder may sell some or all of the shares it receives upon conversion of the Series
B-2 Preferred Stock, permitting it to acquire additional shares in compliance with the beneficial ownership limitation.
Reasons for Stockholder Approval
Our common stock is listed
on The Nasdaq Capital Market, and, as such, we are subject to the Nasdaq Marketplace Rules. Nasdaq Marketplace Rule 5635(d) requires
stockholder approval prior to the issuance of securities in a transaction, other than a public offering, involving the sale, issuance
or potential issuance by us of common stock (or securities convertible into or exercisable for common stock), which equals 20% or more
of the common stock or 20% or more of the voting power outstanding before the issuance, at a price less than the lower of: (i) the
closing price immediately preceding the signing of the binding agreement, or (ii) the average closing price of the common stock for
the five trading days immediately preceding the signing of the binding agreement for the transaction.
The board has determined that
the ability to issue securities pursuant to the Certificate of Designations of the Series B-2 Preferred Stock is in the best interests
of the Company and its stockholders in order to comply with the terms of the Note Exchange Agreement and to receive the benefits of the
Series B-2 Preferred Stock upon conversion thereof.
Effect of Failure to Obtain Stockholder Approval
Pursuant to the Note Exchange
Agreement we are obligated to cause stockholder meetings to be held until stockholder approval is obtained.
Effect of Approval
Upon obtaining stockholder
approval requested in this proposal, we would no longer be bound by Nasdaq Listing Rule 5635(d)’s restriction on the number
or shares of common stock we are able to issue upon conversion of the Series B-2 Preferred Stock.
Each additional common share
that would be issuable to the holders of Series B-2 Preferred Stock would have the same rights and privileges as each of our currently
authorized common shares. See “— Description of Common Stock” under Proposal No. 3 above.
Interests of Officers and Directors in this
Proposal
Our officers and directors
do not have any substantial interest, direct or indirect, in in this proposal.
Required Vote of Stockholders
The affirmative vote of a majority
of the votes cast at the Annual Meeting is required to approve Proposal No. 5.
Board Recommendation
The board of directors unanimously
recommends a vote “FOR” Proposal No. 5.
PROPOSAL NO. 6:
THE ELOC PROPOSAL
Background
On
May 2, 2024, we entered into a Common Stock Purchase Agreement (the “Common Stock Purchase Agreement”) with
an equity line investor (the “Investor”), pursuant
to which the Investor has agreed to purchase from us, at our direction from time to time, in our sole discretion, from and after the date
effective date of the Registration Statement (as defined below) and until the termination of the Common Stock Purchase Agreement in accordance
with the terms thereof, shares of the our common stock having a total maximum aggregate purchase price of $150,000,000 (the “Purchase
Shares”), upon the terms and subject to the conditions and limitations set forth in the Common
Stock Purchase Agreement. In connection with the Common Stock Purchase Agreement, we also entered into a Registration Rights Agreement
with the Investor (the “Registration Rights Agreement”), pursuant to which we
agreed to file a registration statement with the Securities and Exchange Commission covering the resale of the shares of common stock
issued to the Investor pursuant to the Common Stock Purchase Agreement (the “Registration Statement”)
by the later of (i) the 30th calendar day following
the closing date, and (ii) the second business day following Stockholder Approval (defined below).
We
may, from time to time and at our sole discretion, direct the Investor to purchase shares of our common stock upon the satisfaction
of certain conditions set forth in the Common Stock Purchase Agreement at a purchase price per share based on the market price of our
common stock at the time of sale as computed under the Common Stock Purchase Agreement. There is no upper limit on the price per share
that the Investor could be obligated to pay for common stock under the Common Stock Purchase Agreement. We will control the
timing and amount of any sales of our common stock to the Investor, and the Investor has no right to require us to sell
any shares to it under the Common Stock Purchase Agreement. Actual sales of shares of common stock to the Investor under the
Common Stock Purchase Agreement will depend on a variety of factors to be determined by us from time to time, including (among others)
market conditions, the trading price of our common stock and determinations by us as to available and appropriate sources of funding for
the Company and its operations. The Investor may not assign or transfer its rights and obligations under the Common Stock Purchase
Agreement.
Under
the applicable Nasdaq rules, in no event may we issue to the Investor under the Common Stock Purchase Agreement more than 332,876
shares of common stock, which number of shares is equal to 19.99% of the shares of the common stock outstanding immediately prior to the
execution of the Common Stock Purchase Agreement (the “Exchange Cap”), unless (i) we obtain stockholder approval to issue
shares of common stock in excess of the Exchange Cap in accordance with applicable Nasdaq rules (“Stockholder Approval”),
or (ii) the average price per share paid by the Investor for all of the shares of common stock that we direct the Investor to
purchase from us pursuant to the Common Stock Purchase Agreement, if any, equals or exceeds the official closing sale price on the Nasdaq
Capital Market immediately preceding the delivery of the applicable purchase notice to the Investor and (B) the average of the closing
sale prices of our common stock on the Nasdaq Capital market for the five business days immediately preceding the delivery of such purchase
notice.
In
all cases, we may not issue or sell any shares of common stock to the Investor under the Common Stock Purchase Agreement which,
when aggregated with all other shares of our common stock then beneficially owned by the Investor and its affiliates, would
result in the Investor beneficially owning more than 4.99% of the outstanding shares of our common stock.
The
net proceeds under the Common Stock Purchase Agreement to us will depend on the frequency and prices at which we sell shares of its stock
to the Investor. We expect that any proceeds received by us from such sales to the Investor will be used for working capital
and general corporate purposes.
As
consideration for the Investor’s commitment to purchase shares of common stock at our direction upon the terms and subject to the
conditions set forth in the Common Stock Purchase Agreement, the Company shall pay the Investor a commitment fee as outlined in the Common
Stock Purchase Agreement, which is payable on the later of (i) January 2, 2025 and (ii) the trading day following the date on which Stockholder
Approval is obtained.
The foregoing is a summary
of the material terms of the Common Stock Purchase Agreement. The summary is qualified in its entirety by the full text of the Common
Stock Purchase Agreement, a copy of which is attached to this Proxy Statement as Appendix D.
Effect on Current Stockholders
The issuance of shares of common
stock pursuant to the Common Stock Purchase Agreement will not affect the rights of the holders of outstanding common stock, but such
issuances will have a dilutive effect on the existing stockholders, including the voting power and economic rights of the existing stockholders.
The
Common Stock Purchase Agreement provides that we may not issue or sell any shares of common stock to the Investor under
the Common Stock Purchase Agreement which, when aggregated with all other shares of our common stock then beneficially owned by the
Investor and its affiliates, would result in the Investor beneficially owning more than 4.99% of the outstanding shares
of our common stock..
Unlike Nasdaq Rule 5635(d),
which limits the aggregate number of shares the Company may issue to the Investor under the Common Stock Purchase Agreement, this beneficial
ownership limitation limits the number of shares the Investor may beneficially own at any one time. Consequently, the number of shares
the Investor may beneficially own in compliance with the beneficial ownership limitation may increase over time as the number of outstanding
shares of common stock increases over time. In addition, the Investor may sell some or all of the shares it purchases under the Common
Stock Purchase Agreement, permitting it to acquire additional shares in compliance with the beneficial ownership limitation.
Reasons for Stockholder Approval
Our common stock is listed
on The Nasdaq Capital Market, and, as such, we are subject to the Nasdaq Marketplace Rules. Nasdaq Marketplace Rule 5635(d) requires
stockholder approval prior to the issuance of securities in a transaction, other than a public offering, involving the sale, issuance
or potential issuance by us of common stock (or securities convertible into or exercisable for common stock), which equals 20% or more
of the common stock or 20% or more of the voting power outstanding before the issuance, at a price less than the lower of: (i) the
closing price immediately preceding the signing of the binding agreement, or (ii) the average closing price of the common stock for
the five trading days immediately preceding the signing of the binding agreement for the transaction.
The board has determined that
the ability to issue securities pursuant to the Common Stock Purchase Agreement is in the best interests of the Company and its stockholders
in order to comply with the terms of the Common Stock Purchase Agreement and to receive the benefits of the Common Stock Purchase Agreement.
Effect of Failure to Obtain Stockholder Approval
Pursuant to the Common Stock
Purchase Agreement we are obligated to cause stockholder meetings to be held until stockholder approval is obtained.
Effect of Approval
Upon obtaining stockholder
approval requested in this proposal, we would no longer be bound by Nasdaq Listing Rule 5635(d)’s restriction on the number
or shares of common stock we are able to issue under the Common Stock Purchase Agreement.
Each additional common share
that would be issuable under the Common Stock Purchase Agreement would have the same rights and privileges as each of our currently authorized
common shares. See “— Description of Common Stock” under Proposal No. 3 above.
Interests of Officers and Directors in this
Proposal
Our officers and directors
do not have any substantial interest, direct or indirect, in in this proposal.
Required Vote of Stockholders
The affirmative vote
of a majority of the votes cast at the Annual Meeting is required to approve Proposal No. 6.
Board Recommendation
The board of directors
unanimously recommends a vote “FOR” Proposal No. 6.
PROPOSAL NO. 7:
THE AUTHORIZED SHARE INCREASE PROPOSAL
Background
Our
Amended and Restated Certificate of Incorporation, as amended, currently provides for the issuance of
100,000,000 shares of common stock, $0.001 par value per share, and 3,000,000 shares of preferred stock, $0.001 par value per share.
Our board has approved an amendment to increase the number of authorized common stock from 100,000,000 shares to 1,000,000,000
shares.
Reasons for the Increase in Authorized Common Stock Amendment
Our Board determined that the
Authorized Share Increase is in the best interests of the Company and unanimously recommends approval by shareholders. The Board believes
that the availability of additional authorized shares of common stock is required for several reasons including, but not limited to, the
additional flexibility to issue common stock for a variety of general corporate purposes as the Board may determine to be desirable including,
without limitation, future financings, investment opportunities, acquisitions, or other distributions and stock splits (including splits
effected through the declaration of stock dividends). In addition, certain of our securities are exercisable for shares of our common
stock. Therefore, we must maintain a sufficient amount of authorized, but unissued shares of common stock adequate to issue shares of
common stock upon the exercise of such securities.
As of the Record Date,
there were 1,993,682 shares of our common stock issued out of the 100,000,000 shares of common stock that we are authorized to issue.
In addition, as of the Record Date, an aggregate of approximately 165,000,000 shares of common stock have been reserved for future issuance,
including: (i) an aggregate of 5,018,019 shares reserved for issuance upon a standard conversion of our Series A-1 Preferred Stock; (ii)
an aggregate of 1,477,833 shares reserved for issuance upon a standard conversion of our Series B-1 Preferred Stock; (iii) an aggregate
of 557,325 shares reserved for issuance upon a standard conversion of our Series B-2 Preferred Stock; (iv) an aggregate of 1,613,103
shares reserved for issuance upon a standard conversion of our Series C-1 Preferred Stock; (v) an aggregate of 150,000,000 shares reserved
for issuance under our Common Stock Purchase Agreement, pending shareholder approval; (vi) an aggregate of 5,097,050 reserved for issuance
upon the exercise of outstanding warrants; and (vii) 45,572 shares of common stock reserved for issuance upon the exercise of outstanding
options. Thus, we have approximately zero shares of common stock available for future issuance at this time. Our working capital requirements
are significant and may require us to raise additional capital through additional equity financings in the future.
The proposed form of
Authorized Share Increase amendment to our certificate of incorporation is attached as Appendix E to this Proxy
Statement.
Effects of the Increase in Authorized Common Stock
Following the filing of the
Authorized Share Increase amendment with the Secretary of State of the State of Delaware, we will have the authority to issue up to 1,000,000,000
shares of common stock. These shares may be issued without shareholder approval at any time, in the sole discretion of our Board. The
authorized and unissued shares may be issued for cash or for any other purpose that is deemed in the best interests of our Company.
In addition, the Authorized
Share Increase amendment could have a number of effects on our Company’s shareholders depending upon the exact nature and circumstances
of any actual issuances of authorized but unissued shares. If we issue additional shares of common stock or other securities convertible
or exercisable into shares of our common stock in the future, it could dilute the voting rights of existing shareholders and could also
dilute earnings per share and book value per share of existing shareholders. The increase in authorized number of common stock could also
discourage or hinder efforts by other parties to obtain control of our Company, thereby having an anti-takeover effect. The increase in
authorized number of common stock is not being proposed in response to any known threat to acquire control of our Company.
The Authorized Share Increase
amendment will not change the number of shares of common stock issued and outstanding, nor will it have any immediate dilutive effect
or change the rights of current holders of the our common stock.
Procedure for Implementing the Amendment
The Authorized Share Increase
amendment will become effective upon the filing or such later time as specified in the filing with the Secretary of State of the State
of Delaware. The exact timing of the filing of the Authorized Share Increase amendment will be determined by our Board based on its evaluation
as to when such action will be the most advantageous to our Company and our shareholders.
Required Vote of Shareholders
The affirmative vote
of the holders of a majority of the outstanding shares of our common stock and Series D-1 Preferred Stock is required to approve Proposal
No. 7.
Board Recommendation
The board of directors
unanimously recommends a vote “FOR” Proposal No. 7.
PROPOSAL NO. 8:
THE REVERSE SPLIT PROPOSAL
Background
Our board of directors
has approved an amendment to our Certificate of Incorporation, as amended, to combine the outstanding shares of our common stock into
a lesser number of outstanding shares (a “Reverse Stock Split”). If approved by the stockholders as proposed, the board of
directors would have the sole discretion to effect the Reverse Stock Split, if at all, within one (1) year of the date the proposal
is approved by stockholders and to fix the specific ratio for the combination within a range of one-for-five (1:5) to a maximum of a
one-for-two hundred (1:200) split. The board of directors has the discretion to abandon the amendment and not implement the Reverse Stock
Split.
If approved by our stockholders,
this proposal would permit (but not require) the board of directors to effect a Reverse Stock Split of the outstanding shares of our
common stock within one (1) year of the date the proposal is approved by stockholders, at a specific ratio within a range of one-for-five
(1:5) to a maximum of a one-for-two hundred (1:200) split, with the specific ratio to be fixed within this range by the board of directors
in its sole discretion without further stockholder approval. We believe that enabling the board of directors to fix the specific ratio
of the Reverse Stock Split within the stated range will provide us with the flexibility to implement it in a manner designed to maximize
the anticipated benefits for our stockholders.
In fixing the ratio, the board
of directors may consider, among other things, factors such as: the initial and continued listing requirements of the Nasdaq Capital Market;
the number of shares of our common stock outstanding; potential financing opportunities; and prevailing general market and economic conditions.
The Reverse Stock Split, if
approved by our stockholders, would become effective upon the filing of the amendment to our certificate of incorporation with the Secretary
of State of the State of Delaware, or at the later time set forth in the amendment. The exact timing of the amendment will be determined
by the board of directors based on its evaluation as to when such action will be the most advantageous to our Company and our stockholders.
In addition, the board of directors reserves the right, notwithstanding stockholder approval and without further action by the stockholders,
to abandon the amendment and the Reverse Stock Split if, at any time prior to the effectiveness of the filing of the amendment with the
Secretary of State of the State of Delaware, the board of directors, in its sole discretion, determines that it is no longer in our best
interest and the best interests of our stockholders to proceed.
The proposed form of amendment
to our certificate of incorporation to effect the Reverse Stock Split is attached as Appendix F to this Proxy Statement. Any amendment
to our certificate of incorporation to effect the Reverse Stock Split will include the Reverse Stock Split ratio fixed by the board of
directors, within the range approved by our stockholders.
Reasons for the Reverse Stock Split
The Company’s primary
reasons for approving and recommending the Reverse Stock Split are to make our common stock more attractive to certain institutional investors,
which would provide for a stronger investor base and to increase the per share price and bid price of our common stock to regain compliance
with the continued listing requirements of Nasdaq.
In evaluating whether to seek
stockholder approval for the Reverse Stock Split, our Board took into consideration negative factors associated with reverse stock splits.
These factors include: the negative perception of reverse stock splits that investors, analysts and other stock market participants may
hold; the fact that the stock prices of some companies that have effected reverse stock splits have subsequently declined, sometimes significantly,
following their reverse stock splits; the possible adverse effect on liquidity that a reduced number of outstanding shares could cause;
and the costs associated with implementing a reverse stock split. Even if our stockholders approve the Reverse Stock Split, our Board
reserves the right not to effect the Reverse Stock Split if in our Board’s opinion it would not be in the best interests of the
Company or our stockholders to effect such Reverse Stock Split.
Reducing the number of outstanding
shares of our common stock through the Reverse Stock Split is intended, absent other factors, to increase the per share market price of
our common stock. However, other factors, such as our financial results, market conditions and the market perception of our business may
adversely affect the market price of our common stock. As a result, there can be no assurance that the Reverse Stock Split, if completed,
will result in the intended benefits described above, that the market price of our common stock will increase following the Reverse Stock
Split, that as a result of the Reverse Stock Split we will be able to meet or maintain a bid price over the minimum bid price requirement
of Nasdaq or that the market price of our common stock will not decrease in the future. Additionally, we cannot assure you that the market
price per share of our common stock after the Reverse Stock Split will increase in proportion to the reduction in the number of shares
of our common stock outstanding before the Reverse Stock Split. Accordingly, the total market capitalization of our common stock after
the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split.
In addition, the Company believes
the Reverse Stock Split will make its common stock more attractive to a broader range of investors, as it believes that the current market
price of the common stock may prevent certain institutional investors, professional investors and other members of the investing public
from purchasing stock. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them
from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Furthermore,
some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers.
Moreover, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions
on higher-priced stocks, the current average price per share of common stock can result in individual stockholders paying transaction
costs representing a higher percentage of their total share value than would be the case if the share price were higher. The Company believes
that the Reverse Stock Split will make our common stock a more attractive and cost effective investment for many investors, which in turn
would enhance the liquidity of the holders of our common stock.
Potential Effects of the Proposed Amendment
If our stockholders approve
the Reverse Stock Split and the board of directors effects it, the number of shares of common stock issued and outstanding will be reduced,
depending upon the ratio determined by the board of directors. The Reverse Stock Split will affect all holders of our common stock uniformly
and will not affect any stockholder’s percentage ownership interest in the Company, except that as described below in “Fractional
Shares,” record holders of common stock otherwise entitled to a fractional share as a result of the Reverse Stock Split because
they hold a number of shares not evenly divisible by the Reverse Stock Split ratio will automatically be entitled to receive an additional
fraction of a share of common stock to round up to the next whole share. In addition, the Reverse Stock Split will not affect any stockholder’s
proportionate voting power (subject to the treatment of fractional shares).
The Reverse Stock Split will
not change the terms of the common stock. Additionally, the Reverse Stock Split will have no effect on the number of common stock that
we are authorized to issue. After the Reverse Stock Split, the shares of common stock will have the same voting rights and rights to dividends
and distributions and will be identical in all other respects to the common stock now authorized. The common stock will remain fully paid
and non-assessable.
After the effective time of
the Reverse Stock Split, we will continue to be subject to the periodic reporting and other requirements of the Exchange Act.
Registered “Book-Entry” Holders
of Common Stock
Our registered holders of common
stock hold some or all of their shares electronically in book-entry form with the transfer agent. These stockholders do not have stock
certificates evidencing their ownership of the common stock. They are, however, provided with statements reflecting the number of shares
registered in their accounts.
Stockholders who hold shares
electronically in book-entry form with the transfer agent will not need to take action to receive evidence of their shares of post-Reverse
Stock Split common stock.
Holders of Certificated Shares of Common Stock
Stockholders holding shares
of our common stock in certificated form will be sent a transmittal letter by the transfer agent after the effective time of the Reverse
Stock Split. The letter of transmittal will contain instructions on how a stockholder should surrender his, her or its certificate(s) representing
shares of our common stock (the “Old Certificates”) to the transfer agent. Unless a stockholder specifically requests
a new paper certificate or holds restricted shares, upon the stockholder’s surrender of all of the stockholder’s Old Certificates
to the transfer agent, together with a properly completed and executed letter of transmittal, the transfer agent will register the appropriate
number of shares of post-Reverse Stock Split common stock electronically in book-entry form and provide the stockholder with a statement
reflecting the number of shares registered in the stockholder’s account. No stockholder will be required to pay a transfer or other
fee to exchange his, her or its Old Certificates. Until surrendered, we will deem outstanding Old Certificates held by stockholders to
be cancelled and only to represent the number of shares of post-Reverse Stock Split common stock to which these stockholders are entitled.
Any Old Certificates submitted for exchange, whether because of a sale, transfer or other disposition of stock, will automatically be
exchanged for appropriate number of shares of post-Reverse Stock Split common stock. If an Old Certificate has a restrictive legend on
its reverse side, a new certificate will be issued with the same restrictive legend on its reverse side.
STOCKHOLDERS SHOULD NOT
DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Fractional Shares
We will not issue fractional
shares in connection with the Reverse Stock Split. Instead, stockholders who otherwise would be entitled to receive fractional shares
because they hold a number of shares not evenly divisible by the Reverse Stock Split ratio will automatically be entitled to receive an
additional fraction of a share of common stock to round down to the next whole share. In any event, cash will not be paid for fractional
shares.
Effect of the Reverse Stock Split on Outstanding
Stock Options and Warrants
Based upon the Reverse Stock
Split ratio, proportionate adjustments are generally required to be made to the per share exercise price and the number of shares issuable
upon the exercise of all outstanding options and warrants. This would result in approximately the same aggregate price being required
to be paid under such options or warrants upon exercise, and approximately the same value of shares of common stock being delivered upon
such exercise immediately following the Reverse Stock Split as was the case immediately preceding the Reverse Stock Split. The number
of shares reserved for issuance pursuant to these securities will be reduced proportionately based upon the Reverse Stock Split ratio.
Accounting Matters
The proposed amendment to our
Certificate of Incorporation will not affect the par value of our common stock. As a result, at the effective time of the Reverse Stock
Split, the stated capital on our balance sheet attributable to the common stock will be reduced in the same proportion as the Reverse
Stock Split ratio, and the additional paid-in capital account will be credited with the amount by which the stated capital is reduced.
The per share net income or loss will be restated for prior periods to conform to the post-Reverse Stock Split presentation.
Certain Federal Income Tax Consequences of
the Reverse Stock Split
The following summary describes,
as of the date of this proxy statement, certain U.S. federal income tax consequences of the Reverse Stock Split to holders of our
common stock. This summary addresses the tax consequences only to a U.S. holder, which is a beneficial owner of our common stock
that is either:
| ● | an individual citizen or resident of the United States; |
| ● | a corporation, or other entity taxable as a corporation for
U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state thereof or the
District of Columbia; |
| ● | an estate, the income of which is subject to U.S. federal
income taxation regardless of its source; or |
| ● | a trust, if: (i) a court within the United States
is able to exercise primary jurisdiction over its administration and one or more U.S. persons has the authority to control all of
its substantial decisions or (ii) it was in existence before August 20, 1996 and a valid election is in place under applicable
Treasury regulations to treat such trust as a U.S. person for U.S. federal income tax purposes |
This summary is based on the
provisions of the Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury regulations, administrative rulings
and judicial authority, all as in effect as of the date of this proxy statement. Subsequent developments in U.S. federal income tax
law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal
income tax consequences of the Reverse Stock Split.
This summary does not address
all of the tax consequences that may be relevant to any particular investor, including tax considerations that arise from rules of general
application to all taxpayers or to certain classes of taxpayers or that are generally assumed to be known by investors. This summary also
does not address the tax consequences to (i) persons that may be subject to special treatment under U.S. federal income tax
law, such as banks, insurance companies, thrift institutions, regulated investment companies, real estate investment trusts, tax-exempt
organizations, U.S. expatriates, persons subject to the alternative minimum tax, persons whose functional currency is not the U.S. dollar,
partnerships or other pass-through entities, traders in securities that elect to mark to market and dealers in securities or currencies,
(ii) persons that hold our common stock as part of a position in a “straddle” or as part of a “hedging transaction,”
“conversion transaction” or other integrated investment transaction for federal income tax purposes or (iii) persons
that do not hold our common stock as “capital assets” (generally, property held for investment). This summary does not address
backup withholding and information reporting. This summary does not address U.S. holders who beneficially own common stock through
a “foreign financial institution” (as defined in Code Section 1471(d)(4)) or certain other non-U.S. entities specified
in Code Section 1472. This summary does not address tax considerations arising under any state, local or foreign laws, or under federal
estate or gift tax laws.
If a partnership (or other
entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our common stock, the U.S. federal
income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership.
Partnerships that hold our common stock, and partners in such partnerships, should consult their own tax advisors regarding the U.S. federal
income tax consequences of the Reverse Stock Split.
Each holder should consult
his, her or its own tax advisors concerning the particular U.S. federal tax consequences of the Reverse Stock Split, as well as
the consequences arising under the laws of any other taxing jurisdiction, including any foreign, state, or local income tax consequences.
General Tax Treatment of the Reverse Stock
Split
The Reverse Stock Split is intended to qualify
as a “reorganization” under Section 368 of the Code that should constitute a “recapitalization” for U.S. federal
income tax purposes. Assuming the Reverse Stock Split qualifies as a reorganization, a U.S. holder generally will not recognize gain
or loss upon the exchange of our ordinary shares for a lesser number of ordinary shares, based upon the Reverse Stock Split ratio. A U.S. holder’s
aggregate tax basis in the lesser number of ordinary shares received in the Reverse Stock Split will be the same such U.S. holder’s
aggregate tax basis in the shares of our common stock that such U.S. holder owned immediately prior to the Reverse Stock Split. The
holding period for the ordinary shares received in the Reverse Stock Split will include the period during which a U.S. holder held
the shares of our common stock that were surrendered in the Reverse Stock Split. The United States Treasury regulations provide detailed
rules for allocating the tax basis and holding period of the shares of our common stock surrendered to the shares of our common stock
received pursuant to the Reverse Stock Split. U.S. holders of shares of our common stock acquired on different dates and at different
prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
THE FOREGOING IS INTENDED
ONLY AS A SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT, AND DOES NOT CONSTITUTE A TAX OPINION. EACH HOLDER
OF OUR COMMON SHARES SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT TO THEM AND FOR REFERENCE
TO APPLICABLE PROVISIONS OF THE CODE.
Interests of Officers and Directors in this
Proposal
Our officers and directors
do not have any substantial interest, direct or indirect, in in this proposal.
Required Vote of Stockholders
The affirmative vote of the
holders of a majority of the outstanding shares of our common stock is required to approve this proposal.
Board Recommendation
The board of directors
unanimously recommends a vote “FOR” Proposal No. 8.
PROPOSAL NO. 9:
APPROVAL OF AN INCREASE TO THE NUMBER OF AUTHORIZED
SHARES ISSUABLE UNDER THE 2021 OMNIBUS EQUITY INCENTIVE PLAN
Our
board of directors adopted the 2021 Omnibus Equity Incentive Plan (the “2021 Plan”) in February 2021 and the 2021 Plan
was approved by our stockholders in May 2021. Our board of directors initially authorized the issuance of up to 3,000,000 shares
of common stock under the 2021 Plan. On September 13, 2022, we filed a certificate of amendment to its Certificate of Incorporation
with the Secretary of State of the State of Delaware to effectuate a one-for-fifty (1:50) reverse stock split (the “2022 Reverse
Stock Split”). Following the 2022 Reverse Stock Split, up to 60,000 shares of common stock are authorized for issuance under the
2021 Plan. On August 16, 2023, our stockholders approved an amendment to 2021 Plan to increase
the number of shares of common stock issuable thereunder to 1,500,000 shares from 60,000 shares. On
August 17, 2023, we filed a certificate of amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware
to effectuate a one-for-forty (1:40) reverse stock split (the “2023 Reverse Stock Split”). Following the 2023 Reverse Stock
Split, up to 37,500 shares of common stock are authorized for issuance under the 2021 Plan.
As of the Record Date,
excluding the requested share increase, there were 65,888 shares of common stock available for issuance under the 2021 Plan.
Reasons for the Proposed Amendment
Sufficient Shares Are Required to Attract,
Motivate and Retain Key Employees and Non-Employee Directors
In
connection with the 2022 Reverse Stock Split, the authorized number of shares of our common
stock reserved for issuance under the 2021 Plan was decreased such that 60,000 shares of
common stock are currently authorized for issuance under the 2021 Plan. Our board of directors
believes that it is advisable and in the best interests of the Company and its stockholders
to increase the number of shares reserved under the 2021 Plan from 37,500 shares of common
stock to 500,000 shares of common stock to attract, motivate and retain key employees and
non-employee directors.
Executive Compensation is an Important Part
of Our Compensation Program
The Compensation Committee
established long-term equity-based compensation as an important element of our compensation program. The Compensation Committee emphasizes
long-term equity-based compensation in order to (i) align participants’ interests with the interests of the Company’s
stockholders in the long-term success of the Company; (ii) provide management with an equity ownership in the Company tied to Company
performance; (iii) attract, motivate and retain key employees and non-employee directors; and (iv) provide incentive to management
for continuous employment with the Company. The 2021 Plan is designed to advance these interests of the Company and its stockholders.
Equity-based compensation under the 2021 Plan encourages executives to act as owners with an equity stake in the Company, discourages
inappropriate risk-taking and contributes to the continuity and stability within the Company’s leadership.
The purpose of this requested
increase in the number of authorized shares under the 2021 Plan is to continue to be able to attract, retain and motivate executive officers
and other employees, non-employee directors and certain consultants. Upon stockholder approval of the amendment, additional shares of
common stock will be reserved for issuance under the 2021 Plan, which will enable us to continue to grant equity awards to our officers,
employees, consultants and non-employee directors at levels determined by the board of directors to be necessary to attract, retain and
motivate the individuals who will be critical to our success in achieving its business objectives and thereby creating greater value for
all our stockholders.
As described above, we
are seeking stockholder approval of an amendment to increase the number of shares issuable under the 2021 Plan to 500,000 shares. Such
amendment was adopted and approved by our board of directors on July 19, 2023. We believe that equity awards have been critical
in attracting and retaining talented employees and officers, aligning their interests with those of stockholders, and focusing key employees
on our long-term growth. We anticipate that option grants and other forms of equity awards such as restricted stock awards may become
an increasing component in similarly motivating our consultants.
In
determining the amount of the increase contemplated by the proposed amendment to the 2021
Plan, our board of directors has taken into consideration the fact that, excluding the requested
share increase, as of the Record Date, there were approximately 70,000,000 shares of our
common stock outstanding on a fully-diluted basis, and the board of directors believes that
this fully-diluted number, rather than the number of outstanding shares of the Company, is
the relevant number in determining the appropriate number of shares available under the 2021
Plan. Additionally, the Company believes the increase is appropriate following the 2023 Reverse
Stock Split. When approved by our stockholders in May 2021, the 3,000,000 (pre-split)
shares initially authorized for issuance under the 2021 Plan represented approximately 21%
of our common stock. Assuming the approval of this increase, the total number of shares of
our common stock available for issuance under the 2021 Plan will be 565,888 shares, which
will represent approximately 28% of our common stock.
Approval of the amendment to
the 2021 Plan will permit us to continue to use stock-based compensation to align stockholder and employee interests and to motivate employees
and others providing services to us.
Description of 2021 Plan
The following is a summary
of the material features of the 2021 Plan. This summary is qualified in its entirety by the full text of the 2021 Plan, a copy of which
is attached to this Proxy Statement as Appendix G.
Types of Awards. The
2021 Plan provides for the issuance of incentive stock options, non-statutory stock options, stock appreciation rights (“SARs”),
restricted stock, restricted stock units (“RSUs”), and other stock-based awards. Items described above in the Section called
“Shares Available” are incorporated herein by reference.
Administration. The
2021 Plan will be administered by our board of directors, or if our board of directors does not administer the 2021 Plan, a committee
or subcommittee of our board of directors that complies with the applicable requirements of Section 16 of the Exchange Act and
any other applicable legal or stock exchange listing requirements (each of our board of directors or such committee or subcommittee, the
“plan administrator”). The plan administrator may interpret the 2021 Plan and may prescribe, amend and rescind rules and make
all other determinations necessary or desirable for the administration of the 2021 Plan, provided that, subject to the equitable adjustment
provisions described below, the plan administrator will not have the authority to reprice or cancel and re-grant any award at a lower
exercise, base or purchase price or cancel any award with an exercise, base or purchase price in exchange for cash, property or other
awards without first obtaining the approval of our stockholders.
The 2021 Plan permits the plan
administrator to select the eligible recipients who will receive awards, to determine the terms and conditions of those awards, including
but not limited to the exercise price or other purchase price of an award, the number of shares of common stock or cash or other property
subject to an award, the term of an award and the vesting schedule applicable to an award, and to amend the terms and conditions of outstanding
awards.
Restricted Stock and Restricted
Stock Units. Restricted stock and RSUs may be granted under the 2021 Plan. The plan administrator will determine
the purchase price, vesting schedule and performance goals, if any, and any other conditions that apply to a grant of restricted stock
and RSUs. If the restrictions, performance goals or other conditions determined by the plan administrator are not satisfied, the restricted
stock and RSUs will be forfeited. Subject to the provisions of the 2021 Plan and the applicable award agreement, the plan administrator
has the sole discretion to provide for the lapse of restrictions in installments.
Unless the applicable award
agreement provides otherwise, participants with restricted stock will generally have all of the rights of a stockholder; provided that
dividends will only be paid if and when the underlying restricted stock vests. RSUs will not be entitled to dividends prior to vesting,
but may be entitled to receive dividend equivalents if the award agreement provides for them. The rights of participants granted restricted
stock or RSUs upon the termination of employment or service to us will be set forth in the award agreement.
Options. Incentive
stock options and non-statutory stock options may be granted under the 2021 Plan. An “incentive stock option” means an option
intended to qualify for tax treatment applicable to incentive stock options under Section 422 of the Internal Revenue Code. A “non-statutory
stock option” is an option that is not subject to statutory requirements and limitations required for certain tax advantages that
are allowed under specific provisions of the Internal Revenue Code. A non-statutory stock option under the 2021 Plan is referred to for
federal income tax purposes as a “non-qualified” stock option. Each option granted under the Plan will be designated as a
non-qualified stock option or an incentive stock option. At the discretion of the administrator, incentive stock options may be granted
only to our employees, employees of our “parent corporation” (as such term is defined in Section 424(e) of the Code)
or employees of our subsidiaries.
The exercise period of an option
may not exceed ten years from the date of grant and the exercise price may not be less than 100% of the fair market value of a share
of common stock on the date the option is granted (110% of fair market value in the case of incentive stock options granted to ten percent
stockholders). The exercise price for shares of common stock subject to an option may be paid in cash, or as determined by the administrator
in its sole discretion, (i) through any cashless exercise procedure approved by the administrator (including the withholding of shares
of common stock otherwise issuable upon exercise), (ii) by tendering unrestricted shares of common stock owned by the participant,
(iii) with any other form of consideration approved by the administrator and permitted by applicable law or (iv) by any combination
of these methods. The option holder will have no rights to dividends or distributions or other rights of a stockholder with respect to
the shares of common stock subject to an option until the option holder has given written notice of exercise and paid the exercise price
and applicable withholding taxes.
In the event of an participant’s
termination of employment or service, the participant may exercise his or her option (to the extent vested as of such date of termination)
for such period of time as specified in his or her option agreement.
Stock Appreciation Rights. SARs
may be granted either alone (a “free-standing SAR”) or in conjunction with all or part of any option granted under
the 2021 Plan (a “tandem SAR”). A free-standing SAR will entitle its holder to receive, at the time of exercise, an
amount per share up to the excess of the fair market value (at the date of exercise) of a share of common stock over the base price of
the free-standing SAR (which shall be no less than 100% of the fair market value of the related shares of common stock on the date of
grant) multiplied by the number of shares in respect of which the SAR is being exercised. A tandem SAR will entitle its holder to receive,
at the time of exercise of the SAR and surrender of the applicable portion of the related option, an amount per share up to the excess
of the fair market value (at the date of exercise) of a share of common stock over the exercise price of the related option multiplied
by the number of shares in respect of which the SAR is being exercised. The exercise period of a free-standing SAR may not exceed ten years
from the date of grant. The exercise period of a tandem SAR will also expire upon the expiration of its related option.
The holder of a SAR will have
no rights to dividends or any other rights of a stockholder with respect to the shares of common stock subject to the SAR until the holder
has given written notice of exercise and paid the exercise price and applicable withholding taxes.
In the event of a participant’s
termination of employment or service, the holder of a SAR may exercise his or her SAR (to the extent vested as of such date of termination)
for such period of time as specified in his or her SAR agreement.
Other Stock-Based
Awards. The administrator may grant other stock-based awards under the 2021 Plan, valued in whole or in part by reference to, or
otherwise based on, shares of common stock. The administrator will determine the terms and conditions of these awards, including the
number of shares of common stock to be granted pursuant to each award, the manner in which the award will be settled, and the
conditions to the vesting and payment of the award (including the achievement of performance goals). The rights of participants
granted other stock-based awards upon the termination of employment or service to us will be set forth in the applicable award
agreement. In the event that a bonus is granted in the form of shares of common stock, the shares of common stock constituting such
bonus shall, as determined by the administrator, be evidenced in uncertificated form or by a book entry record or a certificate
issued in the name of the participant to whom such grant was made and delivered to such participant as soon as practicable after the
date on which such bonus is payable. Any dividend or dividend equivalent award issued hereunder shall be subject to the same
restrictions, conditions and risks of forfeiture as apply to the underlying award.
Equitable Adjustment and Treatment of Outstanding
Awards Upon a Change in Control
Equitable
Adjustments. In the event of a merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase,
reorganization, special or extraordinary dividend or other extraordinary distribution (whether in the form of common shares, cash or
other property), combination, exchange of shares, or other change in corporate structure affecting our common stock, an equitable
substitution or proportionate adjustment shall be made in (i) the aggregate number and kind of securities reserved for issuance
under the 2021 Plan, (ii) the kind and number of securities subject to, and the exercise price of, any outstanding options and
SARs granted under the 2021 Plan, (iii) the kind, number and purchase price of shares of common stock, or the amount of cash or
amount or type of property, subject to outstanding restricted stock, RSUs and other stock-based awards granted under the 2021 Plan
and (iv) the terms and conditions of any outstanding awards (including any applicable performance targets). Equitable
substitutions or adjustments other than those listed above may also be made as determined by the plan administrator. In addition,
the plan administrator may terminate all outstanding awards for the payment of cash or in-kind consideration having an aggregate
fair market value equal to the excess of the fair market value of the shares of common stock, cash or other property covered by such
awards over the aggregate exercise price, if any, of such awards, but if the exercise price of any outstanding award is equal to or
greater than the fair market value of the shares of common stock, cash or other property covered by such award, the plan
administrator may cancel the award without the payment of any consideration to the participant. With respect to awards subject to
foreign laws, adjustments will be made in compliance with applicable requirements. Except to the extent determined by the plan
administrator, adjustments to incentive stock options will be made only to the extent not constituting a “modification”
within the meaning of Section 424(h)(3) of the Code.
Change in Control. The
2021 Plan provides that, unless otherwise determined by the plan administrator and evidenced in an award agreement, if a “change
in control” (as defined below) occurs and a participant is employed by us or any of our affiliates immediately prior to the consummation
of the change in control, then the plan administrator, in its sole and absolute discretion, may (i) provide that any unvested or
unexercisable portion of an award carrying a right to exercise will become fully vested and exercisable; and (ii) cause the restrictions,
deferral limitations, payment conditions and forfeiture conditions applicable to any award granted under the 2021 Plan to lapse, and the
awards will be deemed fully vested and any performance conditions imposed with respect to such awards will be deemed to be fully achieved
at target performance levels. The administrator shall have discretion in connection with such change in control to provide that all outstanding
and unexercised options and SARs shall expire upon the consummation of such change in control.
For purposes of the 2021 Plan,
a “change in control” means, in summary, the first to occur of the following events: (i) a person or entity becomes the
beneficial owner of more than 50% of our voting power; (ii) an unapproved change in the majority membership of our board of directors;
(iii) a merger or consolidation of us or any of our subsidiaries, other than (A) a merger or consolidation that results in our
voting securities continuing to represent 50% or more of the combined voting power of the surviving entity or its parent and our board
of directors immediately prior to the merger or consolidation continuing to represent at least a majority of the board of directors of
the surviving entity or its parent or (B) a merger or consolidation effected to implement a recapitalization in which no person is
or becomes the beneficial owner of our voting securities representing more than 50% of our combined voting power; or (iv) stockholder
approval of a plan of our complete liquidation or dissolution or the consummation of an agreement for the sale or disposition of substantially
all of our assets, other than (A) a sale or disposition to an entity, more than 50% of the combined voting power of which is owned
by our stockholders in substantially the same proportions as their ownership of us immediately prior to such sale or (B) a sale or
disposition to an entity controlled by our board of directors. However, a change in control will not be deemed to have occurred as a result
of any transaction or series of integrated transactions following which our stockholders, immediately prior thereto, hold immediately
afterward the same proportionate equity interests in the entity that owns all or substantially all of our assets.
Tax Withholding
Each participant will be required
to make arrangements satisfactory to the plan administrator regarding payment of up to the maximum statutory tax rates in the participant’s
applicable jurisdiction with respect to any award granted under the 2021 Plan, as determined by us. We have the right, to the extent permitted
by applicable law, to deduct any such taxes from any payment of any kind otherwise due to the participant. With the approval of the plan
administrator, the participant may satisfy the foregoing requirement by either electing to have us withhold from delivery of shares of
common stock, cash or other property, as applicable, or by delivering already owned unrestricted shares of common stock, in each case,
having a value not exceeding the applicable taxes to be withheld and applied to the tax obligations. We may also use any other method
of obtaining the necessary payment or proceeds, as permitted by applicable law, to satisfy our withholding obligation with respect to
any award.
Amendment and Termination of the 2021 Plan
The 2021 Plan provides our
board of directors with authority to amend, alter or terminate the 2021 Plan, but no such action impair the rights of any participant
with respect to outstanding awards without the participant’s consent. The plan administrator may amend an award, prospectively or
retroactively, but no such amendment may materially impair the rights of any participant without the participant’s consent. Stockholder
approval of any such action will be obtained if required to comply with applicable law. The 2021 Plan will terminate on the tenth anniversary
of the Effective Date (although awards granted before that time will remain outstanding in accordance with their terms).
Clawback. If
we are required to prepare a financial restatement due to the material non-compliance with any financial reporting requirement, then the
plan administrator may require any Section 16 officer to repay or forfeit to us that part of the cash or equity incentive compensation
received by that Section 16 officer during the preceding three years that the plan administrator determines was in excess of
the amount that such Section 16 officer would have received had such cash or equity incentive compensation been calculated based
on the financial results reported in the restated financial statement. The plan administrator may take into account any factors it deems
reasonable in determining whether to seek recoupment of previously paid cash or equity incentive compensation and how much of such compensation
to recoup from each Section 16 officer (which need not be the same amount or proportion for each Section 16 officer). The amount
and form of the incentive compensation to be recouped shall be determined by the administrator in its sole and absolute discretion.
US Federal Income Tax Consequences
The following is a summary
of certain United States federal income tax consequences of awards under the 2021 Plan. It does not purport to be a complete description
of all applicable rules, and those rules (including those summarized here) are subject to change.
Non-Qualified Stock Options. A
participant who has been granted a non-qualified stock option will not recognize taxable income upon the grant of a non-qualified stock
option. Rather, at the time of exercise of such non-qualified stock option, the participant will recognize ordinary income for income
tax purposes in an amount equal to the excess of the fair market value of the shares of common stock purchased over the exercise price.
We generally will be entitled to a tax deduction at such time and in the same amount that the participant recognizes ordinary income.
If shares of common stock acquired upon exercise of a non-qualified stock option are later sold or exchanged, then the difference between
the amount received upon such sale or exchange and the fair market value of such shares on the date of such exercise will generally be
taxable as long-term or short-term capital gain or loss (if the shares are a capital asset of the participant) depending upon the length
of time such shares were held by the participant.
Incentive Stock Options. In
general, no taxable income is realized by a participant upon the grant of an ISO. If shares of common stock are purchased by a participant,
or option shares, pursuant to the exercise of an ISO granted under the 2021 Plan and the participant does not dispose of the option shares
within the two-year period after the date of grant or within one year after the receipt of such option shares by the participant, such
disposition a disqualifying disposition, then, generally (1) the participant will not realize ordinary income upon exercise and (2) upon
sale of such option shares, any amount realized in excess of the exercise price paid for the option shares will be taxed to such participant
as capital gain (or loss). The amount by which the fair market value of the common stock on the exercise date of an ISO exceeds the purchase
price generally will constitute an item which increases the participant’s “alternative minimum taxable income.” If option
shares acquired upon the exercise of an ISO are disposed of in a disqualifying disposition, the participant generally would include in
ordinary income in the year of disposition an amount equal to the excess of the fair market value of the option shares at the time of
exercise (or, if less, the amount realized on the disposition of the option shares), over the exercise price paid for the option shares.
Subject to certain exceptions, an option generally will not be treated as an ISO if it is exercised more than three months following
termination of employment. If an ISO is exercised at a time when it no longer qualifies as an ISO, such option will be treated as a nonqualified
stock option as discussed above. In general, we will receive an income tax deduction at the same time and in the same amount as the participant
recognizes ordinary income.
Stock Appreciation Rights. A
participant who is granted an SAR generally will not recognize ordinary income upon receipt of the SAR. Rather, at the time of exercise
of such SAR, the participant will recognize ordinary income for income tax purposes in an amount equal to the value of any cash received
and the fair market value on the date of exercise of any shares of common stock received. We generally will be entitled to a tax deduction
at such time and in the same amount, if any, that the participant recognizes as ordinary income. The participant’s tax basis in
any shares of common stock received upon exercise of an SAR will be the fair market value of the shares of common stock on the date of
exercise, and if the shares are later sold or exchanged, then the difference between the amount received upon such sale or exchange and
the fair market value of such shares on the date of exercise will generally be taxable as long-term or short-term capital gain or loss
(if the shares are a capital asset of the participant) depending upon the length of time such shares were held by the participant.
Restricted Stock. A
participant generally will not be taxed upon the grant of restricted stock, but rather will recognize ordinary income in an amount equal
to the fair market value of the shares of common stock at the earlier of the time the shares become transferable or are no longer subject
to a substantial risk of forfeiture (within the meaning of the Code). We generally will be entitled to a deduction at the time when, and
in the amount that, the participant recognizes ordinary income on account of the lapse of the restrictions. A participant’s tax
basis in the shares of common stock will equal their fair market value at the time the restrictions lapse, and the participant’s
holding period for capital gains purposes will begin at that time. Any cash dividends paid on the shares of common stock before the restrictions
lapse will be taxable to the participant as additional compensation and not as dividend income, unless the individual has made an election
under Section 83(b) of the Code. Under Section 83(b) of the Code, a participant may elect to recognize ordinary income
at the time the restricted shares are awarded in an amount equal to their fair market value at that time, notwithstanding the fact that
such stock is subject to restrictions or transfer and a substantial risk of forfeiture. If such an election is made, no additional taxable
income will be recognized by such participant at the time the restrictions lapse, the participant will have a tax basis in the shares
of common stock equal to their fair market value on the date of their award, and the participant’s holding period for capital gains
purposes will begin at that time. We generally will be entitled to a tax deduction at the time when, and to the extent that, ordinary
income is recognized by such participant.
Restricted Stock
Units. In general, the grant of RSUs will not result in income for the participant or in a tax deduction for us. Upon the
settlement of such an award in cash or shares of common stock, the participant will recognize ordinary income equal to the aggregate
value of the payment received, and we generally will be entitled to a tax deduction at the same time and in the same amount.
Other Awards. With
respect to other stock-based awards, generally when the participant receives payment in respect of the award, the amount of cash and/or
the fair market value of any shares of common stock or other property received will be ordinary income to the participant, and we generally
will be entitled to a tax deduction at the same time and in the same amount.
New Plan Benefits
Future grants under the 2021
Plan will be made at the discretion of the plan administrator and, accordingly, are not yet determinable. In addition, benefits under
the 2021 Plan will depend on a number of factors, including the fair market value of our common stock on future dates and the exercise
decisions made by participants. Consequently, at this time, it is not possible to determine the future benefits that might be received
by participants receiving discretionary grants under the 2021 Plan.
Effects of Proposed Share Increase
The proposed share increase
will not have any immediate effect on the rights of existing stockholders. However, our board of directors will have the authority to
issue common stock without requiring future stockholder approval of such issuances, except as may be required by the Certificate of Incorporation,
Nasdaq or applicable law. To the extent that the additional authorized shares of common stock are issued in the future, they could decrease
the Company’s existing stockholders’ percentage equity ownership and could potentially have a dilutive effect on our earnings
per share, book value per share and the voting power and interest of current stockholders.
Interests of Officers and Directors in this
Proposal
Members of our board of directors
and the executive officers are eligible to receive awards under the terms of the 2021 Plan, and they therefore have a substantial interest
in this proposal.
Required Vote of Stockholders
The affirmative vote
of a majority of the votes cast at the Annual Meeting is required to approve Proposal No. 9.
Board Recommendation
The board of directors
recommends a vote “FOR” Proposal No. 9.
PROPOSAL NO. 10:
AUTHORIZATION TO ADJOURN THE ANNUAL MEETING
IF NECESSARY OR APPROPRIATE
At the Annual Meeting, we may
ask our stockholders to vote on a proposal to adjourn the Annual Meeting if necessary or appropriate in the sole discretion of our Board
of Directors, including to solicit additional proxies in the event that there are not sufficient votes at the time of the Annual Meeting
or any adjournment or postponement of the Annual Meeting to approve any of the other proposals.
If at the Annual Meeting the
number of shares authorized to vote present or represented by proxy and voting in favor of a proposal is insufficient to approve such
proposal, then our Board of Directors may hold a vote on each proposal that has garnered sufficient votes, if any, and then move to adjourn
the Annual Meeting as to the remaining proposals in order to solicit additional proxies in favor of those remaining proposals.
Alternatively, even if there
are sufficient shares authorized to vote present or represented by proxy voting in favor of all of the proposals, our Board of Directors
may hold a vote on the adjournment proposal if, in its sole discretion, it determines that it is necessary or appropriate for any reason
to adjourn the Annual Meeting to a later date and time. In that event, the Company will ask its stockholders to vote only upon the adjournment
proposal and not any other proposal.
Any adjournment may be made
without notice (if the adjournment is not for more than thirty days and a new record date is not fixed for the adjourned meeting),
other than by an announcement made at the Annual Meeting of the time, date and place of the adjourned meeting.
Any adjournment of the Annual
Meeting will allow our stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Annual
Meeting as adjourned.
If we adjourn the Annual Meeting
to a later date, we will transact the same business and, unless we must fix a new record date, only the stockholders who were eligible
to vote at the original meeting will be permitted to vote at the adjourned meeting.
Required Vote of Stockholders
The affirmative vote
of a majority of the votes cast at the Annual Meeting is required to approve Proposal No. 10.
Board Recommendation
The board of directors
recommends a vote “FOR” Proposal No. 10.
OTHER MATTERS
The board of directors knows
of no other business, which will be presented to the Annual Meeting. If any other business is properly brought before the Annual Meeting,
proxies will be voted in accordance with the judgment of the persons voting the proxies. The proxies also have discretionary authority
to vote to adjourn the Annual Meeting, including for the purpose of soliciting votes in accordance with our board of director’s
recommendations.
We will bear the cost
of soliciting proxies in the accompanying form. In addition to the use of the mails, proxies may also be solicited by our directors,
officers or other employees, personally or by telephone, facsimile or email, none of whom will be compensated separately for these solicitation
activities. We have engaged Kingsdale Advisors to assist in the solicitation of proxies. We will pay a fee of approximately $12,500 plus
reasonable out-of-pocket charges.
If you do not plan to attend
the Annual Meeting, in order that your shares may be represented and in order to assure the required quorum, please sign, date and return
your proxy promptly. In the event you are able to attend the Annual Meeting virtually, at your request, we will cancel your previously
submitted proxy.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR
Stockholders who intend
to have a proposal considered for inclusion in our proxy materials for presentation at our 2025 Annual Meeting of Stockholders must submit
the proposal to us at our corporate headquarters no later than February 11, 2025, which proposal must be made in accordance with the
provisions of Rule 14a-8 of the Exchange Act. Stockholders who intend to present a proposal at our 2025 Annual Meeting of Stockholders
without inclusion of the proposal in our proxy materials are required to provide notice of such proposal to our Corporate Secretary so
that such notice is received by our Corporate Secretary at our principal executive offices on or after March 12, 2025 but no later than
April 11, 2025. We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that
does not comply with these and other applicable requirements.
HOUSEHOLDING
The SEC has adopted rules that
permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and other Annual Meeting
materials with respect to two or more stockholders sharing the same address by delivering a proxy statement or other Annual Meeting materials
addressed to those stockholders. This process, which is commonly referred to as householding, potentially provides extra convenience for
stockholders and cost savings for companies. Stockholders who participate in householding will continue to be able to access and receive
separate proxy cards.
If you share an address
with another stockholder and have received multiple copies of our proxy materials, you may write or call us at the address and phone
number below to request delivery of a single copy of the notice and, if applicable, other proxy materials in the future. We undertake
to deliver promptly upon written or oral request a separate copy of the proxy materials, as requested, to a stockholder at a shared address
to which a single copy of the proxy materials was delivered. If you hold stock as a record stockholder and prefer to receive separate
copies of our proxy materials either now or in the future, please contact us at 2569 Wyandotte St., Suite 101, Mountain View, CA 94043,
Attn: Corporate Secretary. If your stock is held through a brokerage firm or bank and you prefer to receive separate copies of our proxy
materials either now or in the future, please contact your brokerage firm or bank.
ANNUAL REPORT
Copies of our Annual Report
on Form 10-K for the fiscal year ended December 31, 2023 may be obtained without charge by writing to the Company’s Secretary,
Aditxt, Inc., 2569 Wyandotte St., Suite 101, Mountain View, CA 94043. The Notice, our Annual Report on Form 10-K and this proxy
statement are also available online at www.proxyvote.com.
|
BY ORDER OF THE BOARD OF DIRECTORS |
|
|
[*], 2024 |
/s/ Amro Albanna |
|
Amro Albanna |
|
Chief Executive Officer and
Chairman of the Board of Directors |
APPENDIX A
CERTIFICATE OF DESIGNATIONS
OF RIGHTS AND PREFERENCES OF
SERIES A-1 CONVERTIBLE PREFERRED STOCK
OF
ADITXT, INC.
I, Amro Albanna, hereby certify
that I am the Chief Executive Officer and Chairman of Aditxt, Inc. (the “Company”), a corporation organized and existing
under the Chapter 78 of 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 Amended and Restated
Certificate of Incorporation, as amended (the “Certificate of Incorporation”), and Section 151(g) of the DGCL, the
Board on December 7, 2023 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 Twenty Two Thousand, Two Hundred and Eighty (22,280) shares of preferred stock designated as “Series
A-1 Convertible Preferred Stock”, none of which shares have been issued, to be issued pursuant to the Exchange Agreements (as
defined in below), in accordance with the terms of the Exchange Agreements:
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 $0.001 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 A-1 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 A-1
Convertible Preferred Stock” (the “Series A-1 Convertible Preferred Stock”). The authorized number of shares
of Series A-1 Convertible Preferred Stock (the “Preferred Shares”) shall be Two Thousand, Two Hundred and Eighty (22,280)
shares. Each Preferred Share shall have a par value of $0.001 per share. Capitalized terms not defined herein shall have the meaning as
set forth in Section 32 below.
2. Ranking. Except
(i) for shares of Senior Preferred Stock (as defined below) to be issued to certain senior creditors of Evofem Biosciences, Inc. pursuant
to the transactions contemplated by the Merger Agreement (the “Merger Senior Preferred Stock”), shares of Parity Stock
(as defined below) to be issued pursuant to (x) the transactions contemplated by the Merger Agreement (as defined below) and (y) shares
of Parity Stock to be issued pursuant to other acquisitions or strategic transactions with a stated value of not more than $10 million
in the aggregate on terms and conditions no more favorable as those set forth herein (the “Merger Parity Stock”) or
(ii) to the extent that the Required Holders (as defined in the Exchange Agreements) 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 Merger 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”), other than the
Merger Senior Preferred Stock, (ii) of pari 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”), other
than Parity Stock to be issued pursuant to the transactions contemplated by the Merger Agreement and Merger 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 first 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. In addition
to Section 7, Section 8 and/or Section 15 below, as applicable, subject to the senior rights of the Senior Preferred Stock, and pari passu
with the holders of shares of Parity Stock, from and after the first date of issuance of any Preferred Shares (the “Initial Issuance
Date”), each holder of a Preferred Share (each, a “Holder” and collectively, the “Holders”)
shall be entitled to receive dividends (“Dividends”) when and as declared by the Board, from time to time, in its sole
discretion, which Dividends shall be paid by the Company out of funds legally available therefor, payable, subject to the conditions and
other terms hereof, in cash, in securities of the Company or any other entity, or using assets as determined by the Board on the Stated
Value of such Preferred Share.
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 Company’s transfer
agent (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”).
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 plus (2) any Additional Amount thereon as of such date of determination
plus (3) any other amounts owed to such Holder pursuant to this Certificate of Designations or any Transaction Document.
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, $4.44, 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)(iii), 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 or before the first (1st) Trading Day following
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 (1st) 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 (1) provided that the Transfer Agent is
participating in FAST, 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, 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)(iii) 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 18(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. 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 or the Registration Rights Agreement, after
the effective date of a Registration Statement (as defined in the Registration Rights Agreement) and prior to a Holder’s receipt
of the notice of a Grace Period (as defined in the Registration Rights Agreement), 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 Registrable Securities (as defined in
the Registration Rights Agreement) with respect to which such Holder has entered into a contract for sale, and delivered a copy of the
prospectus included as part of the particular Registration Statement 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, either (I) if the Transfer Agent is not participating in FAST, 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, 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) or (II) if the Registration Statement covering the resale of the Conversion Shares that are the subject of the Conversion
Notice (the “Unavailable Conversion Shares”) is not available for the resale of such Unavailable Conversion Shares
and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) notify such
Holder and (y) deliver the shares of Common Stock electronically without any restrictive legend by crediting such aggregate number of
shares of Common Stock to which such Holder is entitled pursuant to such conversion to the Holder’s or its designee’s balance
account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter
referred as a “Notice Failure” and together with the event described in clause (I) above, a “Conversion Failure”),
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. In addition to the foregoing, if on or prior to the Share Delivery Deadline either (A) the Transfer
Agent is not participating in FAST, 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, 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 or (B) a Notice Failure occurs, 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 or Notice Failure, as applicable (a “Buy-In”), then, in addition to all other remedies
available to such Holder, the Company shall, within two (2) Business Days 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”). Nothing herein 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
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 Notice Failure and/or Conversion Failure,
as applicable, 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 Notice Failure and/or Conversion Failure, as applicable, pursuant to the analogous sections
of any other agreement with such Holder.
(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)(iii)) 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 two (2) Business Days of such occurrence, then the Register shall be automatically deemed updated
to reflect such occurrence. In the event of any dispute or discrepancy, such records of such Holder 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 A-1 CONVERTIBLE
PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE, INCLUDING SECTION 4(c)(iii) THEREOF. THE NUMBER OF SHARES OF SERIES A-1 CONVERTIBLE PREFERRED
STOCK REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER OF SHARES OF SERIES A-1 CONVERTIBLE PREFERRED STOCK STATED ON THE FACE
HEREOF PURSUANT TO SECTION 4(c)(iii) OF THE CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES A-1 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 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.
(i) 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 plus 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 the 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 (61st)
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 (61st)
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 waived and shall apply to a successor holder of such Preferred Shares.
(ii) Principal
Market Regulation. The Company shall not issue any shares of Common Stock upon conversion of any Preferred Shares or otherwise pursuant
to the terms of this Certificate of Designations if the issuance of such shares of Common Stock would exceed the aggregate number of shares
of Common Stock which the Company may issue upon exercise or conversion (as the case may be) of the Preferred Shares without breaching
the Company’s obligations under the rules and regulations the listing rules of the Principal Market (the maximum number of shares
of Common Stock which may be issued without violating such rules and regulations, the “Exchange Cap”), except that
such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable
rules and regulations of the Principal Market for issuances of shares of Common Stock in excess of such amount (the “Stockholder
Approval Date”) or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which
opinion shall be reasonably satisfactory to the Required Holders. Until such approval or such written opinion is obtained, no Holder shall
be issued in the aggregate, upon conversion or exercise (as the case may be) of any Preferred Shares, shares of Common Stock in an amount
greater than the product of (i) the Exchange Cap as of the Initial Issuance Date multiplied by (ii) the quotient of (1) the aggregate
number of Preferred Shares issued to such Holder on the Initial Issuance Date divided by (2) the aggregate number of shares of Preferred
Shares and Parity Stock outstanding as of the Initial Issuance Date (with respect to each Holder, the “Exchange Cap Allocation”).
In the event that any Holder shall sell or otherwise transfer any of such Holder’s Preferred Shares, the transferee shall be allocated
a pro rata portion of such Holder’s Exchange Cap Allocation with respect to such portion of such Preferred Shares so transferred,
and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation so
allocated to such transferee. Upon conversion in full of a Holder’s Preferred Shares, the difference (if any) between such Holder’s
Exchange Cap Allocation and the number of shares of Common Stock actually issued to such Holder upon such Holder’s conversion in
full of such Preferred Shares shall be allocated, to the respective Exchange Cap Allocations of the remaining holders of Preferred Shares
and Parity Stock on a pro rata basis in proportion to the shares of Common Stock underlying the shares of preferred stock of the Company
then held by each such holder of Preferred Shares and/or Parity Stock, as applicable.
(e) 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(e) 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 the Holder on the applicable Alternate Conversion Date. Notwithstanding anything to the
contrary in this Section 4(e), but subject to Section 4(d), until the Company delivers to such Holder the shares of Common Stock to which
the 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(e).
5. Triggering Events.
(a) General.
Each of the following events shall constitute a “Triggering Event” and each of the events in clauses 5(a)(ix), 5(a)(x),
and 5(a)(xi), shall constitute a “Bankruptcy Triggering Event”:
(i) the failure of
the applicable Registration Statement (as defined in the Registration Rights Agreement) to be filed with the SEC on or prior to the date
that is five (5) days after the applicable Filing Deadline (as defined in the Registration Rights Agreement) or the failure of the applicable
Registration Statement to be declared effective by the SEC on or prior to the date that is five (5) days after the applicable Effectiveness
Deadline (as defined in the Registration Rights Agreement);
(ii) while the applicable
Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement, the effectiveness
of the applicable Registration Statement lapses for any reason (including, without limitation, the issuance of a stop order) or such Registration
Statement (or the prospectus contained therein) is unavailable to any holder of Registrable Securities (as defined in the Registration
Rights Agreement) for sale of all of such holder’s Registrable Securities in accordance with the terms of the Registration Rights
Agreement, and such lapse or unavailability continues for a period of five (5) consecutive days or for more than an aggregate of ten (10)
days in any 365-day period (excluding days during an Allowable Grace Period (as defined in the Registration Rights Agreement));
(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 or the delisting, removal or withdrawal, as applicable, of registration of the Common Stock under the 1934 Act
with respect to a going-private transaction;
(iv) the Company’s
failure (A) 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(d) 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 the Required Reserve Amount as of such date of determination;
(vi) the Company’s
failure to pay to any Holder any Dividend when required to be paid hereunder (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 Exchange Agreements 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;
(vii) the Company
fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the applicable Holder upon conversion
of the Preferred Shares held by such Holder as and when required by this Certificate of Designations, unless otherwise then prohibited
by applicable federal securities laws, and any such failure remains uncured for at least five (5) days;
(viii) the occurrence
of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $500,000 of indebtedness for borrowed
money of the Company or any of its Subsidiaries, excluding any indebtedness for borrowed money in which no cash payment is required at
such time pursuant to a forbearance agreement in full force and effect or any applicable grace period under the terms of such indebtedness
for borrowed money, except, in the case of a default or breach that is curable, only if such default or breach, as applicable, remains
uncured for a period of twenty (20) days;
(ix) 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;
(x) 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;
(xi) 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;
(xii) 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;
(xiii) 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 $500,000 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 $500,000, 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;
(xiv) 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 five (5) consecutive Trading Days;
(xv) a false or inaccurate
certification (including a false or inaccurate deemed certification) by the Company as to whether any Triggering Event has occurred;
(xvi) any Preferred
Shares remain outstanding on or after December 22, 2026;
(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 Change
of Control occurs;
(xix) any Material
Adverse Effect (as defined in the Exchange Agreements) occurs; or
(xx) 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 parties thereto, 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 one (1)
Business Day deliver written notice thereof via electronic mail and overnight courier (with next day delivery specified) (a “Triggering
Event Notice”) to each Holder.
(c) Mandatory
Redemption upon Bankruptcy Triggering Event. Notwithstanding anything to the contrary herein, and notwithstanding any conversion that
is then required or in process, upon any Bankruptcy Triggering Event, the Company shall immediately redeem, in cash, each of the Preferred
Shares then outstanding at a redemption price equal to the greater of (i) the product of (A) the Conversion Amount to be redeemed multiplied
by (B) the Required Premium and (ii) the product of (X) the Conversion Rate (calculated using the lowest Alternate Conversion Price during
the period commencing on the 20th Trading Day immediately preceding such public announcement and ending on the date the Company makes
the entire redemption payment pursuant to this Section 5(c)) with respect to the Conversion Amount in effect immediately following the
date of initial public announcement (or public filing of bankruptcy documents, as applicable) of such Bankruptcy Triggering Event multiplied
by (Y) the product of (1) the Required Premium 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 Bankruptcy Triggering Event and ending on the date the Company makes
the entire payment required to be made under this Section 5(c), without the requirement for any notice or demand or other action by any
Holder or any other person or entity, provided that a Holder may, in its sole discretion, waive such right to receive payment upon a Bankruptcy
Triggering Event, in whole or in part, and any such waiver shall not affect any other rights of such Holder or any other Holder hereunder,
including any other rights in respect of such Bankruptcy Triggering Event or any right to conversion (or Alternate Conversion), as applicable.
6. Rights Upon Fundamental
Transactions.
(a) Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) 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(a) pursuant to written agreements in form and substance satisfactory to the Required Holders and approved by the Required
Holders prior to such Fundamental Transaction, 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 satisfactory to the Required
Holders and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose shares of common stock are
quoted on or listed for trading on an Eligible Market. 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(a) 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 twenty (20) Trading Days nor later than ten (10) Trading Days
prior to the consummation of a Change of Control (the “Change of Control Date”), but not prior to the public announcement
of such Change of Control, 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 Holder, 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 Closing Bid Price 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 Closing Bid Price 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 Closing Bid Price of the Successor
Shares for each Trading Day in the Rights Measuring Period is the Closing Bid Price 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 pari 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(a). 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) in addition to the shares of Common Stock receivable upon such conversion, 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 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 Adjustment Measurement Commencement 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 minus (3) 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 (1) 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(b) 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 Exchange Agreements Effective 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 Holders, the “Primary
Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”
and together with the Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate
consideration per share of Common Stock with respect to such Primary Security shall be deemed to be the lower of (x) the purchase price
of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest price per share for which one share of
Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 8(a)(i) or 8(a)(ii)
above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day during the five (5) Trading Day period (the “Adjustment
Period”) immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public
announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day
in such five Trading Day period and if any Preferred Shares are converted, on any given Conversion Date during any such Adjustment Period,
solely with respect to such Preferred Shares converted on such applicable Conversion Date, such applicable Adjustment Period shall be
deemed to have ended on, and included, the Trading Day immediately prior to such Conversion Date). 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 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 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 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 15, if
the Company at any time on or after the Exchange Agreements Effective 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 Exchange Agreements Effective 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(b) shall become effective immediately after the effective date of such subdivision or combination.
If any event requiring an adjustment under this Section 8(b) 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(c), 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 (any
such securities, “Variable Price Securities”) after the Adjustment Measurement Commencement 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) [Reserved]
(e) Other Events.
In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly applicable, or,
if applicable, would not operate to protect any Holder from dilution or if any event occurs of the type contemplated by the provisions
of this Section 8 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the Board shall in good faith determine and implement an appropriate
adjustment in the Conversion Price so as to protect the rights of such Holder, provided that no such adjustment pursuant to this Section
8(e) will increase the Conversion Price as otherwise determined pursuant to this Section 8, provided further that if such Holder does
not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Board and such Holder
shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments,
whose determination shall be final and binding absent manifest error and whose fees and expenses shall be borne by the Company.
(f) 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.
(g) 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.
(h) Adjustments.
If on any of the ninetieth (90th) and one hundred and eightieth (180th),
as applicable, calendar day after each of (x) each date of occurrence of any Stock Combination Event and (y) the Applicable Date (each,
an “Adjustment Date”), the Conversion Price then in effect is greater than the Market Price then in effect (the “Adjustment
Price”), on the Adjustment Date the Conversion Price shall automatically lower to the Adjustment Price.
(i) Exchange
Right. Notwithstanding anything herein to the contrary, if a Holder participates in a Subsequent Placement (as defined in the Exchange
Agreement), each such Holder may, at the option of such Holder as elected in writing to the Company, satisfy the purchase price of the
securities to be sold to such Holder in such Subsequent Placement, in whole or in part, with Preferred Shares valued at 120% of the Conversion
Amount of the Preferred Shares delivered by such Holder as payment therefor.
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 115% 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”). The Company may
deliver only one Company Optional Redemption Notice hereunder and such Company Optional Redemption Notice shall be irrevocable. 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, (y) certify that there has been no Equity Conditions Failure and (z) 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.
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 (x) if prior to May 31, 2023 (or,
if earlier, the Stockholder Approval Date (as defined in the Exchange Agreement)) (the “Initial Reserve Expiration Date”),
6.5 million shares of Common Stock or (y) from and after the Initial Reserve Expiration Date, 200% 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 (or deemed outstanding pursuant to Section 11(a) above). 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 sixty (60) 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 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 14C. 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(b);
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.
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
12 and Section 16 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) 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).
(b) 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.
(c) 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 Exchange Agreement Effective 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.
(d) 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.
(e) Maintenance
of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its
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 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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 Agreements and this Certificate of Designations), or (ii) issue any other
securities that would cause a breach or default under this Certificate of Designations.
(j) 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.
(k) Taxes.
The Company and its Subsidiaries shall pay when due all 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.
(l) 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.
(m) Independent
Investigation. At the request of any Holder 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
Holder reasonably believes 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 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 (including the accountants’ work papers) 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, after any Senior Preferred Stock then outstanding, 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 (at the Alternate Conversion Price then in effect) 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 converted 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 of amendment 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
A-1 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, other than any Merger Senior Preferred Stock to be issued pursuant
to the transactions contemplated by the Merger Agreement, any Parity Stock to be issued pursuant to the transactions contemplated by the
Merger Agreement and any Merger 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; (f) issue any Preferred Shares other than as contemplated hereby or pursuant to the Exchange Agreements or the Merger
Agreement; or (g) without limiting any provision of Section 10, 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 Exchange Agreements.
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 18(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 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, 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 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, at its sole option, 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 solely by the Company, 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 (1) 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: Aditxt, Inc., 737 N. Fifth Street, Suite 200, Richmond, VA 23219, Attention: Amro Albanna, e-mail address: aalbanna@aditxt.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(a) 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 Purchase 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(a) 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 e-mail 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 Exchange
Agreements.
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 sitting 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 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).
30. 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.
31. Stockholder Matters;
Amendment; Transactions Related to the Merger Agreement, and Other Acquisitions or Strategic Tramsactions.
(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), which may not be amended 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
(c) Transactions
Related to the Merger Agreement and Other Acquisitions or Strategic Transactions. Notwithstanding the foregoing, nothing herein
shall restrict or otherwise prohibit any term or condition of the Merger Agreement, any agreement resulting in the issuance of Merger
Parity Stock, or the transactions contemplated thereby, including without limitation, the filing of one or more certificates of designations
with any secretary of state with respect thereto and the issuance of the Merger Senior Preferred Stock and/or Parity Stock, as applicable,
in accordance therewith.
32. 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
Measurement Commencement Date” means January 1, 2023.
(e) “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).
(f) “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.
(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) “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.
(i) “Applicable
Date” means the later of (x) the Stockholder Approval Date and (y) the earlier to occur of (A) the effective date of a registration
statement registering the resale by the Holders of all of the shares of Common Stock issuable upon conversion of the Preferred Shares
then outstanding and (B) 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).
(j) “Approved
Stock Plan” means any employee benefit plan or agreement which has been approved by the Board prior to or subsequent to the
Exchange Agreements Effective Date pursuant to which shares of Common Stock 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.
(k) “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.
(l) “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) [Reserved].
(o) “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.
(p) “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 and (iv) any merger or acquisition of any business by the
Company, directly or indirectly, in which either (x) the holders of the Company’s voting power to elect the board of directors of
the Company immediately prior to such merger or acquisition continue after such merger or acquisition to have the voting power to elect
a majority of the board of directors of the Company or (y) the Company shall not, 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 (1) at least 10% of the aggregate ordinary voting power represented by issued
and outstanding Common Stock, (2) at least 10% 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 (3) 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 elect a majority
of the directors of the Board of Directors of the Company (and, in either case, a majority of the directors on the board of directors
of the Company immediately prior to such merger or acquisition continue after such merger or acquisition to be a majority of the directors
on the board of directors of the Company). Notwithstanding the foregoing, the transactions contemplated by the Merger Agreement, or any
agreement resulting in the issuance of Merger Parity Stock shall not be deemed a Change of Control.
(q) “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 (1) 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.
(r) “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 Holder. 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.
(s) “Code”
means the Internal Revenue Code of 1986, as amended.
(t) “Common
Stock” means (i) the Company’s shares of common stock, $0.001 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 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.
(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) “Eligible
Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the
Nasdaq Capital Market.
(y) [Reserved]
(z) “Exchange
Agreement” means those certain exchange agreements set forth on Schedule I attached hereto.
(aa) “Exchange
Agreements Effective Date” means December 22, 2023.
(bb) “Excluded
Securities” means (i) shares of Common Stock 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 (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise of such options) after the Exchange
Agreements Effective Date pursuant to this clause (i) do not either (x) with respect to any issuances during the period commencing on
the Initial Issuance Date through December 31, 2023 and/or (y) with respect to any issuances in any given calendar year thereafter, as
applicable, exceed 10% of the Common Stock issued and outstanding as of the first calendar day in such period and/or calendar year, as
applicable, and (B) 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 of Convertible Securities (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 Adjustment Measurement Commencement Date, provided that the conversion price of any such Convertible Securities (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 (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 (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; and (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 Exchange Agreements
Effective Date (other than antidilution adjustments pursuant to the terms thereof in effect as of the Exchange Agreements Effective Date).
(cc) “FATCA”
means Sections 1471 through 1474 of the Code, as of the date of this Preferred Shares (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.
(dd) “Floor
Price” means $0.888 (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.
(ee) “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.
(ff) “GAAP”
means United States generally accepted accounting principles, consistently applied.
(gg) “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.
(hh) “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.
(ii) “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.
(jj) “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.
(kk) “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.
(ll) “Market
Price” means, with respect to any Adjustment Date, 80% of the quotient determined by dividing (x) the sum of the VWAP of the
Common Stock for each of the three (3) lowest Trading Days during the twenty (20) consecutive Trading Day period ending and including
the Trading Day immediately such Applicable Date, divided by (y) three (3).
(mm) “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.
(nn) “Merger
Agreement” means that certain Agreement and Plan of Merger, dated December 11, 2023, by and among Aditxt, Inc., Adicure, Inc.
and Evofem Biosciences, Inc., as such shall be amended, supplemented and/or restated on or after the date hereof.
(oo) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(pp) “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.
(qq) “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.
(rr) “Principal
Market” means, as of any time of determination, the principal trading market, if any, in which the shares of Common Stock then
trade.
(ss) “Registration
Rights Agreement” means that certain registration rights agreement, dated as of the Initial Issuance Date, by and among the
Company and the initial holders of the Preferred Shares relating to, among other things, the registration of the resale of the Common
Stock issuable upon conversion of the Preferred Shares or otherwise pursuant to the terms of this Certificate of Designations, as may
be amended from time to time.
(tt) “Required
Premium” means as applicable (i) 150% with respect to an Alternate Conversion pursuant to clause 5(a)(xvi) above or (ii) otherwise,
125%.
(uu) “SEC”
means the United States Securities and Exchange Commission or the successor thereto.
(vv) “Securities”
means the Preferred Shares and the Conversion Shares.
(ww) “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.
(xx) “Stock
Combination Event” means the occurrence at any time and from time to time on or after the Exchange Agreements Effective Date
of any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock.
(yy) “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(zz) “Subsequent
Placement” means at any time on or prior to the fourth anniversary of the Initial Issuance Date, the Company or any of its
Subsidiaries shall, directly or indirectly, issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or announce
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).
(aaa) “Subsidiary”
shall have the meaning set forth in the Exchange Agreements.
(bbb) “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.
(ccc) “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.
(ddd) “Transaction
Documents” means the Exchange Agreements, this Certificate of Designations, the Registration Rights Agreement 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 Agreements, all as may be amended from time to time in accordance with the terms thereof.
(eee) “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.
33. 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 immediately upon 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 immediately
upon 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.
34. 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 non-disclosure
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.
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IN WITNESS WHEREOF, the Company
has caused this Certificate of Designations of the Certificate of Incorporation of Aditxt, Inc. to be signed by its Chief Executive Officer
on this 22nd day of December, 2023.
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ADITXT, INC. |
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By: |
/s/ Amro Albanna |
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Name: |
Amro Albanna |
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Title: |
Chief Executive Officer |
EXHIBIT I
ADITXT, INC.
CONVERSION NOTICE
Reference is made to the Certificate
of Designations of the Certificate of Incorporation of Aditxt, Inc., a Delaware corporation (the “Company”) establishing
the terms, preferences and rights of the Series A-1 Convertible Preferred Stock, $0.001 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, $0.001 value per
share (the “Common Stock”), of the Company, as of the date specified below.
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Date of Conversion: |
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Aggregate number of Preferred Shares to be converted: |
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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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Conversion Price: |
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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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DTC Participant: |
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DTC Number: |
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Account Number: |
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Date: _____________ __, __
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Name of Registered Holder |
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Tax ID:_____________________ |
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E-mail Address: |
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EXHIBIT II
ACKNOWLEDGMENT
The Company hereby (a) acknowledges
this Conversion Notice, (b) certifies that the above indicated number of shares of Common Stock are eligible to be resold by the applicable
Holder without restriction and 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 ________________________.
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ADITXT, INC. |
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By: |
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Name: |
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Title: |
APPENDIX B
CERTIFICATE OF DESIGNATIONS
OF RIGHTS AND PREFERENCES OF
SERIES B-1 CONVERTIBLE PREFERRED STOCK
OF
ADITXT, INC.
I, Amro Albanna, hereby certify
that I am the Chief Executive Officer and a Director of Aditxt, 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 Amended and Restated
Certificate of Incorporation, as amended (the “Certificate of Incorporation”), and Section 151(g) of the DGCL, the
Board on January 24, 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 six thousand (6,000) shares of preferred stock designated as “Series B-1 Convertible Preferred
Stock”, none of which shares have been issued, to be issued pursuant to the Purchase Agreement (as defined below), in accordance
with the terms of the Purchase Agreement:
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 $0.001 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-1 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-1
Convertible Preferred Stock” (the “Series B-1 Convertible Preferred Stock”). The authorized number of shares
of Series B-1 Convertible Preferred Stock (the “Preferred Shares”) shall be six thousand (6,000) shares. Each Preferred
Share shall have a par value of $0.001 per share. Capitalized terms not defined herein shall have the meaning as set forth in Section
32 below.
2. Ranking. Except
(i) for shares of Senior Preferred Stock (as defined below) to be issued to the parties identified in Schedule 4.13 of the Purchase Agreement
pursuant to the transactions contemplated by the Merger Agreement (the “Specified Senior Preferred Stock”), shares
of Parity Stock (as defined below) to be issued pursuant to the transactions contemplated by the Merger Agreement (as defined below) to
be issued pursuant to the transactions contemplated by the Merger Agreement, shares of Parity Stock to be issued pursuant to the transactions
contemplated by the Evofem Exchange Agreement (as defined below), and shares of Parity Stock to be issued pursuant to the transactions
contemplated by the Walleye Exchange Agreement or (ii) to the extent that the Required Holders expressly consent to the creation of Parity
Stock or Senior Preferred Stock 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 (i) junior to the
Specified Senior Preferred Stock, (ii) on parity with the Parity Stock issued pursuant to the transactions contemplated by the Merger
Agreement, (iii) on parity with the Parity Stock issued pursuant to the transactions contemplated by the Walleye Exchange Agreement and
(iv) 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”), other than the Specified Senior Preferred Stock, (ii) of pari 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”), other than Parity Stock to be issued pursuant to the transactions contemplated by the Merger Agreement
and Parity Stock to be issued pursuant to the transactions contemplated by the Walleye Exchange Agreement or the Evofem Exchange Agreement
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 first 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. In addition
to Section 7, Section 8 and/or Section 15 below, as applicable, subject to the senior rights of the holders of shares of the Specified
Senior Preferred Stock, and pari passu with the holders of shares of Parity Stock, from and after the first date of issuance of any Preferred
Shares (the “Initial Issuance Date”), each holder of a Preferred Share (each, a “Holder” and collectively,
the “Holders”) shall be entitled to receive dividends (“Dividends”) when and as declared by the
Board, from time to time, in its sole discretion, which Dividends shall be paid by the Company out of funds legally available therefor,
payable, subject to the conditions and other terms hereof, in cash, in securities of the Company or any other entity, or using assets
as determined by the Board on the Stated Value of such Preferred Share.
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 Company’s transfer
agent (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”).
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 plus (2) any Additional Amount thereon as of such date
of determination plus (3) any other amounts owed to such Holder pursuant to this Certificate of Designations or any Transaction
Document.
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, $4.06, 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)(iii), 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 or before the first (1st) Trading Day following
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 (1st) 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 (1) provided that the Transfer Agent is participating in
FAST, 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, 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)(iii) 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 18(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. 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 or the Purchase Agreement, after the effective date of a Registration
Statement (as defined in Exhibit C to the Purchase Agreement) covering the resale of the Conversion Shares, 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 Registrable
Securities (as defined in Exhibit C to the Purchase Agreement) with respect to which such Holder has entered into a contract for sale,
and delivered a copy of the prospectus included as part of the particular Registration Statement 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, either (I) if the Transfer Agent is not participating in FAST, 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, 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) or (II) if a registration statement covering the resale of the Conversion Shares that are the subject of the Conversion
Notice (the “Unavailable Conversion Shares”) is not available for the resale of such Unavailable Conversion Shares
and the Company fails to promptly, but in no event later than the applicable Share Delivery Deadline (x) notify such Holder and (y) deliver
the shares of Common Stock electronically without any restrictive legend by crediting such aggregate number of shares of Common Stock
to which such Holder is entitled pursuant to such conversion to the Holder’s or its designee’s balance account with DTC through
its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a
“Notice Failure” and together with the event described in clause (I) above, a “Conversion Failure”),
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. In addition to the foregoing, if on or prior to the Share Delivery Deadline either (A) the Transfer
Agent is not participating in FAST, 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, 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 or (B) a Notice Failure occurs, 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 or Notice Failure, as applicable (a “Buy-In”), then, in addition to all other remedies
available to such Holder, the Company shall, within two (2) Business Days 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”). Nothing herein 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
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 Notice Failure and/or Conversion Failure,
as applicable, 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 Notice Failure and/or Conversion Failure, as applicable, pursuant to the analogous sections
of any other agreement with such Holder.
(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)(iii)) 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 two (2) Business Days of such occurrence, then the Register shall be automatically deemed updated
to reflect such occurrence. In the event of any dispute or discrepancy, such records of such Holder 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-1 CONVERTIBLE
PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE, INCLUDING SECTION 4(c)(iii) THEREOF. THE NUMBER OF SHARES OF SERIES B-1 CONVERTIBLE PREFERRED
STOCK REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER OF SHARES OF SERIES B-1 CONVERTIBLE PREFERRED STOCK STATED ON THE FACE
HEREOF PURSUANT TO SECTION 4(c)(iii) OF THE CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES B-1 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 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.
(i) 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 plus 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 the 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 (61st)
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 (61st)
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 waived and shall apply to a successor holder of such Preferred Shares.
(ii) Principal
Market Regulation. The Company shall not issue any shares of Common Stock upon conversion of any Preferred Shares or otherwise pursuant
to the terms of this Certificate of Designations if the issuance of such shares of Common Stock would exceed the aggregate number of shares
of Common Stock which the Company may issue upon exercise or conversion (as the case may be) of the Preferred Shares without breaching
the Company’s obligations under the rules and regulations the listing rules of the Principal Market (the maximum number of shares
of Common Stock which may be issued without violating such rules and regulations, the “Exchange Cap”), except that
such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable
rules and regulations of the Principal Market for issuances of shares of Common Stock in excess of such amount (the “Stockholder
Approval Date”) or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which
opinion shall be reasonably satisfactory to the Required Holders. Until such approval or such written opinion is obtained, no Holder shall
be issued in the aggregate, upon conversion or exercise (as the case may be) of any Preferred Shares, shares of Common Stock in an amount
greater than the product of (i) the Exchange Cap as of the Initial Issuance Date multiplied by (ii) the quotient of (1) the aggregate
number of Preferred Shares issued to such Holder on the Initial Issuance Date divided by (2) the aggregate number of Preferred Shares
and Parity Stock outstanding as of the Initial Issuance Date (with respect to each Holder, the “Exchange Cap Allocation”).
In the event that any Holder shall sell or otherwise transfer any of such Holder’s Preferred Shares, the transferee shall be allocated
a pro rata portion of such Holder’s Exchange Cap Allocation with respect to such portion of such Preferred Shares so transferred,
and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation so
allocated to such transferee. Upon conversion in full of a Holder’s Preferred Shares, the difference (if any) between such Holder’s
Exchange Cap Allocation and the number of shares of Common Stock actually issued to such Holder upon such Holder’s conversion in
full of such Preferred Shares shall be allocated, to the respective Exchange Cap Allocations of the remaining holders of Preferred Shares
and Parity Stock outstanding as of the Initial Issuance Date on a pro rata basis in proportion to the shares of Common Stock underlying
the Preferred Shares and/or Parity Stock then held by each such holder of Preferred Shares and/or Parity Stock outstanding as of the Initial
Issuance Date, as applicable.
(e) 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(e) 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 the Holder on the applicable Alternate Conversion Date. Notwithstanding anything to the
contrary in this Section 4(e), but subject to Section 4(d), until the Company delivers to such Holder the shares of Common Stock to which
the 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(e).
5. Triggering Events.
(a) General.
Each of the following events shall constitute a “Triggering Event” and each of the events in clauses 5(a)(ix), 5(a)(x),
and 5(a)(xi), 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 or the delisting, removal or withdrawal, as applicable, of registration of the Common Stock under the 1934 Act
with respect to a going-private transaction;
(iv) the Company’s
failure (A) 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(d) 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 the Required Reserve Amount as of such date of determination;
(vi) the Company’s
failure to pay to any Holder any Dividend when required to be paid hereunder (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 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;
(vii) the Company
fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the applicable Holder upon conversion
of the Preferred Shares held by such Holder as and when required by this Certificate of Designations, unless otherwise then prohibited
by applicable federal securities laws, and any such failure remains uncured for at least five (5) days;
(viii) the occurrence
of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $500,000 of indebtedness for borrowed
money of the Company or any of its Subsidiaries, excluding any indebtedness for borrowed money in which no cash payment is required at
such time pursuant to a forbearance agreement in full force and effect or any applicable grace period under the terms of such indebtedness
for borrowed money, except, in the case of a default or breach that is curable, only if such default or breach, as applicable, remains
uncured for a period of twenty (20) days;
(ix) 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;
(x) 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;
(xi) 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;
(xii) 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;
(xiii) 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 $500,000 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 $500,000, 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;
(xiv) 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 five (5) consecutive Trading Days;
(xv) a false or inaccurate
certification (including a false or inaccurate deemed certification) by the Company as to whether any Triggering Event has occurred;
(xvi) any Preferred
Shares remain outstanding on or after December 22, 2026;
(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 Change
of Control occurs;
(xix) any Material
Adverse Effect (as defined in the Purchase Agreement) occurs; or
(xx) 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 parties thereto, 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 one (1)
Business Day deliver written notice thereof via electronic mail and overnight courier (with next day delivery specified) (a “Triggering
Event Notice”) to each Holder.
(c) Mandatory
Redemption upon Bankruptcy Triggering Event. Notwithstanding anything to the contrary herein, and notwithstanding any conversion that
is then required or in process, upon any Bankruptcy Triggering Event, the Company shall immediately redeem, in cash, each of the Preferred
Shares then outstanding at a redemption price equal to the greater of (i) the product of (A) the Conversion Amount to be redeemed multiplied
by (B) the Required Premium and (ii) the product of (X) the Conversion Rate (calculated using the lowest Alternate Conversion Price during
the period commencing on the 20th Trading Day immediately preceding such public announcement and ending on the date the Company makes
the entire redemption payment pursuant to this Section 5(c)) with respect to the Conversion Amount in effect immediately following the
date of initial public announcement (or public filing of bankruptcy documents, as applicable) of such Bankruptcy Triggering Event multiplied
by (Y) the product of (1) the Required Premium 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 Bankruptcy Triggering Event and ending on the date the Company makes
the entire payment required to be made under this Section 5(c), without the requirement for any notice or demand or other action by any
Holder or any other person or entity, provided that a Holder may, in its sole discretion, waive such right to receive payment upon a Bankruptcy
Triggering Event, in whole or in part, and any such waiver shall not affect any other rights of such Holder or any other Holder hereunder,
including any other rights in respect of such Bankruptcy Triggering Event or any right to conversion (or Alternate Conversion), as applicable.
6. Rights Upon Fundamental
Transactions.
(a) Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) 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(a) pursuant to written agreements in form and substance satisfactory to the Required Holders and approved by the Required
Holders prior to such Fundamental Transaction, 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 satisfactory to the Required
Holders and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose shares of common stock are
quoted on or listed for trading on an Eligible Market. 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(a) 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 twenty (20) Trading Days nor later than ten (10) Trading Days
prior to the consummation of a Change of Control (the “Change of Control Date”), but not prior to the public announcement
of such Change of Control, 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 Holder, 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 Closing Bid Price 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 Closing Bid Price 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 Closing Bid Price of the Successor
Shares for each Trading Day in the Rights Measuring Period is the Closing Bid Price 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 pari 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(a). 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) in addition to the shares of Common Stock receivable upon such conversion, 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 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 Adjustment Measurement Commencement 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 minus (3) 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 (1) 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(b) 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 Purchase Agreement Effective 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 Holders, the “Primary
Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”
and together with the Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate
consideration per share of Common Stock with respect to such Primary Security shall be deemed to be the lower of (x) the purchase price
of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest price per share for which one share of
Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 8(a)(i) or 8(a)(ii)
above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day during the five (5) Trading Day period (the “Adjustment
Period”) immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public
announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day
in such five Trading Day period and if any Preferred Shares are converted, on any given Conversion Date during any such Adjustment Period,
solely with respect to such Preferred Shares converted on such applicable Conversion Date, such applicable Adjustment Period shall be
deemed to have ended on, and included, the Trading Day immediately prior to such Conversion Date). 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 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 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 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 15, if
the Company at any time on or after the Purchase Agreement Effective 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 Purchase Agreement Effective 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(b) shall become effective immediately after the effective date of such subdivision or combination.
If any event requiring an adjustment under this Section 8(b) 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(c), 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 (any
such securities, “Variable Price Securities”) after the Adjustment Measurement Commencement 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) [Reserved].
(e) Other Events.
In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly applicable, or,
if applicable, would not operate to protect any Holder from dilution or if any event occurs of the type contemplated by the provisions
of this Section 8 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the Board shall in good faith determine and implement an appropriate
adjustment in the Conversion Price so as to protect the rights of such Holder, provided that no such adjustment pursuant to this Section
8(e) will increase the Conversion Price as otherwise determined pursuant to this Section 8, provided further that if such Holder does
not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Board and such Holder
shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments,
whose determination shall be final and binding absent manifest error and whose fees and expenses shall be borne by the Company.
(f) 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.
(g) 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.
(h) Adjustments.
If on any of the ninetieth (90th) and one hundred and eightieth (180th),
as applicable, calendar day after each of (x) each date of occurrence of any Stock Combination Event and (y) the Applicable Date (each,
an “Adjustment Date”), the Conversion Price then in effect is greater than the Market Price then in effect (the “Adjustment
Price”), on the Adjustment Date the Conversion Price shall automatically lower to the Adjustment Price.
(i) Exchange
Right. Notwithstanding anything herein to the contrary, if a Holder participates in a Subsequent Placement, each such Holder may,
at the option of such Holder as elected in writing to the Company, satisfy the purchase price of the securities to be sold to such Holder
in such Subsequent Placement, in whole or in part, with Preferred Shares valued at 120% of the Conversion Amount of the Preferred Shares
delivered by such Holder as payment therefor.
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 115% 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”). The Company may
deliver only one Company Optional Redemption Notice hereunder and such Company Optional Redemption Notice shall be irrevocable. 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, (y) certify that there has been no Equity Conditions Failure and (z) 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.
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 (x) if prior to May 31, 2024 (or,
if earlier, the Stockholder Approval Date (the “Initial Reserve Expiration Date”), 900,000 shares of Common Stock or
(y) from and after the Initial Reserve Expiration Date, 200% 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 (or deemed outstanding pursuant to Section 11(a) above). 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 sixty (60) 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 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 14C. 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(b);
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.
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
12 and Section 16 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) 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).
(b) 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.
(c) 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 Exchange Agreement Effective 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.
(d) 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.
(e) Maintenance
of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its
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 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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 Purchase Agreement and this Certificate of Designations), or (ii) issue any other
securities that would cause a breach or default under this Certificate of Designations.
(j) 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.
(k) Taxes.
The Company and its Subsidiaries shall pay when due all 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.
(l) 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.
(m) Independent
Investigation. At the request of any Holder 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
Holder reasonably believes 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 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 (including the accountants’ work papers) 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, after any Senior Preferred Stock then outstanding, 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 (at the Alternate Conversion Price then in effect) 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 converted 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 of amendment 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-1 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, other than any Specified Senior Preferred Stock to be issued pursuant
to the transactions contemplated by the Merger Agreement, any Parity Stock to be issued pursuant to the transactions contemplated by the
Merger Agreement and any Parity Stock to be issued pursuant to the transactions contemplated by the Walleye Exchange Agreement and Evofem
Exchange Agreement; (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; (f) issue
any Preferred Shares other than as contemplated hereby or pursuant to the Purchase Agreement; or (g) without limiting any provision of
Section 10, 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 4.1 of the 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 18(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 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, 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 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, at its sole option, 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 solely by the Company, 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 (1) 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: Aditxt, Inc., 737 N. Fifth Street, Suite 200, Richmond, VA 23219, Attention: Amro Albanna, e-mail address: aalbanna@aditxt.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(a) 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 Purchase 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(a) 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 e-mail 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 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 sitting 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 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).
30. 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.
31. Stockholder Matters;
Amendment; Transactions Related to the Merger Agreement, Evofem Exchange Agreement and Walleye Exchange Agreement.
(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), which may not be amended 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
(c) Transactions
Related to the Merger Agreement and Walleye Exchange Agreement. Notwithstanding the foregoing, nothing herein shall restrict
or otherwise prohibit any term or condition of the Merger Agreement, the Walleye Exchange Agreement, the Evofem Exchange Agreement or
the transactions contemplated thereby, including without limitation, the filing of one or more certificates of designations with any secretary
of state with respect thereto and the issuance of the Specified Senior Preferred Stock and/or Parity Stock, as applicable, in accordance
therewith. For the avoidance of doubt, each Holder by accepting the Preferred Shares hereby consents to the transactions contemplated
by the Merger Agreement, the Evofem Exchange Agreement and the Walleye Exchange Agreement.
32. 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
Measurement Commencement Date” means January 1, 2024.
(e) “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).
(f) “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.
(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) “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.
(i) “Applicable
Date” means the later of (x) the Stockholder Approval Date and (y) the earlier to occur of (A) the effective date of a registration
statement registering the resale by the Holders of all of the shares of Common Stock issuable upon conversion of the Preferred Shares
then outstanding and (B) 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).
(j) “Approved
Stock Plan” means any employee benefit plan or agreement which has been approved by the Board prior to or subsequent to the
Purchase Agreement Effective Date pursuant to which shares of Common Stock 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.
(k) “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.
(l) “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 and (iv) any merger or acquisition of any business by the
Company, directly or indirectly, in which either (x) the holders of the Company’s voting power to elect the board of directors of
the Company immediately prior to such merger or acquisition continue after such merger or acquisition to have the voting power to elect
a majority of the board of directors of the Company or (y) the Company shall not, 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 (1) at least 10% of the aggregate ordinary voting power represented by issued
and outstanding Common Stock, (2) at least 10% 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 (3) 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 elect a majority
of the directors of the Board of Directors of the Company (and, in either case, a majority of the directors on the board of directors
of the Company immediately prior to such merger or acquisition continue after such merger or acquisition to be a majority of the directors
on the board of directors of the Company). Notwithstanding the foregoing, the transactions contemplated by the Merger Agreement, the Evofem
Exchange Agreement and the Walleye Exchange Agreement shall not be deemed a Change of Control.
(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 (1) 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 Holder. 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) “Code”
means the Internal Revenue Code of 1986, as amended.
(s) “Common
Stock” means (i) the Company’s shares of common stock, $0.001 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.
(t) “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.
(u) “Conversion
Floor Price Condition” means that the relevant Alternate Conversion Price is being determined based on clause (x) of such definitions.
(v) “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.
(w) “Eligible
Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the
Nasdaq Capital Market.
(x) “Evofem
Exchange Agreement” means that certain Exchange Agreement to be entered into on or about the date hereof, by and between the
Company and the holders of certain preferred stock of Evofem Biosciences, Inc., as such shall be amended, supplemented and/or restated
on or after the date hereof.
(y) “Excluded
Securities” means (i) shares of Common Stock 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 (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise of such options) after the Purchase
Agreement Effective Date pursuant to this clause (i) do not either (x) with respect to any issuances during the period commencing on the
Initial Issuance Date through December 31, 2024 and/or (y) with respect to any issuances in any given calendar year thereafter, as applicable,
exceed 10% of the Common Stock issued and outstanding as of the first calendar day in such period and/or calendar year, as applicable,
and (B) 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 of Convertible Securities (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 Purchase
Agreement Effective Date, provided that the conversion price of any such Convertible Securities (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 (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 (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 Purchase Agreement Effective Date (other
than antidilution adjustments pursuant to the terms thereof in effect as of the Purchase Agreement Effective Date) and (iv) any securities
to be issued pursuant to the transactions contemplated by the Merger Agreement or the Walleye Exchange Agreement.
(z) “FATCA”
means Sections 1471 through 1474 of the Code, as of the date of this Preferred Shares (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.
(aa) “Floor
Price” means $0.812 (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.
(bb) “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.
(cc) “GAAP”
means United States generally accepted accounting principles, consistently applied.
(dd) “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.
(ee) “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.
(ff) “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.
(gg) “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.
(hh) “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.
(ii) “Market
Price” means 4.06.
(jj) “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.
(kk) “Merger
Agreement” means that certain Agreement and Plan of Merger, dated December 11, 2023, by and among the Company, Adicure, Inc.
and Evofem Biosciences, Inc., as such shall be amended, supplemented and/or restated on or after the date hereof.
(ll) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(mm) “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.
(nn) “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.
(oo) “Principal
Market” means, as of any time of determination, the principal trading market, if any, in which the shares of Common Stock then
trade.
(pp) “Purchase
Agreement” means that certain Securities Purchase Agreement dated as of January 24, 2024, by and among the Company and the original
Holders, as amended, modified or supplemented from time to time in accordance with its terms.
(qq) “Purchase
Agreement Effective Date” means January 24, 2024.
(rr) “Required
Holders” means, as of any time, the means Holders of a majority of the then outstanding Preferred Shares.
(ss) “Required
Premium” means as applicable (i) 150% with respect to an Alternate Conversion pursuant to clause 5(a)(xvi) above or (ii) otherwise,
125%.
(tt) “SEC”
means the United States Securities and Exchange Commission or the successor thereto.
(uu) “Securities”
means the Preferred Shares and the Conversion Shares.
(vv) “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.
(ww) “Stock
Combination Event” means the occurrence at any time and from time to time on or after the Purchase Agreement Effective Date
of any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock.
(xx) “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(yy) “Subsequent
Placement” means at any time on or prior to the fourth anniversary of the Initial Issuance Date, the Company or any of its Subsidiaries
shall, directly or indirectly, issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or announce 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).
(zz) “Subsidiary”
shall have the meaning set forth in the Purchase Agreement.
(aaa) “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.
(bbb) “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.
(ccc) “Transaction
Documents” means the Purchase 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 Purchase Agreement,
all as may be amended from time to time in accordance with the terms thereof.
(ddd) “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.
(eee) “Walleye
Exchange Agreement” means that certain Exchange Agreement, to be entered into on or about the date hereof, by and among the
Company and Walleye Opportunities Master Fund Ltd, as such shall be amended, supplemented and/or restated on or after the date hereof.
33. 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 immediately upon 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 immediately
upon 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.
34. 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 non-disclosure
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.
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IN WITNESS WHEREOF, the Company
has caused this Certificate of Designations of the Certificate of Incorporation of Aditxt, Inc. to be signed by its Chief Executive Officer
on this 24th day of January, 2024.
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ADITXT, INC. |
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By: |
/s/ Amro Albanna |
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Name: |
Amro Albanna |
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Title: |
Chief Executive Officer |
EXHIBIT I
ADITXT, INC.
CONVERSION NOTICE
Reference is made to the Certificate
of Designations of the Certificate of Incorporation of Aditxt, Inc., a Delaware corporation (the “Company”) establishing
the terms, preferences and rights of the Series B-1 Convertible Preferred Stock, $0.001 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, $0.001 value per
share (the “Common Stock”), of the Company, as of the date specified below.
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Date of Conversion: |
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Aggregate number of Preferred Shares to be converted: |
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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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Conversion Price: |
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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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DTC Participant: |
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DTC Number: |
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Account Number: |
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Date: _____________ __, __
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Name of Registered Holder |
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Tax ID:_____________________ |
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E-mail Address: |
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EXHIBIT II
ACKNOWLEDGMENT
The Company hereby (a) acknowledges
this Conversion Notice, (b) certifies that the above indicated number of shares of Common Stock are eligible to be resold by the applicable
Holder without restriction and hereby directs _________________ to issue the above indicated number of shares of Common Stock to the Holder
in accordance with the Conversion Notice.
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ADITXT, INC. |
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By: |
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Name: |
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Title: |
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APPENDIX C
CERTIFICATE OF DESIGNATIONS
OF RIGHTS AND PREFERENCES OF
SERIES B-2 CONVERTIBLE PREFERRED STOCK
OF
ADITXT, INC.
I, Amro Albanna, hereby certify
that I am the Chief Executive Officer and a Director of Aditxt, Inc. (the “Company”), a corporation organized and existing
under the Chapter 78 of 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 Amended and Restated
Certificate of Incorporation, as amended (the “Certificate of Incorporation”), and Section 151(g) of the DGCL, the
Board on December 28, 2023 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 two thousand six hundred twenty five (2,625) shares of preferred stock designated as
“Series B-2 Convertible Preferred Stock”, none of which shares have been issued, to be issued pursuant to the Exchange
Agreement (as defined below), in accordance with the terms of the Exchange Agreement:
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 $0.001 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-2 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-2
Convertible Preferred Stock” (the “Series B-2 Convertible Preferred Stock”). The authorized number of shares
of Series B-2 Convertible Preferred Stock (the “Preferred Shares”) shall two thousand six hundred twenty five (2,625)
shares. Each Preferred Share shall have a par value of $0.001 per share. Capitalized terms not defined herein shall have the meaning as
set forth in Section 32 below.
2. Ranking. Except
(i) for shares of Senior Preferred Stock (as defined below) to be issued to the parties identified in Schedule 5.5 of the Exchange Agreement
pursuant to the transactions contemplated by the Merger Agreement (the “Specified Senior Preferred Stock”), shares
of Parity Stock (as defined below) to be issued pursuant to the transactions contemplated by the Merger Agreement (as defined below) to
be issued pursuant to the transactions contemplated by the Merger Agreement, shares of Parity Stock to be issued pursuant to the transactions
contemplated by the Evofem Exchange Agreement (as defined below), and shares of Parity Stock to be issued pursuant to the transactions
contemplated by the Purchase Agreement or (ii) to the extent that the Required Holders expressly consent to the creation of Parity Stock
or Senior Preferred Stock 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 (i) junior to the Specified
Senior Preferred Stock, (ii) on parity with the Parity Stock issued pursuant to the transactions contemplated by the Merger Agreement,
(iii) on parity with the Parity Stock issued pursuant to the transactions contemplated by the Purchase Agreement Agreement and (iv) 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”),
other than the Specified Senior Preferred Stock, (ii) of pari 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”),
other than Parity Stock to be issued pursuant to the transactions contemplated by the Merger Agreement, and Parity Stock to be issued
pursuant to the transactions contemplated by the Purchase Agreement or the Evofem Exchange Agreement, 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 first 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. In addition
to Section 7, Section 8 and/or Section 15 below, as applicable, subject to the senior rights of the holders of shares of the Specified
Senior Preferred Stock, and pari passu with the holders of shares of Parity Stock, from and after the first date of issuance of any Preferred
Shares (the “Initial Issuance Date”), each holder of a Preferred Share (each, a “Holder” and collectively,
the “Holders”) shall be entitled to receive dividends (“Dividends”) when and as declared by the
Board, from time to time, in its sole discretion, which Dividends shall be paid by the Company out of funds legally available therefor,
payable, subject to the conditions and other terms hereof, in cash, in securities of the Company or any other entity, or using assets
as determined by the Board on the Stated Value of such Preferred Share.
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 Company’s transfer
agent (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”).
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 plus (2) any Additional Amount thereon as of such date
of determination plus (3) any other amounts owed to such Holder pursuant to this Certificate of Designations or any Transaction
Document.
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, $4.71, 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 or before the first (1st) Trading Day following
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 (1st) 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 (1) provided that the Transfer Agent is participating in
FAST, 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, 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 18(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. 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 or the Exchange Agreement, after the effective date of a registration
statement covering the resale of the Conversion Shares, 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 the Conversion Shares with respect to which such Holder has entered
into a contract for sale, and delivered a copy of the prospectus included as part of the particular registration statement 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, either (I) if the Transfer Agent is not participating in FAST, 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, 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) or (II) if a registration statement covering the resale of the Conversion Shares that are the subject of the Conversion
Notice (the “Unavailable Conversion Shares”) is not available for the resale of such Unavailable Conversion Shares
and the Company fails to promptly, but in no event later than the applicable Share Delivery Deadline (x) notify such Holder and (y) deliver
the shares of Common Stock electronically without any restrictive legend by crediting such aggregate number of shares of Common Stock
to which such Holder is entitled pursuant to such conversion to the Holder’s or its designee’s balance account with DTC through
its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a
“Notice Failure” and together with the event described in clause (I) above, a “Conversion Failure”),
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. In addition to the foregoing, if on or prior to the Share Delivery Deadline either (A) the Transfer
Agent is not participating in FAST, 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, 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 or (B) a Notice Failure occurs, 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 or Notice Failure, as applicable (a “Buy-In”), then, in addition to all other remedies
available to such Holder, the Company shall, within two (2) Business Days 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”). Nothing herein 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
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 Notice Failure and/or Conversion Failure,
as applicable, 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 Notice Failure and/or Conversion Failure, as applicable, pursuant to the analogous sections
of any other agreement with such Holder.
(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 two (2) Business Days of such occurrence, then the Register shall be automatically deemed updated
to reflect such occurrence. In the event of any dispute or discrepancy, such records of such Holder 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-2 CONVERTIBLE
PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE, INCLUDING SECTION 4(c)(ii) THEREOF. THE NUMBER OF SHARES OF SERIES B-2 CONVERTIBLE PREFERRED
STOCK REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER OF SHARES OF SERIES B-2 CONVERTIBLE PREFERRED STOCK STATED ON THE FACE
HEREOF PURSUANT TO SECTION 4(c)(ii) OF THE CERTIFICATE OF DESIGNATIONS RELATING TO THE SHARES OF SERIES B-2 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 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.
(i) 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 plus 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 the 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 (61st)
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 (61st)
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 waived and shall apply to a successor holder of such Preferred Shares.
(ii) Principal
Market Regulation. The Company shall not issue any shares of Common Stock upon conversion of any Preferred Shares or otherwise pursuant
to the terms of this Certificate of Designations if the issuance of such shares of Common Stock would exceed the aggregate number of shares
of Common Stock which the Company may issue upon exercise or conversion (as the case may be) of the Preferred Shares without breaching
the Company’s obligations under the rules and regulations the listing rules of the Principal Market (the maximum number of shares
of Common Stock which may be issued without violating such rules and regulations, the “Exchange Cap”), except that
such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable
rules and regulations of the Principal Market for issuances of shares of Common Stock in excess of such amount (the “Stockholder
Approval Date”) or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which
opinion shall be reasonably satisfactory to the Required Holders. Until such approval or such written opinion is obtained, no Holder shall
be issued in the aggregate, upon conversion or exercise (as the case may be) of any Preferred Shares, shares of Common Stock in an amount
greater than the product of (i) the Exchange Cap as of the Initial Issuance Date multiplied by (ii) the quotient of (1) the aggregate
number of Preferred Shares issued to such Holder on the Initial Issuance Date divided by (2) the aggregate number of Preferred Shares
and Parity Stock outstanding as of the Initial Issuance Date (with respect to each Holder, the “Exchange Cap Allocation”).
In the event that any Holder shall sell or otherwise transfer any of such Holder’s Preferred Shares, the transferee shall be allocated
a pro rata portion of such Holder’s Exchange Cap Allocation with respect to such portion of such Preferred Shares so transferred,
and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation so
allocated to such transferee. Upon conversion in full of a Holder’s Preferred Shares, the difference (if any) between such Holder’s
Exchange Cap Allocation and the number of shares of Common Stock actually issued to such Holder upon such Holder’s conversion in
full of such Preferred Shares shall be allocated, to the respective Exchange Cap Allocations of the remaining holders of Preferred Shares
and Parity Stock outstanding as of the Initial Issuance Date, on a pro rata basis in proportion to the shares of Common Stock underlying
the Preferred Shares and/or Parity Stock then held by each such holder of Preferred Shares and/or Parity Stock outstanding as of the Initial
Issuance Date, as applicable.
(e) 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(e) 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 the Holder on the applicable Alternate Conversion Date. Notwithstanding anything to the
contrary in this Section 4(e), but subject to Section 4(d), until the Company delivers to such Holder the shares of Common Stock to which
the 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(e).
5. Triggering Events.
(a) General.
Each of the following events shall constitute a “Triggering Event” and each of the events in clauses 5(a)(ix), 5(a)(x),
and 5(a)(xi), 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 or the delisting, removal or withdrawal, as applicable, of registration of the Common Stock under the 1934 Act
with respect to a going-private transaction;
(iv) the Company’s
failure (A) 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(d) 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 the Required Reserve Amount as of such date of determination;
(vi) the Company’s
failure to pay to any Holder any Dividend when required to be paid hereunder (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 Exchange 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;
(vii) the Company
fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the applicable Holder upon conversion
of the Preferred Shares held by such Holder as and when required by this Certificate of Designations, unless otherwise then prohibited
by applicable federal securities laws, and any such failure remains uncured for at least five (5) days;
(viii) the occurrence
of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $500,000 of indebtedness for borrowed
money of the Company or any of its Subsidiaries, excluding any indebtedness for borrowed money in which no cash payment is required at
such time pursuant to a forbearance agreement in full force and effect or any applicable grace period under the terms of such indebtedness
for borrowed money, except, in the case of a default or breach that is curable, only if such default or breach, as applicable, remains
uncured for a period of twenty (20) days;
(ix) 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;
(x) 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;
(xi) 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;
(xii) 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;
(xiii) 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 $500,000 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 $500,000, 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;
(xiv) 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 five (5) consecutive Trading Days;
(xv) a false or inaccurate
certification (including a false or inaccurate deemed certification) by the Company as to whether any Triggering Event has occurred;
(xvi) any Preferred
Shares remain outstanding on or after December 22, 2026;
(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 Change
of Control occurs;
(xix) any Material
Adverse Effect occurs; or
(xx) 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 parties thereto, 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 one (1)
Business Day deliver written notice thereof via electronic mail and overnight courier (with next day delivery specified) (a “Triggering
Event Notice”) to each Holder.
(c) Mandatory
Redemption upon Bankruptcy Triggering Event. Notwithstanding anything to the contrary herein, and notwithstanding any conversion that
is then required or in process, upon any Bankruptcy Triggering Event, the Company shall immediately redeem, in cash, each of the Preferred
Shares then outstanding at a redemption price equal to the greater of (i) the product of (A) the Conversion Amount to be redeemed multiplied
by (B) the Required Premium and (ii) the product of (X) the Conversion Rate (calculated using the lowest Alternate Conversion Price during
the period commencing on the 20th Trading Day immediately preceding such public announcement and ending on the date the Company makes
the entire redemption payment pursuant to this Section 5(c)) with respect to the Conversion Amount in effect immediately following the
date of initial public announcement (or public filing of bankruptcy documents, as applicable) of such Bankruptcy Triggering Event multiplied
by (Y) the product of (1) the Required Premium 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 Bankruptcy Triggering Event and ending on the date the Company makes
the entire payment required to be made under this Section 5(c), without the requirement for any notice or demand or other action by any
Holder or any other person or entity, provided that a Holder may, in its sole discretion, waive such right to receive payment upon a Bankruptcy
Triggering Event, in whole or in part, and any such waiver shall not affect any other rights of such Holder or any other Holder hereunder,
including any other rights in respect of such Bankruptcy Triggering Event or any right to conversion (or Alternate Conversion), as applicable.
6. Rights Upon Fundamental
Transactions.
(a) Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) 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(a) pursuant to written agreements in form and substance satisfactory to the Required Holders and approved by the Required
Holders prior to such Fundamental Transaction, 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 satisfactory to the Required
Holders and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose shares of common stock are
quoted on or listed for trading on an Eligible Market. 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(a) 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 twenty (20) Trading Days nor later than ten (10) Trading Days
prior to the consummation of a Change of Control (the “Change of Control Date”), but not prior to the public announcement
of such Change of Control, 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 Holder, 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 Closing Bid Price 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 Closing Bid Price 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 Closing Bid Price of the Successor
Shares for each Trading Day in the Rights Measuring Period is the Closing Bid Price 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 pari 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(a). 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) in addition to the shares of Common Stock receivable upon such conversion, 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 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 Adjustment Measurement Commencement 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 minus (3) 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 (1) 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(b) 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 Exchange Agreement Effective 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 Holders, the “Primary
Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”
and together with the Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate
consideration per share of Common Stock with respect to such Primary Security shall be deemed to be the lower of (x) the purchase price
of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest price per share for which one share of
Common Stock is at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 8(a)(i) or 8(a)(ii)
above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day during the five (5) Trading Day period (the “Adjustment
Period”) immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public
announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day
in such five Trading Day period and if any Preferred Shares are converted, on any given Conversion Date during any such Adjustment Period,
solely with respect to such Preferred Shares converted on such applicable Conversion Date, such applicable Adjustment Period shall be
deemed to have ended on, and included, the Trading Day immediately prior to such Conversion Date). 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 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 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 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 15, if
the Company at any time on or after the Exchange Agreement Effective 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 Exchange Agreement Effective 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(b) shall become effective immediately after the effective date of such subdivision or combination.
If any event requiring an adjustment under this Section 8(b) 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(c), 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 (any
such securities, “Variable Price Securities”) after the Adjustment Measurement Commencement 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) [Reserved].
(e) Other Events.
In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly applicable, or,
if applicable, would not operate to protect any Holder from dilution or if any event occurs of the type contemplated by the provisions
of this Section 8 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the Board shall in good faith determine and implement an appropriate
adjustment in the Conversion Price so as to protect the rights of such Holder, provided that no such adjustment pursuant to this Section
8(e) will increase the Conversion Price as otherwise determined pursuant to this Section 8, provided further that if such Holder does
not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Board and such Holder
shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments,
whose determination shall be final and binding absent manifest error and whose fees and expenses shall be borne by the Company.
(f) 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.
(g) 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.
(h) Adjustments.
If on any of the ninetieth (90th) and one hundred and eightieth (180th),
as applicable, calendar day after each of (x) each date of occurrence of any Stock Combination Event and (y) the Applicable Date (each,
an “Adjustment Date”), the Conversion Price then in effect is greater than the Market Price then in effect (the “Adjustment
Price”), on the Adjustment Date the Conversion Price shall automatically lower to the Adjustment Price.
(i) Exchange
Right. Notwithstanding anything herein to the contrary, if a Holder participates in a Subsequent Placement, each such Holder may,
at the option of such Holder as elected in writing to the Company, satisfy the purchase price of the securities to be sold to such Holder
in such Subsequent Placement, in whole or in part, with Preferred Shares valued at 120% of the Conversion Amount of the Preferred Shares
delivered by such Holder as payment therefor.
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 115% 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”). The Company may
deliver only one Company Optional Redemption Notice hereunder and such Company Optional Redemption Notice shall be irrevocable. 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, (y) certify that there has been no Equity Conditions Failure and (z) 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.
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 (x) if prior to May 31, 2024 (or,
if earlier, the Stockholder Approval Date (the “Initial Reserve Expiration Date”), 900,000 shares of Common Stock or
(y) from and after the Initial Reserve Expiration Date, 200% 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 (or deemed outstanding pursuant to Section 11(a) above). 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 sixty (60) 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 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 14C. 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(b);
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.
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
12 and Section 15 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) 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).
(b) 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.
(c) 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 Exchange Agreement Effective 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.
(d) 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.
(e) Maintenance
of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its
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 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) 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.
(k) Taxes.
The Company and its Subsidiaries shall pay when due all 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.
(l) 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.
(m) Independent
Investigation. At the request of any Holder 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
Holder reasonably believes 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 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 (including the accountants’ work papers) 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, after any Senior Preferred Stock then outstanding, 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 (at the Alternate Conversion Price then in effect) 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 converted 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 of amendment 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-2 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, other than any Specified Senior Preferred Stock to be issued pursuant
to the transactions contemplated by the Merger Agreement, any Parity Stock to be issued pursuant to the transactions contemplated by the
Merger Agreement and any Parity Stock to be issued pursuant to the transactions contemplated by the Purchase Agreement; (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; (f) issue any Preferred Shares other than
as contemplated hereby or pursuant to the Exchange Agreement; or (g) without limiting any provision of Section 10, 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 6 of the Exchange 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 18(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 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, 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 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, at its sole option, 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 solely by the Company, 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 (1) 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: Aditxt, Inc., 737 N. Fifth Street, Suite 200, Richmond, VA 23219, Attention: Amro Albanna, e-mail address: aalbanna@aditxt.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(a) 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(a) 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 e-mail 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 Exchange
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 sitting 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 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).
30. 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.
31. Stockholder Matters;
Amendment; Transactions Related to the Merger Agreement, Evofem Exchange Agreement and Purchase Agreement.
(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), which may not be amended 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
(c) Transactions
Related to the Merger Agreement and Purchase Agreement. Notwithstanding the foregoing, nothing herein shall restrict or otherwise
prohibit any term or condition of the Merger Agreement, the Purchase Agreement, the Evofem Exchange Agreement or the transactions contemplated
thereby, including without limitation, the filing of one or more certificates of designations with any secretary of state with respect
thereto and the issuance of the Specified Senior Preferred Stock and/or Parity Stock, as applicable, in accordance therewith. For the
avoidance of doubt, each Holder by accepting the Preferred Shares hereby consents to the transactions contemplated by the Merger Agreement,
the Evofem Exchange Agreement, and the Purchase Agreement.
32. 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
Measurement Commencement Date” means January 1, 2024.
(e) “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).
(f) “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.
(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) “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.
(i) “Applicable
Date” means the later of (x) the Stockholder Approval Date and (y) the earlier to occur of (A) the effective date of a registration
statement registering the resale by the Holders of all of the shares of Common Stock issuable upon conversion of the Preferred Shares
then outstanding and (B) 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).
(j) “Approved
Stock Plan” means any employee benefit plan or agreement which has been approved by the Board prior to or subsequent to the
Exchange Agreement Effective Date pursuant to which shares of Common Stock 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.
(k) “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.
(l) “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 and (iv) any merger or acquisition of any business by the
Company, directly or indirectly, in which either (x) the holders of the Company’s voting power to elect the board of directors of
the Company immediately prior to such merger or acquisition continue after such merger or acquisition to have the voting power to elect
a majority of the board of directors of the Company or (y) the Company shall not, 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 (1) at least 10% of the aggregate ordinary voting power represented by issued
and outstanding Common Stock, (2) at least 10% 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 (3) 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 elect a majority
of the directors of the Board of Directors of the Company (and, in either case, a majority of the directors on the board of directors
of the Company immediately prior to such merger or acquisition continue after such merger or acquisition to be a majority of the directors
on the board of directors of the Company). Notwithstanding the foregoing, the transactions contemplated by the Merger Agreement, the Evofem
Exchange Agreement and the Purchase Agreement shall not be deemed a Change of Control.
(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 (1) 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 Holder. 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) “Code”
means the Internal Revenue Code of 1986, as amended.
(s) “Common
Stock” means (i) the Company’s shares of common stock, $0.001 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.
(t) “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.
(u) “Conversion
Floor Price Condition” means that the relevant Alternate Conversion Price is being determined based on clause (x) of such definitions.
(v) “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.
(w) “Eligible
Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the
Nasdaq Capital Market.
(x) “Evofem
Exchange Agreement” means that certain Exchange Agreement to be entered into on or about the date hereof, by and between the
Company and the holders of certain preferred stock of Evofem Biosciences, Inc., as such shall be amended, supplemented and/or restated
on or after the date hereof.
(y) “Exchange
Agreement” means that certain Exchange Agreement, dated as of December 28, 2023, by and among the Company and Walleye Opportunities
Master Fund Ltd, as such shall be amended, supplemented and/or restated on or after the date hereof.
(z) “Exchange
Agreement Effective Date” means December 28, 2023.
(aa) “Excluded
Securities” means (i) shares of Common Stock 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 (A) all such issuances (taking into account the shares of Common Stock issuable upon exercise of such options) after the Exchange
Agreement Effective Date pursuant to this clause (i) do not either (x) with respect to any issuances during the period commencing on the
Initial Issuance Date through December 31, 2023 and/or (y) with respect to any issuances in any given calendar year thereafter, as applicable,
exceed 10% of the Common Stock issued and outstanding as of the first calendar day in such period and/or calendar year, as applicable,
and (B) 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 of Convertible Securities (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 Exchange
Agreement Effective Date, provided that the conversion price of any such Convertible Securities (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 (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 (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 Exchange Agreement Effective Date (other
than antidilution adjustments pursuant to the terms thereof in effect as of the Exchange Agreement Effective Date) and (iv) any securities
to be issued pursuant to the transactions contemplated by the Merger Agreement or the Purchase Agreement.
(bb) “FATCA”
means Sections 1471 through 1474 of the Code, as of the date of this Preferred Shares (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.
(cc) “Floor
Price” means $0.9420 (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.
(dd) “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 Exchange 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 Exchange 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.
(ee) “GAAP”
means United States generally accepted accounting principles, consistently applied.
(ff) “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.
(gg) “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.
(hh) “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.
(ii) “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.
(jj) “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.
(kk) “Market
Price” means $4.59.
(ll) “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.
(mm) “Merger
Agreement” means that certain Agreement and Plan of Merger, dated December 11, 2023, by and among the Company, Adicure, Inc.
and Evofem Biosciences, Inc., as such shall be amended, supplemented and/or restated on or after the date hereof.
(nn) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(oo) “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.
(pp) “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.
(qq) “Principal
Market” means, as of any time of determination, the principal trading market, if any, in which the shares of Common Stock then
trade.
(rr) “Purchase
Agreement” means that certain Securities Purchase Agreement to be entered into on or about the date hereof by and among the
Company and the purchasers party thereto, as amended, modified or supplemented from time to time in accordance with its terms.
(ss) “Required
Holders” means, as of any time, the means Holders of a majority of the then outstanding Preferred Shares.
(tt) “Required
Premium” means as applicable (i) 150% with respect to an Alternate Conversion pursuant to clause 5(a)(xvi) above or (ii) otherwise,
125%.
(uu) “SEC”
means the United States Securities and Exchange Commission or the successor thereto.
(vv) “Securities”
means the Preferred Shares and the Conversion Shares.
(ww) “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.
(xx) “Stock
Combination Event” means the occurrence at any time and from time to time on or after the Purchase Agreement Effective Date
of any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock.
(yy) “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(zz) “Subsequent
Placement” means at any time on or prior to the fourth anniversary of the Initial Issuance Date, the Company or any of its Subsidiaries
shall, directly or indirectly, issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or announce 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).
(aaa) “Subsidiary”
shall have the meaning set forth in the Exchange Agreement.
(bbb) “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.
(ccc) “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.
(ddd) “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.
(eee) “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.
33. 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 immediately upon 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 immediately
upon 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.
34. 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 non-disclosure
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
blank]
IN WITNESS WHEREOF, the Company
has caused this Certificate of Designations of the Certificate of Incorporation of Aditxt, Inc. to be signed by its Chief Executive Officer
on this 28th day of December, 2023.
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ADITXT, INC. |
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By: |
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Name: |
Amro Albanna |
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Title: |
Chief Executive Officer |
EXHIBIT I
ADITXT, INC.
CONVERSION NOTICE
Reference is made to the Certificate
of Designations of the Certificate of Incorporation of Aditxt, Inc., a Delaware corporation (the “Company”) establishing
the terms, preferences and rights of the Series B-2 Convertible Preferred Stock, $0.001 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, $0.001 value per
share (the “Common Stock”), of the Company, as of the date specified below.
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Date of Conversion: |
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Aggregate number of Preferred Shares to be converted: |
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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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Conversion Price: |
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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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DTC Participant: |
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DTC Number: |
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Account Number: |
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Date: _____________ __, __
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Name of Registered Holder |
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Tax ID:_____________________ |
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E-mail Address: |
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EXHIBIT II
ACKNOWLEDGMENT
The Company hereby (a) acknowledges
this Conversion Notice, (b) certifies that the above indicated number of shares of Common Stock are eligible to be resold by the applicable
Holder without restriction and hereby directs _________________ to issue the above indicated number of shares of Common Stock to the Holder
in accordance with the Conversion Notice.
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ADITXT, INC. |
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By: |
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Name: |
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Title: |
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APPENDIX D
COMMON STOCK PURCHASE AGREEMENT
Dated as of May 2, 2024
by and among
ADITXT, INC.,
and
SEVEN KNOTS, LLC
Table
of Contents
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Page |
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ARTICLE I PURCHASE AND SALE OF COMMON STOCK |
6 |
Section 1.1. |
Purchase and Sale of Stock |
6 |
Section 1.2. |
Closing Date; Settlement Dates |
6 |
Section 1.3. |
Initial Public Announcements and Required Filings |
7 |
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ARTICLE II PURCHASE TERMS |
7 |
Section 2.1. |
Fixed Purchases |
7 |
Section 2.2. |
VWAP Purchases |
8 |
Section 2.3. |
Additional VWAP Purchases |
9 |
Section 2.4. |
Compliance with Rules of Trading Market |
9 |
Section 2.5. |
Beneficial Ownership Limitation |
10 |
Section 2.6. |
Commitment Fee |
10 |
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ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR |
10 |
Section 3.1. |
Organization and Standing of the Investor |
10 |
Section 3.2. |
Authorization and Power |
11 |
Section 3.3. |
No Conflicts |
11 |
Section 3.4. |
Investment Purpose |
12 |
Section 3.5. |
Accredited Investor Status |
12 |
Section 3.6. |
Reliance on Exemptions |
12 |
Section 3.7. |
Information |
12 |
Section 3.8. |
No Governmental Review |
12 |
Section 3.9. |
No General Solicitation |
13 |
Section 3.10. |
Not an Affiliate |
13 |
Section 3.11. |
No Prior Short Sales |
13 |
Section 3.12. |
Statutory Underwriter Status |
13 |
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ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY |
13 |
Section 4.1. |
Organization, Good Standing and Power |
13 |
Section 4.2. |
Authorization, Enforcement |
14 |
Section 4.3. |
Capitalization |
14 |
Section 4.4. |
Issuance of Securities |
15 |
Section 4.5. |
No Conflicts |
15 |
Section 4.6. |
Commission Documents, Financial Statements; Disclosure Controls and Procedures; Internal Controls Over Financial Reporting; Accountants |
16 |
Section 4.7. |
Subsidiaries |
18 |
Section 4.8. |
No Material Adverse Effect or Material Adverse Change, No Undisclosed Liabilities |
18 |
Section 4.9. |
No Undisclosed Events or Circumstances |
19 |
Section 4.10. |
Indebtedness |
19 |
Section 4.11. |
Title to Assets |
19 |
Section 4.12. |
Actions Pending |
20 |
Section 4.13. |
Compliance With Laws |
20 |
Section 4.14. |
Certain Fees |
20 |
Section 4.15. |
Operation of Business |
20 |
Section 4.16. |
Environmental Compliance |
21 |
Section 4.17. |
Material Agreements |
21 |
Section 4.18. |
Transactions With Affiliates |
21 |
Section 4.19. |
Intellectual Property Rights |
21 |
Section 4.20. |
Use of Proceeds |
22 |
Section 4.21. |
Investment Company Act Status |
22 |
Section 4.22. |
Benefit Plans; Labor Matters |
22 |
Section 4.23. |
Taxes |
23 |
Section 4.24. |
Insurance |
23 |
Section 4.25. |
Dilutive Effect |
23 |
Section 4.26. |
Manipulation of Price |
23 |
Section 4.27. |
Securities Act |
24 |
Section 4.28. |
Listing and Maintenance Requirements; DTC Eligibility |
24 |
Section 4.29. |
Application of Takeover Protections |
24 |
Section 4.30. |
Foreign Corrupt Practices |
24 |
Section 4.31. |
Money Laundering Laws |
24 |
Section 4.32. |
OFAC |
25 |
Section 4.33. |
Information Technology; Compliance with Data Privacy Laws |
25 |
Section 4.34. |
No Disqualification Events |
25 |
Section 4.35. |
ERISA |
26 |
Section 4.36. |
No Other Similar Agreement |
26 |
Section 4.37. |
Acknowledgement Regarding Investor’s Acquisition of Securities |
26 |
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ARTICLE V ADDITIONAL COVENANTS |
27 |
Section 5.1. |
Securities Compliance |
27 |
Section 5.2. |
Reservation of Common Stock |
27 |
Section 5.3. |
Registration and Listing |
27 |
Section 5.4. |
Compliance with Laws |
28 |
Section 5.5. |
Keeping of Records and Books of Account; Due Diligence |
28 |
Section 5.6. |
No Frustration; Prohibition of Certain Issuances Before Settlement of Purchases; No Similar Transactions |
29 |
Section 5.7. |
Corporate Existence |
30 |
Section 5.8. |
Fundamental Transaction |
30 |
Section 5.9. |
Selling Restrictions |
31 |
Section 5.10. |
Effective Registration Statement |
31 |
Section 5.11. |
Blue Sky |
31 |
Section 5.12. |
Non-Public Information |
32 |
Section 5.13. |
Broker/Dealer |
32 |
Section 5.14. |
Disclosure Schedules |
32 |
Section 5.15. |
Delivery of Bring Down Opinions and Compliance Certificates Upon Occurrence of Certain Events |
33 |
Section 5.16. |
DTC Chill |
33 |
Section 5.17. |
Use of Proceeds |
34 |
Section 5.18. |
Stockholder Approval |
34 |
ARTICLE VI CONDITIONS TO CLOSING AND CONDITIONS TO THE SALE AND PURCHASE OF THE SHARES |
34 |
Section 6.1. |
Conditions Precedent to Closing |
34 |
Section 6.2. |
Conditions Precedent to Commencement |
35 |
Section 6.3. |
Conditions Precedent to Purchases by Investor |
38 |
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ARTICLE VII TERMINATION |
42 |
Section 7.1. |
Automatic Termination; Termination by Consent |
42 |
Section 7.2. |
Other Termination |
42 |
Section 7.3. |
Effect of Termination |
43 |
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ARTICLE VIII INDEMNIFICATION |
43 |
Section 8.1. |
Indemnification of Investor |
43 |
Section 8.2. |
Indemnification Procedures |
44 |
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ARTICLE IX MISCELLANEOUS |
45 |
Section 9.1. |
Certain Fees and Expenses; Commitment Shares; Commencement Irrevocable Transfer Agent Instructions |
45 |
Section 9.2. |
Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial |
46 |
Section 9.3. |
Entire Agreement |
47 |
Section 9.4. |
Notices |
47 |
Section 9.5. |
Waivers |
48 |
Section 9.6. |
Amendments |
48 |
Section 9.7. |
Headings |
49 |
Section 9.8. |
Construction |
49 |
Section 9.9. |
Binding Effect |
49 |
Section 9.10. |
No Third Party Beneficiaries |
49 |
Section 9.11. |
Governing Law |
49 |
Section 9.12. |
Survival |
49 |
Section 9.13. |
Counterparts |
50 |
Section 9.14. |
Publicity |
50 |
Section 9.15. |
Severability |
50 |
Section 9.16. |
Further Assurances |
50 |
COMMON
STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE
AGREEMENT is made and entered into as of May 2, 2024 (this “Agreement”), by and among Seven Knots, LLC,
a Montana limited liability company (the “Investor”), and Aditxt, Inc., a Delaware corporation (the “Company”).
RECiTALS
WHEREAS, the parties
desire that, upon the terms and subject to the conditions and limitations set forth herein, the Company may issue and sell to the Investor,
from time to time as provided herein, and the Investor shall purchase from the Company, up to the lesser of (a) $150,000,000 and (b) 19.99%
of the Company’s outstanding shares of Common Stock as of the date of this Agreement (to the extent applicable under Section 2.4
hereof), unless (i) stockholder approval is obtained to issue more than such 19.99% (“Stockholder Approval”)
or (ii) the price of applicable sales of Common Stock to the Investor under this Agreement equals or exceeds the lower of (A) the official
Closing Sale Price on the Nasdaq Capital Market or any nationally recognized successor thereto (the “NCM”) immediately
preceding the delivery of the applicable Fixed Purchase notice, VWAP Purchase notice, or Additional VWAP Purchase notice to the Investor
and (B) the average of the Closing Sale Prices of the Common Stock on the NCM for the five business days immediately preceding the delivery
of such Fixed Purchase notice, VWAP Purchase notice or Additional VWAP Purchase Notice, as applicable (in each case plus an incremental
amount to take into account the Commitment Shares), such that the sales of such Common Stock to the Investor would not count toward the
19.99% because they are “at market” under applicable NCM rules;
WHEREAS, in consideration
for the Investor’s execution and delivery of this Agreement, the Company shall cause its Transfer Agent to issue to the Investor
the Commitment Shares in accordance with the terms and subject to the conditions of this Agreement; and
WHEREAS, the parties
hereto are concurrently entering into a Registration Rights Agreement in the form attached as Exhibit A hereto (the “Registration
Rights Agreement”), pursuant to which the Company shall provide Investor with certain registration rights related to the
shares issued under this Agreement, upon the terms and subject to the conditions set forth therein.
NOW, THEREFORE, the
parties hereto, intending to be legally bound, hereby agree as follows:
Article
I
PURCHASE AND SALE OF COMMON STOCK
Section 1.1. Purchase
and Sale of Stock. Upon the terms and subject to the conditions of this Agreement, during the Investment Period, the Company,
in its sole discretion, shall have the right, but not the obligation, to issue and sell to the Investor, and the Investor shall purchase
from the Company, up to the lesser of (a) $150,000,000 and (b) 19.99% of the Company’s outstanding shares of Common Stock as of
the date of this Agreement, including the Commitment Shares, unless (i) stockholder approval is obtained to issue more than such 19.99%
or (ii) the price of applicable sales of Common Stock to the Investor under this Agreement equals or exceeds the lower of (A) the official
Closing Sale Price on the NCM immediately preceding the delivery of the applicable Fixed Purchase notice, VWAP Purchase notice, or Additional
VWAP Purchase notice to the Investor and (B) the average of the Closing Sale Prices of the Common Stock on the NCM for the five business
days immediately preceding the delivery of such Fixed Purchase notice, VWAP Purchase notice or Additional VWAP Purchase Notice, as applicable
(in each case, plus an incremental amount to take into account the Commitment Shares), such that the sales of such Common Stock to the
Investor would not count toward the 19.99% because they are “at market” under applicable NCM rules (the “Total
Purchase Commitment”), to the extent applicable under Section 2.4, by the delivery to the Investor of Fixed Purchase Notices,
VWAP Purchase Notices, or Additional VWAP Purchase Notices, as provided in Article II.
Section 1.2. Closing
Date; Settlement Dates. This Agreement shall become effective and binding (the “Closing”) upon (a) the
delivery of counterpart signature pages of this Agreement and the Registration Rights Agreement executed by each of the parties hereto
and thereto and (b) the delivery of all other documents, instruments and writings required to be delivered at the Closing, in each case
as provided in Section 6.1, to the offices of Pryor Cashman LLP, 7 Times Square, New York, NY 10036, at 1:00 p.m., New York City time,
on the Closing Date, or such other time and place as the parties hereto shall agree. In consideration of, and in express reliance upon,
the representations, warranties and covenants contained in, and upon the terms and subject to the conditions of, this Agreement, during
the Investment Period the Company, at its sole option and discretion, may issue and sell to the Investor, and, if the Company elects to
so issue and sell, the Investor shall purchase from the Company, the Shares in respect of each Fixed Purchase, VWAP Purchase and Additional
VWAP Purchase (each, a “Settlement”). The payment for the Shares in respect of each Fixed Purchase, VWAP Purchase
and Additional VWAP Purchase shall occur (i) on the third (3rd) Trading Day following
delivery of the Shares by the Company, and (ii) in accordance with Article II hereof; provided, that all of the conditions precedent
in Article VII shall have been fulfilled at the applicable times set forth in Article VII.
Section 1.3. Initial
Public Announcements and Required Filings. The Company shall, within the time period required under the Exchange Act, file with
the Commission a Current Report on Form 8-K describing the material terms of the transactions contemplated by the Transaction Documents,
including, without limitation, the agreement by the Company to issue the Commitment Shares to the Investor following Stockholder Approval
pursuant to the terms of this Agreement, and attaching as exhibits thereto copies of each of this Agreement, the Registration Rights Agreement,
and, if applicable, any press release issued by the Company disclosing the execution of this Agreement by the Company (including all exhibits
thereto, the “Current Report”). The Company shall provide the Investor a reasonable opportunity to comment on
a draft of the Current Report prior to filing the Current Report with the Commission and shall give due consideration to all such comments.
From and after the filing of the Current Report with the Commission, the Company shall have publicly disclosed all material, nonpublic
information delivered to the Investor (or the Investor’s representatives or agents) by the Company, any of its Subsidiaries, or
any of their respective officers, directors, employees, agents or representatives (if any) in connection with the transactions contemplated
by the Transaction Documents. The Investor covenants that until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company as described in this Section 1.3, the Investor shall maintain the confidentiality of all disclosures made to
it in connection with the transactions contemplated by the Transaction Documents (including the existence and terms of the transactions),
except that the Investor may disclose the terms of such transactions to its financial, accounting, legal and other advisors (provided
that the Investor directs such Persons to maintain the confidentiality of such information). The Company shall use its commercially reasonable
efforts to prepare and, as soon as practicable, but in no event later than the applicable Filing Deadline, file with the Commission the
Registration Statement covering only the resale by the Investor of the Registrable Securities in accordance with the Securities Act and
the Registration Rights Agreement. At or before 8:30 a.m. (New York City time) on the Trading Day immediately following the Effective
Date of the Registration Statement, the Company shall use its commercially reasonable efforts to file with the Commission in accordance
with Rule 424(b) under the Securities Act the final Prospectus to be used in connection with sales pursuant to such Registration Statement
(or post-effective amendment thereto).
Article
II
PURCHASE TERMS
Subject to the satisfaction
or (to the extent permitted by applicable law) waiver of the conditions set forth in this Agreement, the parties agree (unless otherwise
mutually agreed upon by the parties in writing) as follows:
Section 2.1. Fixed Purchases.
Upon the initial satisfaction of all of the conditions set forth in set forth in Section 6.2, (the “Commencement”
and the date of initial satisfaction of all of such conditions, the “Commencement Date”) and from time to time
thereafter, subject to the satisfaction of all of the conditions set forth in Section 6.3, and on any business day selected by the Company
where the Closing Sale Price on the applicable national market, or quotation service, is equal to or greater than $1.00, the Company shall
have the right, but not the obligation, to direct the Investor, by its delivery to the Investor of a Fixed Purchase Notice, to purchase
a Fixed Purchase Share Amount, not to exceed the applicable Fixed Purchase Maximum Amount (calculated as of the applicable Fixed Purchase
Date), at the applicable Fixed Purchase Price therefor on the applicable Fixed Purchase Date in accordance with this Agreement (each such
purchase a “Fixed Purchase”); provided, however, that the Investor’s committed obligation
under any single Fixed Purchase shall not exceed the lower of 100,000 shares of Common Stock or $200,000 (provided that all shares of
Common Stock in respect of all prior Fixed Purchases, VWAP Purchases and Additional VWAP Purchases shall have been delivered to the Investor
via Deposit/Withdrawal at Custodian (“DWAC”)). If the Company delivers any Fixed Purchase Notice directing the
Investor to purchase a Fixed Purchase Share Amount in excess of the applicable Fixed Purchase Maximum Amount (calculated as of the applicable
Fixed Purchase Date), such Fixed Purchase Notice shall be void ab initio to the extent of the amount by which the Fixed Purchase
Share Amount set forth in such Fixed Purchase Notice exceeds such applicable Fixed Purchase Maximum Amount, and the Investor shall have
no obligation to purchase such excess Shares in respect of such Fixed Purchase Notice; provided, however, that the Investor
shall remain obligated to purchase the applicable Fixed Purchase Maximum Amount in such Fixed Purchase. The Company may deliver a Fixed
Purchase Notice, in the Form attached hereto as Annex 2.1, to the Investor as often as every Trading Day, so long as (i) the Closing
Sale Price of the Common Stock on such Trading Day is not less than $1.00 and (ii) all Shares subject to all prior Fixed Purchase Notices,
VWAP Purchase Notices and Additional VWAP Purchase Notices (as applicable) have theretofore been received by the Investor as DWAC Shares.
Since delivery of a Fixed Purchase Notice is made by the Company after market close on the applicable Fixed Purchase Date, the Fixed Purchase
Price is determined and fixed at the time the Company delivers the Fixed Purchase to the Investor.
Section 2.2. VWAP Purchases.
Upon the initial satisfaction of all of the conditions set forth in set forth in Section 6.2, on the Commencement Date and from time to
time thereafter, and on any business day selected by the Company where the Closing Sale Price on the applicable national market, or quotation
service is equal to or greater than $1.00, subject to the satisfaction of all of the conditions set forth in Section 6.3, in addition
to purchases of Shares as described in Section 2.1, the Company shall also have the right, but not the obligation, to direct the Investor,
by its delivery to the Investor of a VWAP Purchase Notice, to purchase the applicable VWAP Purchase Share Amount, not to exceed the applicable
VWAP Purchase Maximum Amount, at the applicable VWAP Purchase Price therefor on the applicable VWAP Purchase Date in accordance with this
Agreement (each such purchase, a “VWAP Purchase”); provided, however, that the Investor’s
aggregate committed obligation under a VWAP Purchase and all Additional VWAP Purchases shall not exceed $2,000,000 in the aggregate for
such VWAP Purchase and all such Additional VWAP Purchases on such VWAP Purchase Date, collectively. The Company may deliver a VWAP Purchase
Notice, in the Form attached hereto as Annex 2.2, to the Investor only (i) on a Trading Day on which the Company also properly
submitted a Fixed Purchase Notice providing for a Fixed Purchase of an amount of Shares not less than the applicable Fixed Purchase Maximum
Amount (calculated as of the applicable Fixed Purchase Date) and (ii) if all Shares subject to all prior Fixed Purchase Notices, VWAP
Purchase Notices, and Additional VWAP Purchase Notices (as applicable) have theretofore been received by the Investor as DWAC Shares.
The Investor is obligated to accept each VWAP Purchase Notice prepared and delivered by the Company in accordance with the terms of and
subject to the satisfaction of the conditions contained in this Agreement. If the Company delivers any VWAP Purchase Notice directing
the Investor to purchase a VWAP Purchase Share Amount in excess of the applicable VWAP Purchase Maximum Amount that the Company is then
permitted to include in such VWAP Purchase Notice, such VWAP Purchase Notice shall be void ab initio to the extent of the amount
by which the VWAP Purchase Share Amount set forth in such VWAP Purchase Notice exceeds such applicable VWAP Purchase Maximum Amount, and
the Investor shall have no obligation to purchase such excess Shares in respect of such VWAP Purchase Notice; provided, however,
that the Investor shall remain obligated to purchase the applicable VWAP Purchase Maximum Amount in such VWAP Purchase At or prior to
9:30 a.m., New York City time, on the Trading Day immediately following the VWAP Purchase Date for each VWAP Purchase, the Investor shall
provide to the Company a written confirmation of such VWAP Purchase setting forth the applicable VWAP Purchase Share Amount and VWAP Purchase
Price for such VWAP Purchase (each, a “VWAP Purchase Confirmation”).
Section 2.3. Additional
VWAP Purchases. Upon the initial satisfaction of all of the conditions set forth in set forth in Section 6.3 on the Commencement
Date and from time to time thereafter, subject to the satisfaction of all of the conditions set forth in Section 6.3, in addition to purchases
of Shares as described in Section 2.1 and Section 2.2, the Company shall also have the right, but not the obligation, to direct the Investor,
by its delivery to the Investor of an Additional VWAP Purchase Notice, to purchase the applicable Additional VWAP Purchase Share Amount,
not to exceed the applicable Additional VWAP Purchase Maximum Amount, at the applicable Additional VWAP Purchase Price therefor on the
applicable Additional VWAP Purchase Date in accordance with this Agreement (each such purchase, an “Additional VWAP Purchase”);
provided, however, that the Investor’s aggregate committed obligation under a VWAP Purchase and all Additional VWAP
Purchases on the applicable Additional VWAP Purchase Date, which Additional VWAP Purchase Date shall be the same Trading Day as the applicable
VWAP Purchase Date for such VWAP Purchase, shall not exceed $2,000,000 in the aggregate for such VWAP Purchase and all such Additional
VWAP Purchases, collectively. The Company may deliver an Additional VWAP Purchase Notice, in the Form attached hereto as Annex 2.3, to
the Investor only (i) on a Trading Day that is also the VWAP Purchase Date for a VWAP Purchase with respect to which the Company properly
submitted to the Investor a VWAP Purchase Notice in accordance with this Agreement on the applicable Fixed Purchase Date for a Fixed Purchase
of an amount of Shares not less than the applicable Fixed Purchase Maximum Amount (calculated as of the applicable Fixed Purchase Date)
and (ii) if all Shares subject to all prior Fixed Purchase Notices, VWAP Purchase Notices, and Additional VWAP Purchase Notices, including,
without limitation, all prior VWAP Purchases and Additional VWAP Purchases effected on the same Trading Day as the Additional VWAP Purchase
Date on which the applicable Additional VWAP Purchase is to be effected, as applicable, have theretofore been received by the Investor
as DWAC Shares. The Investor is obligated to accept each Additional VWAP Purchase Notice prepared and delivered by the Company in accordance
with the terms of and subject to the satisfaction of the conditions contained in this Agreement. If the Company delivers any Additional
VWAP Purchase Notice directing the Investor to purchase an Additional VWAP Purchase Share Amount in excess of the applicable Additional
VWAP Purchase Maximum Amount that the Company is then permitted to include in such Additional VWAP Purchase Notice, such Additional VWAP
Purchase Notice shall be void ab initio to the extent of the amount by which the Additional VWAP Purchase Share Amount set forth
in such Additional VWAP Purchase Notice exceeds such applicable Additional VWAP Purchase Maximum Amount, and the Investor shall have no
obligation to purchase such excess Shares in respect of such Additional VWAP Purchase Notice; provided, however, that the
Investor shall remain obligated to purchase the applicable Additional VWAP Purchase Maximum Amount in such Additional VWAP Purchase At
or prior to 9:30 a.m., New York City time, on the Trading Day immediately following the Additional VWAP Purchase Date for each Additional
VWAP Purchase, the Investor shall provide to the Company a written confirmation of such Additional VWAP Purchase setting forth the applicable
Additional VWAP Purchase Share Amount and Additional VWAP Purchase Price for such Additional VWAP Purchase (each, an “Additional
VWAP Purchase Confirmation”).
Section 2.4. Compliance with Rules of Trading
Market.
(a) Share Issuance Restriction.
The Company shall not issue or sell any shares of Common Stock pursuant to this Agreement, and the Investor shall not purchase or acquire
any shares of Common Stock pursuant to this Agreement, to the extent that after giving effect thereto, the aggregate number of shares
of Common Stock that would be issued pursuant to this Agreement and the transactions contemplated hereby, including the Commitment Shares,
would exceed 332,876 (representing 19.99% of the shares of Common Stock issued and outstanding immediately prior to the execution of this
Agreement), which number of shares shall be reduced, on a share-for-share basis, by the number of shares of Common Stock issued or issuable
pursuant to any transaction or series of transactions that may be aggregated with the transactions contemplated by this Agreement under
applicable rules of the Trading Market (such maximum number of shares of Common Stock issuable by the Company under this Agreement, the
“Aggregate Limit”).
(b) General. The
Company shall not issue or sell any shares of Common Stock pursuant to this Agreement if such issuance or sale would reasonably be expected
to result in (A) a violation of the Securities Act or (B) a breach of the rules of the Trading Market. The provisions of this Section
2.4 shall be implemented in a manner otherwise than in strict conformity with the terms of this Section 2.4 only if necessary to ensure
compliance with the Securities Act and the applicable rules of the Trading Market.
Section 2.5. Beneficial
Ownership Limitation. Notwithstanding anything to the contrary contained in this Agreement, the Company shall not issue or sell,
and the Investor shall not purchase or acquire, any shares of Common Stock under this Agreement which, when aggregated with all other
shares of Common Stock then beneficially owned by the Investor and its Affiliates (as calculated pursuant to Section 13(d) of the Exchange
Act and Rule 13d-3 promulgated thereunder), would result in the beneficial ownership by the Investor of more than 4.99% of the outstanding
shares of Common Stock (the “Beneficial Ownership Limitation”). Upon the written or oral request of the Investor,
the Company shall promptly (but not later than the next business day on which the Transfer Agent is open for business) confirm orally
or in writing to the Investor the number of shares of Common Stock outstanding as of the most recent date for which the Transfer Agent
has such information. The Investor and the Company shall each cooperate in good faith in the determinations required under this Section
2.5 and the application of this Section 2.5. The Investor’s written certification to the Company of the applicability of the Beneficial
Ownership Limitation, and the resulting effect thereof hereunder at any time, shall be conclusive with respect to the applicability thereof
and such result absent manifest error. The provisions of this Section 2.5 shall be construed and implemented in a manner otherwise than
in strict conformity with the terms of this Section 2.5 to the extent necessary to properly give effect to the limitations contained in
this Section 2.5.
Section 2.6. Commitment
Fee. In consideration for the Investor’s execution and delivery of this Agreement, the Company shall pay the Commitment
Fee (which may be paid in the sole discretion of the Company in the form of cash or Commitment Shares) to the Investor or its designee
(in which case such designee name shall have been provided to the Company prior to January 2, 2025) not later than 4:00 p.m. (New York
City time) on the later of (i) January 2, 2025 and (ii) the Trading Day following the date on which Stockholder Approval is obtained.
All of the Commitment Shares, if any, shall be included in the Registration Statement. For the avoidance of doubt, the Commitment Fee
shall be fully earned as of the Closing Date, regardless of whether any Fixed Purchases or VWAP Purchases are effected hereunder and regardless
of any subsequent termination of this Agreement; provided, that in the event that any issuance of Commitment Shares to the Investor
would result in the Investor exceeding the Beneficial Ownership Limitation, then any such Commitment Shares in excess of the Beneficial
Ownership Limitation shall be held in abeyance for the Investor until such time, if ever, as its rights thereto would not result in the
Investor exceeding the Beneficial Ownership Limitation.
Article
III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR
The Investor hereby makes
the following representations, warranties and covenants to the Company:
Section 3.1. Organization
and Standing of the Investor. The Investor is a limited liability company duly organized, validly existing and in good standing
under the laws of the State of Montana.
Section 3.2. Authorization
and Power. The Investor has the requisite limited liability company power and authority to enter into and perform its obligations
under this Agreement and the Registration Rights Agreement and to purchase or acquire the Securities in accordance with the terms hereof.
The execution, delivery and performance by the Investor of this Agreement and the Registration Rights Agreement and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized by all necessary limited liability company action, and
no further consent or authorization of the Investor, its Board of Directors or its members is required. Each of this Agreement and the
Registration Rights Agreement has been duly executed and delivered by the Investor and constitutes a valid and binding obligation of the
Investor enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership, or similar laws relating to, or affecting generally the enforcement
of, creditor’s rights and remedies or by other equitable principles of general application (including any limitation of equitable
remedies).
Section 3.3. No Conflicts.
The execution, delivery and performance by the Investor of this Agreement and the Registration Rights Agreement and the consummation by
the Investor of the transactions contemplated hereby and thereby do not and shall not (i) result in a violation of such Investor’s
certificate of formation, limited liability company agreement or other applicable organizational instruments, (ii) conflict with, constitute
a default (or an event which, with notice or lapse of time or both, would become a default) under, or give rise to any rights of termination,
amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement,
instrument or obligation to which the Investor is a party or is bound, (iii) create or impose any lien, charge or encumbrance on any property
of the Investor under any agreement or any commitment to which the Investor is party or under which the Investor is bound or under which
any of its properties or assets are bound, or (iv) result in a violation of any federal, state, local or foreign statute, rule, or regulation,
or any order, judgment or decree of any court or governmental agency applicable to the Investor or by which any of its properties or assets
are bound or affected, except, in the case of clauses (ii), (iii) and (iv), for such conflicts, defaults, terminations, amendments, acceleration,
cancellations and violations as would not, individually or in the aggregate, prohibit or otherwise interfere with, in any material respect,
the ability of the Investor to enter into and perform its obligations under this Agreement and the Registration Rights Agreement. The
Investor is not required under any applicable federal, state, local or foreign law, rule or regulation to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement and the Registration Rights Agreement or to purchase or acquire the Securities in accordance
with the terms hereof; provided, however, that for purposes of the representation made in this sentence, the Investor is
assuming and relying upon the accuracy of the relevant representations and warranties and the compliance with the relevant covenants and
agreements of the Company in the Transaction Documents to which it is a party.
Section 3.4. Investment
Purpose. The Investor is acquiring the Securities for its own account, for investment purposes and not with a view towards, or
for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under or exempt from the registration
requirements of the Securities Act; provided, however, that by making the representations herein, the Investor does not
agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specific term and reserves the right
to dispose of the Securities at any time in accordance with, or pursuant to, a registration statement filed pursuant to the Registration
Rights Agreement or an applicable exemption under the Securities Act. The Investor does not presently have any agreement or understanding,
directly or indirectly, with any Person to sell or distribute any of the Securities.
Section 3.5. Accredited
Investor Status. The Investor is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
Section 3.6. Reliance
on Exemptions. The Investor understands that the Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of U.S. federal and state securities laws and that the Company is relying upon the truth and accuracy
of, and the Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor
set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Securities.
Section 3.7. Information.
All materials relating to the business, financial condition, management and operations of the Company and materials relating to the offer
and sale of the Securities which have been requested by the Investor have been furnished or otherwise made available to the Investor or
its advisors, including, without limitation, the Commission Documents. The Investor understands that its investment in the Securities
involves a high degree of risk. The Investor is able to bear the economic risk of an investment in the Securities and has such knowledge
and experience in financial and business matters that it is capable of evaluating the merits and risks of a proposed investment in the
Securities. The Investor and its advisors have been afforded the opportunity to ask questions of and receive answers from representatives
of the Company concerning the financial condition and business of the Company and other matters relating to an investment in the Securities.
Neither such inquiries nor any other due diligence investigations conducted by the Investor or its advisors, if any, or its representatives
shall modify, amend or affect the Investor’s right to rely on the Company’s representations and warranties contained in this
Agreement or in any other Transaction Document to which the Company is a party or the Investor’s right to rely on any other document
or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby (including,
without limitation, the opinions of the Company’s counsel delivered pursuant to Section 6.2(xvi)). The Investor has sought such
accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition
of the Securities. The Investor understands that it (and not the Company) shall be responsible for its own tax liabilities that may arise
as a result of this investment or the transactions contemplated by this Agreement.
Section 3.8. No Governmental
Review. The Investor understands that no United States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities
nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
Section 3.9. No General
Solicitation. The Investor is not purchasing or acquiring the Securities as a result of any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities.
Section 3.10. Not an
Affiliate. The Investor is not an officer, director or an Affiliate of the Company. As of the date of this Agreement, the Investor
does not beneficially own any shares of Common Stock or securities exercisable for or convertible into shares of Common Stock, and during
the Restricted Period, Investor will not acquire beneficial ownership of any shares of the Company’s capital stock (including shares
of Common Stock or securities exercisable for or convertible into shares of Common Stock) other than pursuant to this Agreement; provided,
however, that nothing in this Agreement shall prohibit or be deemed to prohibit the Investor from purchasing, in an open market
transaction or otherwise, shares of Common Stock necessary to make delivery by the Investor in satisfaction of a sale by the Investor
of Shares that the Investor anticipated receiving from the Company in connection with the settlement of a Fixed Purchase, VWAP Purchase
or Additional VWAP Purchase, as applicable, if the Company or the Transfer Agent shall have failed for any reason to electronically transfer
all of the Shares subject to such Fixed Purchase, VWAP Purchase or Additional VWAP Purchase, as applicable, to the Investor by crediting
the Investor’s or its designated Broker-Dealer’s account at DTC through its DWAC delivery system, at or prior to the applicable
time required by and otherwise in compliance with Section 2.4 of this Agreement.
Section 3.11. No Prior
Short Sales. At no time prior to the date of this Agreement has any of the Investor, its agents, representatives or Affiliates
engaged in or effected, in any manner whatsoever, directly or indirectly, any (i) “short sale” (as such term is defined in
Rule 200 of Regulation SHO of the Exchange Act) of the Common Stock or (ii) hedging transaction, which establishes a net short position
with respect to the Common Stock.
Section 3.12. Statutory
Underwriter Status. The Investor acknowledges that it will be disclosed as an “underwriter” and a “selling stockholder”
in the Registration Statement and in any Prospectus contained therein to the extent required by applicable law.
Article
IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
Except as set forth in the
disclosure schedule delivered by the Company to the Investor (which is hereby incorporated by reference in, and constitutes an integral
part of, this Agreement) (the “Disclosure Schedule”), the Company hereby makes the following representations,
warranties and covenants to the Investor:
Section 4.1. Organization,
Good Standing and Power. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority
to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is
in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational
or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected
to result in a Material Adverse Effect and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing
or seeking to revoke, limit or curtail such power and authority or qualification.
Section 4.2. Authorization,
Enforcement. Each of the Company and its Subsidiaries has the requisite corporate or other power and authority to enter into and
perform its obligations under each of the Transaction Documents to which it is a party and, in the case of the Company, to issue the Securities
in accordance with the terms hereof and thereof. Except for approvals of the Company’s Board of Directors or a committee thereof
and Stockholder Approval as may be required in connection with any issuance and sale of Shares to the Investor hereunder (which approvals
shall be obtained prior to the delivery of any Fixed Purchase Notice, any VWAP Purchase Notice and any Additional VWAP Purchase Notice),
the execution, delivery and performance by the Company of each of the Transaction Documents to which it is a party and the consummation
by it of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate or other action
(as applicable) on the part of the Company, and no further consent or authorization of the Company or its Board of Directors or its stockholders,
or any other Person is required in order for the Company to execute, deliver and perform its respective obligations under the Transaction
Documents to which it is a party. Each of the Transaction Documents to which the Company is a party has been duly executed and delivered
by the Company and, following Stockholder Approval, constitutes a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general application (including any limitation of equitable remedies).
Section 4.3. Capitalization.
All of the outstanding shares of capital stock of the Company and each of its Subsidiaries have been duly and validly authorized and issued
and are fully paid and non-assessable, and, except as otherwise set forth in the Commission Documents, all outstanding shares of capital
stock or membership interests of the Subsidiaries are owned by the Company either directly or through wholly owned Subsidiaries and are
free and clear of any perfected security interest or any other security interests, claims, liens or encumbrances. Except as set forth
in the Commission Documents and this Agreement, there are no agreements or arrangements under which the Company is obligated to register
the sale of any securities under the Securities Act. Except as set forth in the Commission Documents, no shares of capital stock of the
Company are entitled to preemptive rights and there are no outstanding debt securities and no contracts, commitments, understandings,
or arrangements by which the Company is or may become bound to issue additional shares of the capital stock of the Company or options,
warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible
into or exchangeable for, any shares of capital stock of the Company other than those issued or granted in the ordinary course of business
pursuant to the Company’s equity incentive and/or compensatory plans or arrangements. Except for customary transfer restrictions
contained in agreements entered into by the Company to sell restricted securities or as set forth in the Commission Documents, the Company
is not a party to, and it has no Knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of
the Company. Except as set forth in the Commission Documents, there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by this Agreement or any of the other Transaction Documents or the consummation of the transactions
described herein or therein. The Company has made available via EDGAR true and correct copies of the Company’s Amended and Restated
Certificate of Incorporation as amended to date as in effect on the Commencement Date (the “Charter”), and the Company’s
Amended and Restated Bylaws as in effect on the Commencement Date (the “Bylaws”).
Section 4.4. Issuance
of Securities. The Shares to be issued under this Agreement have been, or with respect to Shares to be purchased by the Investor
pursuant to a particular Fixed Purchase Notice, a particular VWAP Purchase Notice or a particular Additional VWAP Purchase Notice, will
be, prior to the delivery to the Investor hereunder of such Fixed Purchase Notice, VWAP Purchase Notice, Additional VWAP Purchase Notice,
respectively, duly authorized by all necessary corporate action on the part of the Company. Following Stockholder Approval, the Commitment
Shares, if and when issued to the Investor in accordance with this Agreement, and the Shares, when issued and sold against payment therefor
in accordance with this Agreement, shall be validly issued and outstanding, fully paid and non-assessable and free from all liens, charges,
taxes, security interests, encumbrances, rights of first refusal, preemptive or similar rights and other encumbrances with respect to
the issue thereof, and the Investor shall be entitled to all rights accorded to a holder of Common Stock. Following Stockholder Approval,
2,250,000 shares of Common Stock will be duly authorized and reserved by the Company for issuance and sale by the Company to the Investor
as Shares under this Agreement, and 147,750,000 shares of Common Stock have been duly authorized and reserved by the Company for issuance
by the Company to the Investor as Commitment Shares under this Agreement.
Section 4.5. No Conflicts.
The execution, delivery and performance by the Company of each of the Transaction Documents to which it is a party and the consummation
by the Company of the transactions contemplated hereby and thereby do not and shall not (i) result in a violation of any provision of
the Company’s Charter or Bylaws, (ii) conflict with or result in a breach or violation of any of the terms or provisions of, or
constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give rise to any rights
of termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company or of the Company’s Subsidiaries is a party or is bound, except as
set forth on Schedule 4.5, (iii) create or impose a lien, charge or encumbrance on any property or assets of the Company or of
the Company’s Subsidiaries under any agreement or any commitment to which the Company or of the Company’s Subsidiaries is
a party or by which the Company or of the Company’s Subsidiaries is bound or to which any of their respective properties or assets
is subject, or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree
applicable to the Company or of the Company’s Subsidiaries or by which any property or asset of the Company or of the Company’s
Subsidiaries are bound or affected (including federal and state securities laws and regulations and the rules and regulations of the Trading
Market), except, in the case of clauses (ii), (iii) and (iv), for such conflicts, defaults, terminations, amendments, acceleration, cancellations,
liens, charges, encumbrances and violations as would not, individually or in the aggregate, have a Material Adverse Effect. Except as
specifically contemplated by this Agreement or the Registration Rights Agreement, including but not limited to the requirement to obtain
Stockholder Approval, and as required under the Securities Act and any applicable state securities laws, the Company is not required under
any federal, state, local or foreign law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency (including, without limitation, the Trading Market) in order for it to execute, deliver or perform
any of its respective obligations under the Transaction Documents to which it is a party, or to issue the Securities to the Investor in
accordance with the terms hereof and thereof (other than such consents, authorizations, orders, filings or registrations as have been
obtained or made prior to the Closing Date); provided, however, that, for purposes of the representation made in this sentence,
the Company is assuming and relying upon the accuracy of the representations and warranties of the Investor in this Agreement and the
compliance by it with its covenants and agreements contained in this Agreement and the Registration Rights Agreement.
Section 4.6. Commission
Documents, Financial Statements; Disclosure Controls and Procedures; Internal Controls Over Financial Reporting; Accountants.
(a) The Company has timely filed
(giving effect to permissible extensions in accordance with Rule 12b-25 under the Exchange Act) all Commission Documents for the twelve
months preceding the date of this Agreement required to be filed by it (the “Filed Commission Documents”). The
Company has delivered or made available to the Investor via EDGAR or otherwise true and complete copies of the Filed Commission Documents
prior to the Closing Date. As of its filing date, each Commission Document complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as applicable, and other federal, state and local laws, rules and regulations applicable to it,
and, as of its filing date (or, if amended or superseded by a filing prior to the Closing Date, on the date of such amended or superseded
filing). Each Registration Statement, on the date it is filed with the Commission, on the date it is declared effective by the Commission,
on each Fixed Purchase Date, each VWAP Purchase Date and each Additional VWAP Purchase Date, shall comply in all material respects with
the requirements of the Securities Act (including, without limitation, Rule 415 under the Securities Act) and shall not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein not misleading, except that this representation and warranty shall not apply to statements in or omissions from such Registration
Statement made in reliance upon and in conformity with information relating to the Investor furnished to the Company in writing by or
on behalf of the Investor expressly for use therein. The Prospectus and each Prospectus Supplement required to be filed pursuant to this
Agreement or the Registration Rights Agreement after the Closing Date, when taken together, on its date, on each Fixed Purchase Date,
each VWAP Purchase Date and each Additional VWAP Purchase Date, shall comply in all material respects with the requirements of the Securities
Act (including, without limitation, Rule 424(b) under the Securities Act) and shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that this representation and warranty shall not apply to statements in or omissions
from the Prospectus or any Prospectus Supplement made in reliance upon and in conformity with information relating to the Investor furnished
to the Company in writing by or on behalf of the Investor expressly for use therein. Each Commission Document to be filed with or furnished
to the Commission after the Closing Date and filed as part of or incorporated by reference in the Registration Statement, or the Prospectus
included therein or any Prospectus Supplement thereto required to be filed pursuant to this Agreement or the Registration Rights Agreement
(including, without limitation, the Current Report), when such document is filed with or furnished to the Commission and, if applicable,
when such document becomes effective, as the case may be, shall comply in all material respects with the requirements of the Securities
Act or the Exchange Act, as applicable, and other federal, state and local laws, rules and regulations applicable to it. There are no
outstanding or unresolved comments or undertakings in such comment letters received by the Company from the Commission. The Commission
has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the
Securities Act or the Exchange Act. To the Company’s Knowledge, the Commission has not commenced any enforcement proceedings against
the Company or any of its Subsidiaries.
(b) The financial statements
and schedules of the Company and its consolidated Subsidiaries to be filed as part of or incorporated by reference in the Registration
Statement, or the Prospectus included therein or any Prospectus Supplement thereto, present fairly in all material respects the financial
condition, results of operations and cash flows of the Company and its consolidated Subsidiaries as of the dates and for the periods indicated,
comply as to form with the applicable accounting requirements of Regulation S-X, and have been prepared in conformity with United States
generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved
(except as otherwise noted therein). The interactive data in eXtensible Business Reporting Language included or incorporated by reference
in the Commission Documents, the Registration Statement fairly presents the information called for in all material respects and have been
prepared in accordance with the Commission’s rules and guidelines applicable thereto. The statistical and market-related data included
or incorporated by reference in the Commission Documents or any Registration Statement are based on or derived from sources that the Company
believes, after reasonable inquiry, to be reliable and accurate and, to the extent required, the Company has obtained the written consent
to the use of such data from such source, except where the failure to do so would not reasonably be expected to have a Material Adverse
Effect.
(c) The Company and the Subsidiaries
have established and maintain disclosure controls and procedures (as such term is defined in Rule 13a-15 and 15d-15 under the Exchange
Act). Such disclosure controls and procedures are designed to ensure that material information relating to the Company and its Subsidiaries
is made known to the Company’s Chief Executive Officer and its Chief Financial Officer by others within those entities, and except
as disclosed in the Commission Documents, such disclosure controls and procedures are effective to perform the functions for which they
were established. The Company and the Subsidiaries have established and maintain internal control over financial reporting (as such term
is defined in Rule 13a-15 and 15d-15 under the Exchange Act). Except as disclosed in Commission Documents, such internal control over
financial reporting is designed to provide reasonable assurance that (A) transactions are executed in accordance with management’s
general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity
with GAAP and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general
or specific authorization; (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences; and (E) the interactive data in eXtensible Business Reporting Language in
the Commission Documents fairly presents the information called for in all material respects and are prepared in accordance with the Commission’s
rules and guidelines applicable thereto. The Company’s auditors and the Audit Committee of the Board of Directors of the Company
have been advised of: (i) any significant deficiencies and material weaknesses in the design or operation of internal controls which could
adversely affect the Company’s ability to record, process, summarize, and report financial data; and (ii) any fraud, whether or
not material, that involves management or other employees who have a role in the Company’s internal controls. Since the date of
the most recent evaluation of such disclosure controls and procedures, except as disclosed in Commission Documents, there have been (A)
no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (B) no significant
changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with
regard to significant deficiencies.
(d) The Company is in compliance
with all applicable provisions of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations thereunder, which are applicable
to it as of the date hereof.
(e) The Company’s accountants
are set forth in the Commission Documents and, to the Knowledge of the Company, such accountants are an independent registered public
accounting firm as required by the Securities Act.
Section 4.7. Subsidiaries.
The Filed Commission Documents set forth each subsidiary (each, a “Subsidiary,” and collectively, the “Subsidiaries”),
of the Company as of the Commencement Date, other than those that may be omitted pursuant to Item 601 of Regulation S-K, showing its jurisdiction
of incorporation or organization, and the Company does not have any other Subsidiaries as of the Commencement Date. No Subsidiary of the
Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution
on such Subsidiary’s capital stock, from repaying to the Company any loans or advances to such Subsidiary from the Company or from
transferring any of such Subsidiary’s property or assets to the Company or any other Subsidiary of the Company, except as described
or incorporate by reference in, or contemplated by, the Registration Statement and the Prospectus, or as would not reasonably be expected
to have a Material Adverse Effect.
Section 4.8. No Material
Adverse Effect or Material Adverse Change, No Undisclosed Liabilities. Except as otherwise disclosed in any Commission Document,
since the end of the Company’s most recent audited fiscal year: (i) the Company has not experienced or suffered any Material Adverse
Effect, and, to the Company’s Knowledge, there exists no current state of facts, condition or event which would have a Material
Adverse Effect; (ii) there has not occurred any material adverse change, or any development that would reasonably be expected to result
in a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the
Company from that set forth in the Commission Documents, including, without limitation, as a result of the outbreak of COVID-19, or as
a result of any measures intended to contain the outbreak of COVID-19 imposed by any federal, state, local or foreign government or government
agency in any country or region in which the Company, or any of its agents, consultants, advisors or vendors, has assets or properties
or conducts business, including, without limitation, any limitations, curtailments, suspensions or closures of businesses, business offices
or establishments, schools, properties and other public areas due to quarantines, curfews, travel restrictions, workplace controls, “stay-at-home”
orders, social distancing requirements or guidelines or other public gathering restrictions or limitations; (iii) neither the Company
nor any of its Subsidiaries has incurred any material liability or obligation, direct or contingent, nor entered into any material transaction;
(iv) the Company has not purchased any of its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution
of any kind on its capital stock other than ordinary and customary dividends; and (v) there has not been any material change in the capital
stock, short-term debt or long-term debt of the Company.
Neither the Company nor any
of its Subsidiaries has any liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute,
accrued, contingent or otherwise) that would be required to be disclosed on a balance sheet of the Company or any Subsidiary (including
the notes thereto) in conformity with GAAP and are not disclosed in the Commission 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, would not reasonably
be expected to have a Material Adverse Effect.
Section 4.9. No Undisclosed
Events or Circumstances. Except as set forth on Schedule 4.9, 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 in the Registration Statement or the Prospectus, which
has not been disclosed or incorporated by reference in the Registration Statement and the Prospectus, or (ii) would reasonably be expected
to have a Material Adverse Effect.
Section 4.10. Indebtedness.
The Filed Commission Documents set forth all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which
the Company or any Subsidiary has commitments through such date. For the purposes of this Agreement, “Indebtedness”
shall mean (a) any liabilities for borrowed money or amounts owed in excess of $100,000 (other than trade accounts payable incurred in
the ordinary course of business), (b) all guaranties, endorsements, indemnities and other contingent obligations in respect of Indebtedness
of others in excess of $100,000, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary
course of business; and (c) the present value of any lease payments in excess of $100,000 due under leases required to be capitalized
in accordance with GAAP. Except as set forth on Schedule 4.10, there is no existing or continuing default or event of default in
respect of any Indebtedness of the Company or any of its Subsidiaries. The Company has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to Title 11 of the United States Code or any similar federal or state bankruptcy law or
law for the relief of debtors, nor does the Company have any Knowledge that its creditors intend to initiate involuntary bankruptcy, insolvency,
reorganization or liquidation proceedings or other proceedings for relief under Title 11 of the United States Code or any other federal
or state bankruptcy law or any law for the relief of debtors.
Section 4.11. Title
to Assets. Except as disclosed in the Commission Documents, the Company and each of its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the
business of the Company, in each case free and clear of all liens, encumbrances and defects except such as are described or incorporated
by reference in the Registration Statement and the Prospectus or such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the Company and its Subsidiaries; and any real property and buildings
held under lease by the Company and its Subsidiaries are held by it under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere in any material respect with the use made and proposed to be made of such property and buildings
by the Company and its Subsidiaries, in each case except as described or incorporated by reference in the Registration Statement and the
Prospectus
Section 4.12. Actions
Pending. Except as disclosed in Commission Documents, there is no action, suit, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or body pending or, to the Knowledge of the Company, threatened
against or affecting the Company or any of the Subsidiaries, or any of their respective officers or directors in their capacities as such,
which would reasonably be expected to have a Material Adverse Effect.
Section 4.13. Compliance
With Laws. During the 12-month period immediately preceding the date hereof, except as described in the Filed Commission Documents,
the Company and each of its Subsidiaries is and at all times has been in material compliance with all applicable U.S. and foreign statutes,
rules, or regulations applicable to Company and its Subsidiaries (“Applicable Laws”), except as would not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
Section 4.14. Certain
Fees. Except as set forth on Schedule 4.14, no brokerage or finder’s fees or commissions are or will be payable by
the Company or of the Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by the Transaction Documents. The Investor shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 4.14 incurred
by the Company or of the Subsidiaries that may be due or payable in connection with the transactions contemplated by the Transaction Documents.
Section 4.15. Operation
of Business. The Company and the Subsidiaries possess or have obtained, all material licenses, certificates, consents, orders,
approvals, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state,
local or foreign governmental entity that are necessary for the ownership or lease of their respective properties or the conduct of their
respective businesses as currently conducted, as described or incorporated by reference in the Registration Statement and the Prospectus
(the “Permits”), except where the failure to possess, obtain or make the same would not, individually or in
the aggregate, have a Material Adverse Effect. Neither the Company nor any Subsidiary has received written notice of any proceeding relating
to revocation or modification of any such Permit or has any reason to believe that such Permit will not be renewed in the ordinary course,
except where the failure to obtain any such renewal would not, individually or in the aggregate, have a Material Adverse Effect. This
Section 4.15 does not relate to environmental matters, such items being the subject of Section 4.16.
Section 4.16. Environmental
Compliance. Other than as set forth on Schedule 4.16, to the Knowledge of the Company, the Company and its Subsidiaries
are not in violation of any statute, any rule, regulation, decision or order of any governmental agency or body or any court, domestic
or foreign, relating to the use, disposal or release of hazardous or toxic substances (collectively, “Environmental Laws”),
owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, is liable for any off-site
disposal or contamination pursuant to any Environmental Laws, or subject to any claim relating to any Environmental Laws, which violation,
contamination, liability or claim would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and
the Company is not aware of any pending investigation which might lead to such a claim. Other than as set forth or incorporated by reference
in the Registration Statement and the Prospectus, there is no judgment, decree, injunction, rule, writ or order of any governmental entity
under any Environmental Laws outstanding against the Company and its Subsidiaries which would, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
Section 4.17. Material
Agreements. Except as set forth in the Commission Documents, neither the Company nor any Subsidiary of the Company is a party
to any written or oral contract, instrument, agreement commitment, obligation, plan or arrangement (collectively, “Material
Agreements”). Each of the Material Agreements described in the Commission Documents conform in all material respects to
the descriptions thereof contained or incorporated by reference therein. Except as set forth in Schedule 4.17, the Company and
each of its Subsidiaries have performed in all material respects all the obligations then required to be performed by them under the Material
Agreements, have received no notice of default or an event of default by the Company or any of its Subsidiaries thereunder and are not
aware of any basis for the assertion thereof, and neither the Company or any of its Subsidiaries nor, to the Knowledge of the Company,
any other contracting party thereto are in default under any Material Agreement now in effect, the result of which would have a Material
Adverse Effect. Except as set forth in the Commission Documents, each of the Material Agreements is in full force and effect, and constitutes
a legal, valid and binding obligation enforceable in accordance with its terms against the Company and/or any of its Subsidiaries and,
to the Knowledge of the Company, each other contracting party thereto, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally
the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.
Section 4.18. Transactions
With Affiliates. Except as disclosed in the Commission Documents, none of the Company’s, officers or directors, or to the
Company’s Knowledge, none of the Company’s stockholders or any family member or Affiliate of any of the foregoing, has either
directly or indirectly an interest in, or is a party to, any transaction that would be required to be disclosed as a related party transaction
pursuant to Item 404 of Regulation S-K promulgated under the Securities Act.
Section 4.19. Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted, except as would
not reasonably be expected to have a Material Adverse Effect. None of the Company’s material trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations,
trade secrets or other intellectual property rights have expired or terminated, or, by the terms and conditions thereof, will expire or
terminate within two years from the date of this Agreement, except as would not reasonably be expected to have a Material Adverse Effect.
The Company has no Knowledge of any infringement by the Company or the Subsidiaries of any material trademark, trade name rights, patents,
patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other similar
rights of others, or of any such development of similar or identical trade secrets or technical information by others, and there is no
claim, action or proceeding being made or brought against, or to the Company’s Knowledge, being threatened against, the Company
or the Subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks,
service mark registrations, trade secret or other infringement, which would reasonably be expected to have a Material Adverse Effect.
Section 4.20. Use of
Proceeds. The proceeds from the sale of the Shares by the Company to the Investor shall be used by the Company in the manner as
will be set forth in the Prospectus included in any Registration Statement (and any post-effective amendment thereto) and any Prospectus
Supplement thereto filed pursuant to the Registration Rights Agreement.
Section 4.21. Investment
Company Act Status. The Company is not required to be registered as, and immediately after receipt of payment for the Shares will
not be required to be registered as, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended.
Section 4.22. Benefit
Plans; Labor Matters. Except as set forth on Schedule 4.22, each benefit and compensation plan, agreement, policy and arrangement
that is maintained, administered or contributed to by the Company for current or former employees or directors of, or independent contractors
with respect to, the Company has been maintained in material compliance with its terms and the requirements of any applicable statutes,
orders, rules and regulations, and the Company has complied in all material respects with all applicable statutes, orders, rules and regulations
in regard to such plans, agreements, policies and arrangements. Each stock option granted under any equity incentive plan of the Company
(each, a “Stock Plan”) was granted with a per share exercise price no less than the market price per common
share on the grant date of such option in accordance with the rules of the Trading Market, and no such grant involved any “back-dating,”
“forward-dating” or similar practice with respect to the effective date of such grant; each such option (i) was granted in
compliance in all material respects with Applicable Laws and with the applicable Stock Plan(s), (ii) was duly approved by the Company’s
Board of Directors, and (iii) has been properly accounted for in the Company’s financial statements and disclosed, to the extent
required, in the Company’s filings or submissions with the Commission, and the Trading Market. Neither the Company nor any Subsidiary
is in violation of or has received written notice of any violation with respect to any federal or state law, regulation or rule relating
to discrimination in the hiring, termination, promotion, employment or pay of employees, nor any applicable federal or state wages and
hours law, nor any state law, regulation or rule precluding the denial of credit due to the neighborhood in which a property is situated,
the violation of any of which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. There
are no existing or, to the Knowledge of the Company, threatened labor disputes with the employees of the Company or any of the Subsidiaries
that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 4.23. Taxes.
Except as set forth on Schedule 4.23, each of the Company and the Subsidiaries has filed on a timely basis (including in accordance
with any applicable extensions) all material necessary federal, state, local and foreign income and franchise tax returns required to
be filed through the date hereof or have properly requested extensions thereof, and have paid all taxes shown as due thereon, and if due
and payable, any related or similar assessment, fine or penalty levied against the Company or of the Subsidiaries. Except as disclosed
in the Commission Documents, no material tax deficiency has been asserted against any such entity, and the Company has no Knowledge of
any tax deficiency that is likely to be asserted against any such entity that, individually or in the aggregate, if determined adversely
to any such entity, would reasonably be expected to have a Material Adverse Effect. All material tax liabilities are adequately provided
for on the respective books of the Company and the Subsidiaries.
Section 4.24. 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, including, but not limited to, insurance covering real and personal property owned or leased by the Company and the Subsidiaries
against theft, damage, destruction, environmental liabilities, acts of vandalism, terrorism, earthquakes, flood and all other risks customarily
insured against, all of which insurance is in full force and effect. 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 not be
able 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 reasonably be expected to have a Material Adverse Effect.
Section 4.25. Dilutive
Effect. The Company is aware and acknowledges that issuance of the Securities could cause dilution to existing stockholders and
could significantly increase the outstanding number of shares of Common Stock. The Company further acknowledges that its obligation to
issue the Commitment Shares (if it elects to pay the Commitment Fee in Commitment Shares) and to issue the Shares pursuant to the terms
of a Fixed Purchase, VWAP Purchase or Additional VWAP Purchase in accordance with this Agreement is, in each case, unconditional regardless
of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company.
Section 4.26. Manipulation
of Price. The Company has not, and to its Knowledge no Person acting on its behalf has, (i) taken, directly or indirectly, any
action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the
sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of
the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities
of the Company. Neither the Company nor any of its officers, directors or Affiliates will during the term of this Agreement, and, to the
Knowledge of the Company, no Person acting on their behalf will during the term of this Agreement, take any of the actions referred to
in the immediately preceding sentence.
Section 4.27. Securities
Act. The Company has complied and shall comply with all applicable federal and state securities laws in connection with the offer,
issuance and sale of the Securities hereunder, including, without limitation, the applicable requirements of the Securities Act. Each
Registration Statement, upon filing with the Commission and at the time it is declared effective by the Commission, shall satisfy all
of the requirements of the Securities Act to register the resale of the Registrable Securities included therein by the Investor in accordance
with the Registration Rights Agreement on a delayed or continuous basis under Rule 415 under the Securities Act at then-prevailing market
prices, and not fixed prices. The Company is not, and has not previously been at any time, an issuer identified in, or subject to, Rule
144(i).
Section 4.28. Listing
and Maintenance Requirements; DTC Eligibility. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and
the Company has taken no action designed to, or which to its Knowledge is likely to have the effect of, terminating the registration of
the Common Stock pursuant to the Exchange Act nor has the Company received any notification that the Commission is currently contemplating
terminating such registration. Except as disclosed in the Filed Commission Documents, the Company has not, in the twelve (12) months preceding
the date hereof, received any written notice from any Person to the effect that the Company is not in compliance with the listing or maintenance
requirements of the Trading Market. Except as disclosed in the Commission Documents, the Company is in compliance with all such listing
and maintenance requirements of the Trading Market. The Common Stock is eligible for participation in the DTC book entry system and has
shares on deposit at DTC for transfer electronically to third parties via DTC through its DWAC delivery system. The Company has not received
notice from DTC to the effect that a suspension of, or restriction on, accepting additional deposits of the Common Stock, electronic trading
or book-entry services by DTC with respect to the Common Stock is being imposed or is contemplated.
Section 4.29. Application
of Takeover Protections. The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s Charter or the laws of the State of Delaware that is or could become applicable to the
Investor as a result of the Investor and the Company fulfilling their respective obligations or exercising their respective rights under
the Transaction Documents (as applicable), including, without limitation, as a result of the Company’s issuance of the Securities
and the Investor’s ownership of the Securities.
Section 4.30. Foreign
Corrupt Practices. Neither the Company or Subsidiary, nor to the Knowledge of the Company, any agent or other Person acting on
behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials
or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution
made by the Company (or made by any Person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated
in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”).
Section 4.31. Money
Laundering Laws. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations
or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”);
and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company
or any Subsidiary with respect to the Money Laundering Laws is pending or, to the Knowledge of the Company, threatened.
Section 4.32. OFAC.
Neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any director, officer, agent, employee or Affiliate
of the Company or any of its Subsidiaries (i) is currently subject to any sanctions administered by the U.S. government, including the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”) or the U.S. Department of State, the
United Nations Security Council, the European Union, or the United Kingdom (including sanctions administered or controlled by Her Majesty’s
Treasury) (collectively, “Sanctions” and such persons, “Sanctioned Persons”) or other
relevant sanctions authority, and (ii) will use the proceeds of this offering, directly or indirectly, to fund or facilitate the activities
of any Sanctioned Persons or entity or any country, region or territory that is, at the time of such funding or facilitation, subject
to Sanctions or any person or entity located in a country, region or territory subject to Sanctions (including any administered or enforced
by OFAC or the U.S. Department of State), the United Nations Security Council, the European Union, or the United Kingdom (including sanctions
administered or controlled by Her Majesty’s Treasury). Neither the Company nor any of its Subsidiaries nor, to the Knowledge of
the Company, any director, officer, agent, employee or Affiliate of the Company or any of its Subsidiaries, is a Person that is, or is
50% or more owned or otherwise controlled by a Person that is: (i) the subject of any Sanctions; or (ii) located, organized or resident
in a country, region or territory that is, or whose government is, the subject of Sanctions that broadly prohibit dealings with that country,
region or territory (including at the time of this agreement, Cuba, Iran, North Korea, Syria and Crimea) (collectively, “Sanctioned
Countries” and each, a “Sanctioned Country”). The Company and its Subsidiaries have not engaged
in any dealings or transactions with or for the benefit of Sanctioned Persons, or with or in a Sanctioned Country, in the preceding 3
years, nor does the Company or any of its Subsidiaries have any plans to deal or transact with Sanctioned Persons, or with or in Sanctioned
Countries.
Section 4.33. Information
Technology; Compliance with Data Privacy Laws. To the best of the Company’s knowledge and as previously disclosed under
Commission Documents, (i) there have been no material breaches or violations of (or unauthorized access to) the Company, or the Subsidiaries’
information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications and databases (collectively,
the “IT Systems”) or any personal, personally identifiable, sensitive, confidential or regulated data (collectively,
“Personal Data”) processed or stored by or on behalf of the Company or the Subsidiaries, except for those that
have been remedied without material cost or liability or the duty to notify any regulator, nor are there any pending internal investigations
of the Company or the Subsidiaries relating to the same and (ii) the Company and the Subsidiaries are presently in compliance in all material
respects with all Applicable Laws, statutes and regulations and contractual obligations relating to the privacy and security of IT Systems
and Personal Data.
Section 4.34. No Disqualification
Events. None of the Company, any of their predecessors, any affiliated issuer, any director, general partner executive officer,
other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s
outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under
the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”)
is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a
“Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the
Securities Act. The Company have exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification
Event.
Section 4.35. ERISA.
Except as set forth in the Commission Documents, the Company is not a party to an “employee benefit plan,” as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which: (i) is subject to
Title IV of ERISA and (ii) is or was at any time maintained, administered or contributed to by the Company or any of its ERISA Affiliates
(as defined hereafter). These plans are referred to collectively herein as the “Employee Plans.” An “ERISA Affiliate”
of any person or entity means any other person or entity which, together with that Person or entity, could be treated as a single employer
under Section 414(b), (c), (m) or (o) of the Code. Each Employee Plan has been maintained in material compliance with its terms and the
requirements of Applicable Law. Except as set forth or incorporated by reference in the Registration Statement and the Prospectus, there
is no liability in respect of post-retirement health and medical benefits for retired employees of the Company or any of its ERISA Affiliates,
other than medical benefits required to be continued under Applicable Law. No “prohibited transaction” (as defined in either
Section 406 of ERISA or Section 4975 of the Code) has occurred with respect to any Employee Plan; and each Employee Plan that is intended
to be qualified under Section 401(a) of the Code is so qualified, and nothing has occurred, whether by action or by failure to act, which
could cause the loss of such qualification.
Section 4.36. No Other
Similar Agreement. Except as disclosed in the Commission Documents, other than the Transaction Documents to which it is a party,
the Company is not a party to any agreement that is (or that contains any term, obligation or restriction that is) in effect on the date
hereof with any Person, other than the Investor, relating to any “at the market offering,” “equity line of credit”
or any other similar continuous offering in which the Company may offer, issue or sell Common Stock or Common Stock Equivalents at a future
determined price.
Section 4.37. Acknowledgement
Regarding Investor’s Acquisition of Securities. The Company acknowledges and agrees that the Investor is acting solely in
the capacity of an arm’s-length purchaser with respect to this Agreement and the transactions contemplated by the Transaction Documents.
The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated by the Transaction Documents, and any advice given by the Investor
or any of its representatives or agents in connection therewith is merely incidental to the Investor’s acquisition of the Securities.
The Company further represents to the Investor that the Company’s decision to enter into the Transaction Documents to which it is
a party has been based solely on the independent evaluation of the transactions contemplated thereby by the Company, respectively, and
their respective representatives. The Company acknowledges and agrees that the Investor has not made and does not make any representations
or warranties with respect to the transactions contemplated by the Transaction Documents other than those specifically set forth in Article
IV.
Article
V
ADDITIONAL COVENANTS
The Company covenants with
the Investor, and the Investor covenants with the Company, as follows, which covenants of one party are for the benefit of the other party
during the Investment Period (and with respect to the Company for the period following the termination of this Agreement specified in
Section 8.3 pursuant to and in accordance with Section 8.3):
Section 5.1. Securities
Compliance. The Company shall notify the Commission and the Trading Market, if and as applicable, in accordance with their respective
rules and regulations, of the transactions contemplated by the Transaction Documents, and shall take all necessary action, undertake all
proceedings and obtain all registrations, permits, consents and approvals for the legal and valid issuance of the Securities to the Investor
in accordance with the terms of the Transaction Documents, as applicable.
Section 5.2. Reservation
of Common Stock. Following Stockholder Approval, the Company will have available and the Company will reserve and keep available
at all times, free of preemptive and other similar rights of stockholders, 150,000,000 shares of authorized but unissued shares of Common
Stock to enable the Company to timely effect the issuance, sale and delivery of all Shares pursuant to this Agreement. As of the date
of this Agreement the Company has reserved, and as of the Commencement Date shall have continued to reserve, out of its authorized and
unissued Common Stock, 147,750,000 shares of Common Stock solely for the purpose of effecting Fixed Purchases, VWAP Purchases and Additional
VWAP Purchases under this Agreement, and 2,250,000 shares of Common Stock solely for the purpose of issuing the Commitment Shares. The
number of shares of Common Stock so reserved for the purpose of issuing the Commitment Shares and effecting Fixed Purchases, VWAP Purchases
and Additional VWAP Purchases under this Agreement may be increased from time to time by the Company from and after the Commencement Date,
and such number of reserved shares may be reduced from and after the Commencement Date only by the number of Shares actually issued, sold
and delivered to the Investor pursuant to any Fixed Purchase, VWAP Purchase and Additional VWAP Purchase effected from and after the Commencement
Date pursuant to this Agreement.
Section 5.3. Registration
and Listing. The Company shall use its commercially reasonable efforts to cause the Common Stock to continue to be registered
as a class of securities under Sections 12(b) of the Exchange Act, and to comply with its reporting and filing obligations under the Exchange
Act, and shall not take any action or file any document (whether or not permitted by the Securities Act or the Exchange Act) to terminate
or suspend such registration or to terminate or suspend its reporting and filing obligations under the Exchange Act or Securities Act,
except as permitted herein. The Company shall use its commercially reasonable efforts to continue the listing and trading of its Common
Stock and the listing of the Securities purchased by the Investor hereunder on the Trading Market and to comply with the Company’s
reporting, filing and other obligations under the rules and regulations of the Trading Market. The Company shall not take any action which
could be reasonably expected to result in the delisting or suspension of the Common Stock on the Trading Market. If the Company receives
any final and non-appealable notice that the listing or quotation of the Common Stock on the Trading Market shall be terminated on a date
certain, the Company shall promptly (and in any case within 24 hours) notify the Investor of such fact in writing and shall use its commercially
reasonable efforts to cause the Common Stock to be listed or quoted on another Eligible Market.
Section 5.4. Compliance with Laws.
(i) During the Investment Period,
(a) the Company shall comply, and the Company shall cause each Subsidiary to comply, with all laws, rules, regulations and orders applicable
to the business and operations of the Company and the Subsidiaries, except as would not have a Material Adverse Effect, and (b) the Company
shall comply with all applicable provisions of the Securities Act and the Exchange Act, including Regulation M thereunder, applicable
state securities or “Blue Sky” laws, and applicable listing rules of the Trading Market or Eligible Market, except as would
not, individually or in the aggregate, prohibit or otherwise interfere with the ability of the Company to enter into and perform its obligations
under this Agreement in any material respect or for Investor to conduct resales of Securities under the Registration Statement in any
material respect. Without limiting the foregoing, none of the Company, or any of the Subsidiaries, nor to the Knowledge of the Company,
any of their respective directors, officers, agents, employees or any other Persons acting on their behalf shall, in connection with the
operation of the respective businesses of the Company and the Subsidiaries, (1) use any corporate funds for unlawful contributions, payments,
gifts or entertainment or to make any unlawful expenditures relating to political activity to government officials, candidates or members
of political parties or organizations, (2) pay, accept or receive any unlawful contributions, payments, expenditures or gifts, or (3)
violate or operate in noncompliance with any export restrictions, anti-boycott regulations, embargo regulations or other applicable domestic
or foreign laws and regulations, including, without limitation, the FCPA and the Money Laundering Laws.
(ii) The Investor shall comply
with all laws, rules, regulations and orders applicable to the performance by it of its obligations under this Agreement and its investment
in the Securities, except as would not, individually or in the aggregate, prohibit or otherwise interfere with the ability of the Investor
to enter into and perform its obligations under this Agreement in any material respect. Without limiting the foregoing, the Investor shall
comply with all applicable provisions of the Securities Act and the Exchange Act, including Regulation M thereunder, and all applicable
state securities or “Blue Sky” laws.
Section 5.5. Keeping of Records and Books
of Account; Due Diligence.
(i) The Investor and the Company
shall each maintain records showing the remaining the remaining Total Purchase Commitment, the remaining Aggregate Limit and the dates
and Fixed Purchase Share Amount, VWAP Purchase Share Amount and Additional VWAP Purchase Share Amount for each Fixed Purchase, each VWAP
Purchase and each Additional VWAP Purchase, respectively.
(ii) The Investor shall
have the right, from time to time as the Investor may reasonably deem appropriate, and upon reasonable advance notice to the Company,
to perform reasonable due diligence on the Company during normal business hours; provided, however, that after the Closing
Date, the Investor’s continued due diligence of the Company shall not be a condition precedent to, or otherwise impair, delay or
modify in any respect, the Company’s right to deliver to the Investor any Fixed Purchase Notice, any VWAP Purchase Notice and any
Additional VWAP Purchase Notice, or the Investor’s obligation to purchase the Shares subject thereto, pursuant to this Agreement.
The Company and its officers and employees shall provide information on a reasonably timely basis and otherwise reasonably cooperate with
the Investor in connection with any reasonable request by the Investor related to the Investor’s due diligence of the Company.
Section 5.6. No Frustration; Prohibition
of Certain Issuances Before Settlement of Purchases; No Similar Transactions.
(i) No Frustration.
The Company shall not enter into, announce or recommend to the Company’s stockholders any agreement, plan, arrangement or transaction
in or of which the terms thereof would restrict, materially delay, conflict with or impair the ability or right of the Company to perform
its obligations under the Transaction Documents to which it is a party, including, without limitation, the obligation of the Company to
deliver (i) the Commitment Shares to the Investor not later than 4:00 p.m. (New York time) on the later of (A) January 2, 2025 and (B)
the Trading Day following the date on which Stockholder Approval is obtained or, in its sole discretion, to pay the Commitment Fee in
cash, in accordance with Section 9(ii) of this Agreement, (ii) the Shares to the Investor in respect of a Fixed Purchase as DWAC Shares
not later than 10:00 a.m., New York City time, on the Trading Day immediately following the applicable Fixed Purchase Date for such Fixed
Purchase in accordance with Section 2.1 of this Agreement, (iii) the Shares to the Investor in respect of a VWAP Purchase as DWAC Shares
not later than 10:00 a.m., New York City time, on the Trading Day immediately following the applicable VWAP Purchase Date for such VWAP
Purchase in accordance with Section 2.2 of this Agreement, and (iv) Shares to the Investor in respect of an Additional VWAP Purchase as
DWAC Shares not later than 10:00 a.m., New York City time, on the Trading Day immediately following the applicable Additional VWAP Purchase
Date for such Additional VWAP Purchase in accordance with Section 2.3 of this Agreement. For the avoidance of doubt, nothing in this Section
5.6(i) shall in any way limit the Company’s right to terminate this Agreement in accordance with Section 7.2 (subject in all cases
to Section 7.3).
(ii) No Dilutive
Issuances During Reference Periods. Neither the Company nor or any Subsidiary shall issue, sell or grant any right, option or
warrant to purchase, or issue, sell or grant any right to reprice (or reset the purchase price therefor), or otherwise dispose of for
cash (or enter into any agreement, plan or arrangement contemplating any of the foregoing, or seek to utilize any existing agreement,
plan or arrangement to effect any of the foregoing), or announce any offer, issuance, sale or grant of any option or warrant to purchase
or other disposition for cash (or any agreement, plan or arrangement therefor), at any time during the following periods: (i) with respect
to each Fixed Purchase for which the Company has delivered to the Investor a Fixed Purchase Notice, the period beginning on the third
(3rd) Trading Day immediately preceding the applicable Fixed Purchase Date for such Fixed
Purchase and ending on the third (3rd) Trading Day next following the Trading Day on which
the Investor has delivered to the Company the applicable total purchase price for all of the Shares to be purchased by the Investor in
such Fixed Purchase pursuant to Section 2.1, and (ii) with respect to each VWAP Purchase and Additional VWAP Purchase under this Agreement
for which the Company has delivered to the Investor a VWAP Purchase Notice and (if applicable) an Additional VWAP Purchase Notice, respectively,
the period beginning on the third (3rd) Trading Day immediately preceding the applicable
VWAP Purchase Date for such VWAP Purchase (and, with respect to each Additional VWAP Purchase effected on the same Trading Day as such
VWAP Purchase Date, the applicable Additional VWAP Purchase Date, if any, for such Additional VWAP Purchase) and ending on the third (3rd)
Trading Day next following the Trading Day on which the Investor has delivered to the Company the applicable total purchase price for
all of the Shares to be purchased by the Investor in such VWAP Purchase, and the applicable total purchase price of all of the Shares
to be purchased by the Investor in such Additional VWAP Purchase(s), as applicable, pursuant to Section 2.2 and Section 2.3 (each such
period referred to in clause (i) and (ii) above, a “Reference Period”), any Common Stock or Common Stock Equivalents,
at an effective price per share of Common Stock less than the applicable Fixed Purchase Price, VWAP Purchase Price or Additional VWAP
Purchase Price (as applicable) per Share (such price, the “Reference Price”) to be sold to the Investor in the
applicable Fixed Purchase, VWAP Purchase and Additional VWAP Purchase (as applicable) to which such Reference Period relates (each such
issuance, a “Dilutive Issuance”), other than an Exempt Issuance (it being understood and agreed that if the
holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which
are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share of Common Stock
that is less than the applicable Reference Price, such issuance shall be deemed to have occurred for less than the applicable Reference
Price on such date of the Dilutive Issuance at such effective price) and the applicable Fixed Purchase Price, VWAP Purchase Price or Additional
VWAP Purchase Price (as applicable) shall be reduced to equal the Reference Price. If the Company enters into a Variable Rate Transaction,
the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price
at which such securities may be converted or exercised. The Investor shall be entitled to seek injunctive relief against the Company and
the Subsidiaries to preclude any such Dilutive Issuance that does not constitute an Exempt Issuance, which remedy shall be in addition
to any right to collect damages, without the necessity of showing economic loss and without any bond or other security being required.
(iii) Clearing Date.
If the lowest trade price for the Common Stock on the Clearing Date is lower than that at the time any Shares pursuant to a Fixed
Purchase, VWAP Purchase, or Additional VWAP Purchase are actually issued, then the price per share at which such Shares are issued shall
be adjusted such that the price per share at which such Shares are issued shall be calculated from the closing trade price on the Clearing
Date, and the Company shall issue additional Shares to Investor to reflect such adjusted price per Share. For purposes of this Agreement,
“Clearing Date” shall be on the date on which any Shares pursuant to a Fixed Purchase, VWAP Purchase, or Additional
VWAP Purchase are deposited into Investor’s brokerage account and Investor’s broker has confirmed with Investor that the Investor
may execute trades of such Shares.
(iv) No Other Similar
Transactions. From and after the date of this Agreement until the termination of this Agreement pursuant to Section 7 (the “Similar
Transaction Restricted Period”), none of the Company or any Subsidiary shall issue, sell or grant any, or otherwise dispose
of or issue (or enter into any agreement, plan or arrangement contemplating any of the foregoing, or seek to utilize any existing agreement,
plan or arrangement to effect any of the foregoing), or announce any offer, issuance, sale or grant or other disposition or issuance of
(or any agreement, plan or arrangement therefor) any Common Stock or Common Stock Equivalents (or a combination of units thereof) in any
“equity line of credit,” “at the market offering” or other similar continuous offering in which the Company may
offer, issue or sell Common Stock or Common Stock Equivalents (or any combination of units thereof) at a future determined price, other
than (a) Securities issued to the Investor pursuant to this Agreement and any of the other Transaction Documents or pursuant to any other
agreement entered into by the Company and the Investor at any time after the date of this Agreement, and (b) any securities of the Company
issued upon the exercise or exchange of or conversion of any shares of Common Stock or Common Stock Equivalents held by the Investor at
any time (such similar transaction other than those referred to clauses (a) and (b) hereof, a “Similar Transaction”).
From and after the date immediately following the last day of the Similar Transaction Restricted Period, the Company and/or any Subsidiary
shall be permitted to enter into an agreement, plan or arrangement to effect a Similar Transaction (and may publicly announce the same),
and the Company and/or any Subsidiary shall be permitted to take all such actions necessary or as contemplated thereby in order to satisfy
any conditions required thereunder to be satisfied by the Company and/or any Subsidiary in order to commence issuances and sales of Common
Stock or Common Stock Equivalents (or a combination of units thereof) thereunder, including, without limitation, preparing and filing
with the Commission one or more registration statements to register under the Securities Act the offer, issuance and sale by the Company
of Common Stock or Common Stock Equivalents (or a combination of units thereof) thereunder, or to register the resale by any Person or
Persons of Common Stock or Common Stock Equivalents (or a combination of units thereof) that may be issued or sold by the Company and/or
any Subsidiary to such Person or Persons thereunder; provided, however, that none of the Company or Subsidiary may issue,
sell or otherwise dispose of any shares of Common Stock or Common Stock Equivalents (or a combination of units thereof) to or through
any Person or Persons thereunder prior to the date of termination of this Agreement pursuant to Section 7. The Investor shall be entitled
to seek injunctive relief against the Company and the Subsidiaries to preclude any such issuance, which remedy shall be in addition to
any right to collect damages, without the necessity of showing economic loss and without any bond or other security being required.
Section 5.7. Corporate
Existence. The Company shall take all steps necessary to preserve and continue the corporate existence of the Company; provided,
however, that, except as provided in Section 5.8, nothing in this Agreement shall be deemed to prohibit the Company from engaging
in any Fundamental Transaction with another Person. For the avoidance of doubt, nothing in this Section 5.7 shall in any way limit the
Company’s right to terminate this Agreement in accordance with Section 7.2 (subject in all cases to Section 7.3).
Section 5.8. Fundamental
Transaction. If a Fixed Purchase Notice, a VWAP Purchase Notice or an Additional VWAP Purchase Notice has been delivered by the
Company to the Investor under Article II and the applicable Fixed Purchase, VWAP Purchase and Additional VWAP Purchase, respectively,
has or have not yet been fully settled in accordance with this Agreement (including, without limitation, the delivery by the Investor
to the Company of the applicable total purchase price for all of the Shares to be purchased by the Investor in such Fixed Purchase, VWAP
Purchase and Additional VWAP Purchase, respectively, as contemplated by Article II), the Company shall not effect any Fundamental Transaction
until the expiration of three (3) Trading Days following the Trading Day on which the Investor has delivered to the Company the applicable
total purchase price for all of the Shares to be purchased by the Investor in such Fixed Purchase, VWAP Purchase and Additional VWAP Purchase,
respectively.
Section 5.9. Selling Restrictions.
(i) Except as expressly set
forth below, the Investor covenants that from and after the Closing Date through and including the Trading Day next following the expiration
or termination of this Agreement (the “Restricted Period”), neither the Investor nor any of its Affiliates nor
any entity managed or controlled by the Investor (collectively, the “Restricted Persons” and each of the foregoing
is referred to herein as a “Restricted Person”) shall, directly or indirectly, (x) engage in any Short Sales
involving the Company’s securities or (y) grant any option to purchase, or acquire any right to dispose of or otherwise dispose
for value of, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for any shares of Common Stock,
or enter into any swap, hedge or other similar agreement that transfers, in whole or in part, the economic risk of ownership of the Common
Stock. Notwithstanding the foregoing, it is expressly understood and agreed that nothing contained herein shall (without implication that
the contrary would otherwise be true) prohibit any Restricted Person during the Restricted Period from: (1) selling “long”
(as defined under Rule 200 promulgated under Regulation SHO) the Securities; or (2) selling a number of shares of Common Stock equal to
the number of Shares that such Restricted Person is or may be obligated to purchase under a pending Fixed Purchase Notice, a pending VWAP
Purchase Notice or a pending Additional VWAP Purchase Notice but has not yet taken possession of so long as such Restricted Person (or
the Broker-Dealer, as applicable) delivers the Shares purchased pursuant to such Fixed Purchase Notice, such VWAP Purchase Notice or such
Additional VWAP Purchase Notice (as applicable) to the purchaser thereof or the applicable Broker-Dealer upon such Restricted Person’s
receipt of such shares of Common Stock from the Company pursuant to this Agreement.
(ii) In addition to the foregoing,
in connection with any sale of Securities (including any sale permitted by paragraph (i) above), the Investor shall comply in all respects
with all applicable laws, rules, regulations and orders, including, without limitation, the requirements of the Securities Act and the
Exchange Act.
Section 5.10. Effective
Registration Statement. During the Investment Period, the Company shall use its commercially reasonable efforts to maintain the
continuous effectiveness of each Registration Statement filed with the Commission under the Securities Act for the applicable Registration
Period pursuant to and in accordance with the Registration Rights Agreement.
Section 5.11. Blue Sky.
The Company shall take such action, if any, as is necessary by the Company in order to obtain an exemption for or to qualify the Securities
for sale by the Company to the Investor pursuant to the Transaction Documents, and at the request of the Investor, the subsequent resale
of Registrable Securities by the Investor, in each case, under applicable state securities or “Blue Sky” laws and shall provide
evidence of any such action so taken to the Investor from time to time following the Closing Date; provided, however, that
the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 5.11, (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction.
Section 5.12. Non-Public
Information. None of the Company or of the Subsidiaries, nor any of their respective directors, officers, employees or agents
shall disclose any material non-public information about the Company or the Subsidiaries to the Investor, unless a simultaneous public
announcement thereof is made by the Company in the manner contemplated by Regulation FD. In the event of a breach of the foregoing covenant
by the Company or of the Subsidiaries, or any of their respective directors, officers, employees and agents (as determined in the reasonable
good faith judgment of the Investor), (i) the Investor shall promptly provide written notice of such breach to the Company and (ii) after
such notice has been provided to the Company and, provided that the Company shall have failed to publicly disclose such material, non-public
information within 24 hours following demand therefor by the Investor, in addition to any other remedy provided herein or in the other
Transaction Documents, the Investor shall have the right to make a public disclosure, in the form of a press release, public advertisement
or otherwise, of such material, non-public information without the prior approval by the Company, any of the Subsidiaries, or any of their
respective directors, officers, employees or agents. The Investor shall not have any liability to the Company, any of the Subsidiaries,
or any of their respective directors, officers, employees, stockholders or agents, for any such disclosure.
Section 5.13. Broker/Dealer.
The Investor shall use one or more broker-dealers to effectuate all sales, if any, of the Shares that it may purchase or otherwise acquire
from the Company pursuant to the Transaction Documents, as applicable, which (or whom) shall be unaffiliated with the Investor and not
then currently engaged or used by the Company, and a DTC participant (collectively, the “Broker-Dealer”). The
Investor shall, from time to time, provide the Company and the Transfer Agent with all information regarding the Broker-Dealer reasonably
requested by the Company. The Investor shall be solely responsible for all fees and commissions of the Broker-Dealer, which shall not
exceed customary brokerage fees and commissions and shall be responsible for designating only a DTC participant eligible to receive DWAC
Shares.
Section 5.14. Disclosure Schedules.
(i) The Company may, from time
to time, update the Disclosure Schedules as may be required to satisfy the conditions set forth in Section 6.2(i) and Section 6.3 (to
the extent such condition set forth in Section 6.3 relates to the condition in Section 6.2(i) as of a specific Notice Delivery Time).
For purposes of this Section 5.14, any disclosure made in a schedule to the Compliance Certificate shall be deemed to be an update of
the Disclosure Schedule. Notwithstanding anything in this Agreement to the contrary, no update to the Disclosure Schedule pursuant to
this Section 5.14 shall cure any breach of a representation or warranty of the Company contained in this Agreement and made prior to the
update and shall not affect any of the Investor’s rights or remedies with respect thereto.
(ii) Notwithstanding anything
to the contrary contained in the Disclosure Schedule or in this Agreement, the information and disclosure contained in any Schedule of
the Disclosure Schedule shall be deemed to be disclosed and incorporated by reference in any other Schedule of the Disclosure Schedule
as though fully set forth in such Schedule for which applicability of such information and disclosure is reasonably apparent. The fact
that any item of information is disclosed in the Disclosure Schedule shall not be construed to mean that such information is required
to be disclosed by this Agreement. Except as expressly set forth in this Agreement, such information and the thresholds (whether based
on quantity, qualitative characterization, dollar amounts or otherwise) set forth herein shall not be used as a basis for interpreting
the terms “material” or “Material Adverse Effect” or other similar terms in this Agreement.
Section 5.15. Delivery
of Bring Down Opinions and Compliance Certificates Upon Occurrence of Certain Events. Within three (3) Trading Days immediately
following the (i) filing of (A) a post-effective amendment to the Prospectus Supplement required to be filed by the Company with the Commission
pursuant to the Registration Rights Agreement, (B) a New Registration Statement required to be filed by the Company with the Commission
pursuant to Section 2(c) of the Registration Rights Agreement, or (C) a post-effective amendment to a New Registration Statement required
to be filed by the Company with the Commission pursuant to Section 2(c) of the Registration Rights Agreement, in each case with respect
to a fiscal year ending after the Commencement Date, to register the resale of Securities by the Investor under the Securities Act pursuant
to this Agreement and the Registration Rights Agreement, and (ii) the date the Company files with the Commission (A) a Prospectus Supplement
to the Prospectus contained in the Registration Statement under the Securities Act, (B) an annual report on Form 10-K under the Exchange
Act with respect to a fiscal year ending after the Commencement Date, (C) an amendment on Form 10-K/A to an annual report on Form 10-K
under the Exchange Act with respect to a fiscal year ending after the Commencement Date, which contains amended material financial information
(or a restatement of material financial information) or an amendment to other material information contained in a previously filed Form
10-K, and (D) a Commission Document under the Exchange Act (other than those referred to in clauses (ii)(A) and (ii)(B) of this Section
5.15), which contains amended material financial information (or a restatement of material financial information) or an amendment to other
material information contained or incorporated by reference in the Registration Statement, or the Prospectus or any Prospectus Supplement
contained in the Registration Statement (it being hereby acknowledged and agreed that the filing by the Company with the Commission of
a quarterly report on Form 10-Q that includes only updated financial information as of the end of the Company’s most recent fiscal
quarter shall not, in and of itself, constitute an “amendment” or “restatement” for purposes of clause (ii) of
this Section 5.15), in each case of this clause (ii) if the Company is not also then required under the Securities Act to file a post-effective
amendment to the Registration Statement or a post-effective amendment to any New Registration Statement, in each case with respect to
a fiscal year ending after the Commencement Date, to register the resale of Securities by the Investor under the Securities Act pursuant
to this Agreement and the Registration Rights Agreement, and in any case of this clause (ii), not more than once per calendar quarter,
the Company shall (I) deliver to the Investor a Compliance Certificate, dated such date, and (II) cause to be furnished to the Investor
an opinion “bring down” from outside counsel to the Company substantially in the form mutually agreed to by the Company and
the Investor prior to the date of this Agreement, modified, as necessary, to relate to such Registration Statement or post-effective amendment,
or the Prospectus contained therein as then amended or supplemented by such Prospectus Supplement, as applicable (each such opinion, a
“Bring Down Opinion”).
Section 5.16. DTC Chill.
If the Common stock is chilled for deposit at DTC, becomes chilled, or receives a Stop Sign or other trading restrictions at any point
while this Agreement remains outstanding, an additional 10% discount will be attributed to the price per Share at which each Fixed Purchase,
VWAP Purchase and Additional VWAP Purchase is made and the Investor shall be entitled to deduct from such payment for the Shares an amount
equal to $1,500 for each Fixed Purchase, VWAP Purchase and Additional VWAP Purchase to cover costs associated with the deposit of chilled
or otherwise trade restricted stocks for each issuance.
Section 5.17. Use of
Proceeds. Until such time as no shares of Preferred Stock remain outstanding, the Company shall use twenty five percent (25%)
of the proceeds from each Fixed Purchase, VWAP Purchase and Additional Purchase to redeem the shares of Preferred Stock then outstanding
in accordance with the terms of the respective certificates of designation for each such class of Preferred Stock. As used herein, “Preferred
Stock” shall mean, collectively, the Company’s (i) Series C-1 Preferred Stock, par value $0.001 per share, (ii) Series
B-1 Preferred Stock, par value $0.001 per share, (iii) Series B-2 Preferred Stock, par value $0.001 per share, (iv) Series A-1 Preferred
Stock, par value $0.001 per share.
Section 5.18. Stockholder
Approval. The Company shall hold an annual or special meeting of stockholders on or prior to the date that is sixty (60) days
following the date hereof for the purpose of obtaining Stockholder Approval, with the recommendation of the Company’s board of directors
that such proposals are approved, and the Company shall solicit proxies from its stockholders in connection therewith in the same manner
as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor
of such proposals. If the Company does not obtain Stockholder Approval at the first meeting, the Company shall call a meeting every sixty
(60) days thereafter to seek Stockholder Approval until the earlier of the date on which Stockholder Approval is obtained. Notwithstanding
the foregoing, the Company shall include the proposal(s) required to obtain Stockholder Approval in the first proxy statement filed by
the Company following the date hereof, with the recommendation of the Company’s board of director that such proposal(s) are approved.
Article
VI
CONDITIONS TO CLOSING AND CONDITIONS TO THE SALE AND
PURCHASE OF THE SHARES
Section 6.1. Conditions
Precedent to Closing. The Closing is subject to the satisfaction of each of the conditions set forth in this Section 6.1 on the
Closing Date.
(i) Accuracy of the Investor’s
Representations and Warranties. The representations and warranties of the Investor contained in this Agreement (a) that are not
qualified by “materiality” shall be true and correct in all material respects as of the Closing Date, except to the extent
such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct
in all material respects as of such other date and (b) that are qualified by “materiality” shall be true and correct as of
the Closing Date, except to the extent such representations and warranties are as of another date, in which case, such representations
and warranties shall be true and correct as of such other date.
(ii) Accuracy of
the Company’s Representations and Warranties. The representations and warranties of the Company contained in this Agreement
(a) that are not qualified by “materiality” or “Material Adverse Effect” shall be true and correct in all material
respects as of the Closing Date, except to the extent such representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct in all material respects as of such other date and (b) that are qualified by
“materiality” or “Material Adverse Effect” shall be true and correct as of the Closing Date, except to the extent
such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct
as of such other date.
(iii) [Reserved]
(iv) Closing Deliverables.
At the Closing, counterpart signature pages of this Agreement and the Registration Rights Agreement executed by each of the parties hereto
shall be delivered as provided in Section 1.2. Simultaneously with the execution and delivery of this Agreement and the Registration Rights
Agreement, the Investor’s counsel shall have received the closing certificate from the Company, dated as of the Closing Date, in
the form of Exhibit B hereto.
Section 6.2. Conditions
Precedent to Commencement. The right of the Company to commence delivering Fixed Purchase Notices, VWAP Purchase Notices and Additional
VWAP Purchase Notices under this Agreement, and the obligation of the Investor to accept Fixed Purchase Notices, VWAP Purchase Notices
and Additional VWAP Purchase Notices delivered to the Investor by the Company under this Agreement, are subject to the initial satisfaction,
at the time of Commencement, of each of the conditions set forth in this Section 6.2.
(i) Accuracy of the Company’s
Representations and Warranties. The representations and warranties of the Company contained in this Agreement (a) that are not
qualified by “materiality” or “Material Adverse Effect” shall have been true and correct in all material respects
when made and shall be true and correct in all material respects as of the Commencement Date with the same force and effect as if made
on such date, except to the extent such representations and warranties are as of another date, in which case, such representations and
warranties shall be true and correct in all material respects as of such other date and (b) that are qualified by “materiality”
or “Material Adverse Effect” shall have been true and correct when made and shall be true and correct as of the Commencement
Date with the same force and effect as if made on such date, except to the extent such representations and warranties are as of another
date, in which case, such representations and warranties shall be true and correct as of such other date.
(ii) Performance of the
Company. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and
conditions required by this Agreement and the Registration Rights Agreement to be performed, satisfied or complied with by the Company
at or prior to the Commencement. The Company shall deliver to the Investor on the Commencement Date the compliance certificate substantially
in the form attached hereto as Exhibit C (the “Compliance Certificate”).
(iii) No Material
Notices. None of the following events shall have occurred and be continuing: (a) receipt of any request by the Commission or any
other federal or state governmental authority for any additional information relating to the Prospectus Supplement, or the Prospectus
contained therein or any Prospectus Supplement thereto, or for any amendment of or supplement to the Prospectus Supplement, the Prospectus
contained therein or any Prospectus Supplement thereto; (b) the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of the Prospectus Supplement or prohibiting or suspending the use of the Prospectus
contained therein or any Prospectus Supplement thereto, or of the suspension of qualification or exemption from qualification of the Securities
for offering or sale in any jurisdiction, or the initiation or contemplated initiation of any proceeding for such purpose; or (c) the
occurrence of any event or the existence of any condition or state of facts, which makes any statement of a material fact made in the
Prospectus Supplement, the Prospectus contained therein or any Prospectus Supplement thereto untrue or which requires the making of any
additions to or changes to the statements then made in the Prospectus Supplement, the Prospectus contained therein or any Prospectus Supplement
thereto in order to state a material fact required by the Securities Act to be stated therein or necessary in order to make the statements
then made therein (in the case of the Prospectus or any Prospectus Supplement, in light of the circumstances under which they were made)
not misleading, or which requires an amendment to the Prospectus Supplement or a supplement to the Prospectus contained therein or any
Prospectus Supplement thereto to comply with the Securities Act or any other law. The Company shall not have any Knowledge of any event
that would reasonably be expected to have the effect of causing the suspension of the effectiveness of the Prospectus Supplement or the
prohibition or suspension of the use of the Prospectus contained therein or any Prospectus Supplement thereto in connection with the resale
of the Registrable Securities by the Investor.
(iv) Other Commission
Filings. The Current Report shall have been filed with the Commission as required pursuant to Section 1.3. The final Prospectus
included in any post-effective amendment to the Prospectus Supplement, and any Prospectus Supplement thereto, required to be filed by
the Company with the Commission pursuant to Section 1.3 and the Registration Rights Agreement after the Commencement Date and prior to
the applicable Fixed Purchase Date and the applicable VWAP Purchase Date and Additional VWAP Purchase Date (as applicable), shall have
been filed with the Commission in accordance with Section 1.3 and the Registration Rights Agreement. The final Prospectus included in
any New Registration Statement and in any post-effective amendment thereto, and any Prospectus Supplement thereto, required to be filed
by the Company with the Commission pursuant to Section 1.3 and the Registration Rights Agreement after the Commencement Date and prior
to the applicable Fixed Purchase Date and the applicable VWAP Purchase Date and Additional VWAP Purchase Date (as applicable), shall have
been filed with the Commission in accordance with Section 1.3 and the Registration Rights Agreement. All reports, schedules, registrations,
forms, statements, information and other documents required to have been filed by the Company with the Commission pursuant to the reporting
requirements of the Exchange Act, including all material required to have been filed pursuant to Section 13(a) or 15(d) of the Exchange
Act, after the Commencement Date and prior to the applicable Fixed Purchase Date and the applicable VWAP Purchase Date and Additional
VWAP Purchase Date (as applicable), shall have been filed with the Commission and, if any Registrable Securities are covered by a Registration
Statement on Form S-3, such filings shall have been made within the applicable time period prescribed for such filing under the Exchange
Act.
(v) No Suspension of Trading
in or Notice of Delisting of Common Stock. Trading in the Common Stock shall not have been suspended by the Commission, the Trading
Market or the FINRA (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated
prior to the Commencement Date), the Company shall not have received any final and non-appealable notice that the listing or quotation
of the Common Stock on the Trading Market shall be terminated on a date certain (unless, prior to such date certain, the Common Stock
is listed or quoted on any other Eligible Market), nor shall there have been imposed any suspension of, or restriction on, accepting additional
deposits of the Common Stock, electronic trading or book-entry services by DTC with respect to the Common Stock that is continuing, the
Company shall not have received any notice from DTC to the effect that a suspension of, or restriction on, accepting additional deposits
of the Common Stock, electronic trading or book-entry services by DTC with respect to the Common Stock is being imposed or is contemplated
(unless, prior to such suspension or restriction, DTC shall have notified the Company in writing that DTC has determined not to impose
any such suspension or restriction).
(vi) Compliance with Laws.
The Company shall have complied in all material respects with all applicable federal, state and local governmental laws, rules, regulations
and ordinances in connection with the execution, delivery and performance of this Agreement and the other Transaction Documents to which
it is a party and the consummation of the transactions contemplated hereby and thereby, including, without limitation, the Company shall
have obtained all permits and qualifications required by any applicable state securities or “Blue Sky” laws for the offer
and sale of the Securities by the Company to the Investor and the subsequent resale of the Registrable Securities by the Investor (or
shall have the availability of exemptions therefrom).
(vii) No Injunction.
No statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits the consummation of, or which would materially modify
or delay any of the transactions contemplated by, the Transaction Documents.
(viii) No Proceedings
or Litigation. No action, suit or proceeding before any arbitrator or any court or governmental authority shall have been commenced,
and no inquiry or investigation by any governmental authority shall have been commenced, against the Company or any Subsidiary, or any
of the officers, directors or Affiliates of the Company or any Subsidiary, seeking to restrain, prevent or change the transactions contemplated
by the Transaction Documents, or seeking material damages in connection with such transactions.
(ix) Listing of Securities.
All of the Securities that have been and may be issued pursuant to this Agreement shall have been approved for listing or quotation on
the Trading Market as of the Commencement Date, subject only to notice of issuance.
(x) No Material Adverse
Effect. No condition, occurrence, state of facts or event constituting a Material Adverse Effect shall have occurred and be continuing.
(xi) No Bankruptcy Proceedings.
No Person shall have commenced a proceeding against the Company pursuant to or within the meaning of any Bankruptcy Law. The Company
shall not have, pursuant to or within the meaning of any Bankruptcy Law, (a) commenced a voluntary case, (b) consented to the entry of
an order for relief against it in an involuntary case, (c) consented to the appointment of a Custodian of the Company for all or substantially
all of the Company’s property, or (d) made a general assignment for the benefit of its creditors. A court of competent jurisdiction
shall not have entered an order or decree under any Bankruptcy Law that (I) is for relief against the Company in an involuntary case,
(II) appoints a Custodian of the Company for all or substantially all of the Company’s property, or (III) orders the liquidation
of the Company or of the Subsidiaries.
(xii) Stockholder Approval
and Issuance of Commitment Shares. The Company shall have obtained Stockholder Approval and not later than 4:00 p.m. (New York
City time) on the later of (A) January 2, 2025 and (B) the Trading Day following the date on which Stockholder Approval is obtained and,
to the extent the Company elects to pay the Commitment Fee in Commitment Shares, the Company shall deliver irrevocable instructions to
the Transfer Agent to issue to the Investor a certificate or book-entry statement representing the Commitment Shares in the name of the
Investor or its designee (in which case such designee name shall have been provided to the Company prior to January 2, 2025), in consideration
for the Investor’s execution and delivery of this Agreement; provided, that in the event any issuance of Commitment Shares
to the Investor would result in the Investor exceeding the Beneficial Ownership Limitation, then any such Commitment Shares in excess
of the Beneficial Ownership Limitation shall be held in abeyance for the Investor until such time, if ever, as its rights thereto would
not result in the Investor exceeding the Beneficial Ownership Limitation. Such certificate or book-entry statement shall be delivered
to the Investor by overnight courier at its address set forth in Section 9.4 hereof. For the avoidance of doubt, all of the Commitment
Shares shall be fully earned as of the Closing Date regardless of whether any Fixed Purchases, VWAP Purchases or Additional VWAP Purchases
are made hereunder or any subsequent termination of this Agreement.
(xiii) Delivery of Commencement
Irrevocable Transfer Agent Instructions and Notice of Effectiveness. The Commencement Irrevocable Transfer Agent Instructions
shall have been executed by the Company and delivered to and acknowledged in writing by the Transfer Agent, and the Notice of Effectiveness
relating to the Registration Statement shall have been executed by the Company’s outside counsel and delivered to the Transfer Agent.
(xiv) Reservation of Shares.
As of the Commencement Date, the Company shall have reserved out of its authorized and unissued Common Stock, 147,750,000 shares of Common
Stock solely for the purpose of effecting Fixed Purchases, VWAP Purchases, and Additional VWAP Purchases under this Agreement.
(xv) Opinions of Company
Counsel. On the Commencement Date, the Investor shall have received the opinion and negative assurances from outside counsel to
the Company, dated the Commencement Date, in the forms mutually agreed to by the Company and the Investor prior to the date of this Agreement.
Section 6.3. Conditions
Precedent to Purchases by Investor. The right of the Company to deliver Fixed Purchase Notices, VWAP Purchase Notices and Additional
VWAP Purchase Notices under this Agreement after the Commencement Date, and the obligation of the Investor to accept Fixed Purchase Notices,
VWAP Purchase Notices and Additional VWAP Purchase Notices under this Agreement after the Commencement Date, are subject to the satisfaction
of each of the conditions set forth in this Section 6.3: (i) with respect to each Fixed Purchase after the Commencement Date, at the time
of delivery of the applicable Fixed Purchase Notice to the Investor on the applicable Fixed Purchase Date for such Fixed Purchase, (ii)
with respect to each VWAP Purchase after the Commencement Date, (A) at the time of delivery of the applicable VWAP Purchase Notice to
the Investor and (B) immediately prior to the applicable VWAP Purchase Commencement Time on the applicable VWAP Purchase Date for such
VWAP Purchase, and (iii) with respect to each Additional VWAP Purchase after the Commencement Date, (A) at the time of delivery of the
applicable Additional VWAP Purchase Notice to the Investor and (B) immediately prior to the applicable Additional VWAP Purchase Commencement
Time on the applicable Additional VWAP Purchase Date for such Additional VWAP Purchase (each such time referred to in clauses (i), (ii)
and (iii) hereof, a “Notice Delivery Time”).
(i) Satisfaction of Certain
Prior Conditions. Each of the conditions set forth in subsections (i), (ii), and (vii) through (xv) set forth in Section 6.2 shall
be satisfied at the applicable Notice Delivery Time after the Commencement Date (with the terms “Commencement” and “Commencement
Date” in the conditions set forth in subsections (i) and (ii) of Section 6.2 replaced with “applicable Notice Delivery Time”);
provided, however, that the Company shall not be required to deliver the Compliance Certificate after the Commencement Date,
except as provided in Section 5.1 and Section 6.2(ii).
(ii) Any Required New
Registration Statement Effective. Any New Registration Statement covering the resale by the Investor of the Registrable Securities,
included therein, and any post-effective amendment thereto, required to be filed by the Company with the Commission pursuant to the Registration
Rights Agreement after the Commencement Date and prior to the applicable Fixed Purchase Date, the applicable VWAP Purchase Date and the
applicable Additional VWAP Purchase Date (as applicable), in each case shall have been declared effective under the Securities Act by
the Commission and shall remain effective for the applicable Registration Period, and the Investor shall be permitted to utilize the Prospectus
therein, and any Prospectus Supplement thereto, to resell (a) all of the then-issued Commitment Shares (if any) included in such New Registration
Statement, and any post-effective amendment thereto, (b) all of the Shares included in such New Registration Statement, and any post-effective
amendment thereto, that have been issued and sold to the Investor hereunder pursuant to all Fixed Purchase Notices, all VWAP Purchase
Notices and all Additional VWAP Purchase Notices (as applicable) delivered by the Company to the Investor prior to such applicable Fixed
Purchase Date, such applicable VWAP Purchase Date, and such applicable Additional VWAP Purchase Date, respectively, and (c) all of the
Shares included in such new Registration Statement, and any post-effective amendment thereto, that are issuable pursuant to the applicable
Fixed Purchase Notice, the applicable VWAP Purchase Notice, and the applicable Additional VWAP Purchase Notice (as applicable) delivered
by the Company to the Investor with respect to a Fixed Purchase, a VWAP Purchase, and an Additional VWAP Purchase, respectively, to be
effected hereunder on such applicable Fixed Purchase Date, such applicable VWAP Purchase Date, and such Additional VWAP Purchase Date,
respectively.
(iii) Delivery of Subsequent
Irrevocable Transfer Agent Instructions and Notice of Effectiveness. With respect to any post-effective amendment to the Registration
Statement or any post-effective amendment to any Registration Statement, in each case declared effective by the Commission after the Commencement
Date, the Company shall have delivered or caused to be delivered to the Transfer Agent (a) irrevocable instructions in the form substantially
similar to the Commencement Irrevocable Transfer Agent Instructions executed by the Company and acknowledged in writing by the Transfer
Agent and (b) the Notice of Effectiveness, in each case modified as necessary to refer to such Registration Statement or post-effective
amendment and the Registrable Securities included therein, to issue the Registrable Securities included therein as DWAC Shares in accordance
with the terms of this Agreement and the Registration Rights Agreement.
(iv) No Material Notices.
None of the following events shall have occurred and be continuing: (a) receipt of any request by the Commission or any other federal
or state governmental authority for any additional information relating to the Registration Statement or any post-effective amendment
thereto, or any New Registration Statement or any post-effective amendment thereto, or the Prospectus contained in any of the foregoing
or any Prospectus Supplement thereto; (b) the issuance by the Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of any Registration Statement or any post-effective amendment thereto, or prohibiting or suspending
the use of the Prospectus contained in any of the foregoing or any Prospectus Supplement thereto, or of the suspension of qualification
or exemption from qualification of the Securities for offering or sale in any jurisdiction, or the initiation or contemplated initiation
of any proceeding for such purpose; or (c) the occurrence of any event or the existence of any condition or state of facts, which makes
any statement of a material fact made in the Registration Statement or any post-effective amendment thereto, or the Prospectus contained
in any of the foregoing or any Prospectus Supplement thereto untrue or which requires the making of any additions to or changes to the
statements then made in the Registration Statement or any post-effective amendment thereto, or the Prospectus contained in any of the
foregoing or any Prospectus Supplement thereto in order to state a material fact required by the Securities Act to be stated therein or
necessary in order to make the statements then made therein (in the case of the Prospectus or any Prospectus Supplement, in light of the
circumstances under which they were made) not misleading, or which requires an amendment or any post-effective amendment thereto, any
New Registration Statement or any post-effective amendment thereto, or the Prospectus contained in any of the foregoing or any Prospectus
Supplement thereto to comply with the Securities Act or any other law (other than the transactions contemplated by the applicable Fixed
Purchase Notice, the applicable VWAP Purchase Notice, and the applicable Additional VWAP Purchase Notice (as applicable) delivered by
the Company to the Investor with respect to a Fixed Purchase, a VWAP Purchase, and an Additional VWAP Purchase, respectively, to be effected
hereunder on such applicable Fixed Purchase Date, such applicable VWAP Purchase Date, and such applicable Additional VWAP Purchase Date,
respectively, and the settlement thereof). The Company shall not have any Knowledge of any event that would reasonably be expected to
have the effect of causing the suspension of the effectiveness of the Registration Statement or any post-effective amendment thereto,
or the prohibition or suspension of the use of the Prospectus contained in any of the foregoing or any Prospectus Supplement thereto in
connection with the resale of the Registrable Securities by the Investor.
(v) Other Commission Filings.
The final Prospectus included in any post-effective amendment to any Prospectus required to be filed by the Company with the Commission
pursuant to Section 1.3 and the Registration Rights Agreement after the Commencement Date and prior to the applicable Fixed Purchase Date
and the applicable VWAP Purchase Date and Additional VWAP Purchase Date (as applicable), shall have been filed with the Commission in
accordance with Section 1.3 and the Registration Rights Agreement. The final Prospectus included in any New Registration Statement and
in any post-effective amendment thereto, and any Prospectus Supplement thereto, required to be filed by the Company with the Commission
pursuant to Section 1.3 and the Registration Rights Agreement after the Commencement Date and prior to the applicable Fixed Purchase Date
and the applicable VWAP Purchase Date and Additional VWAP Purchase Date (as applicable), shall have been filed with the Commission in
accordance with Section 1.3 and the Registration Rights Agreement. All reports, schedules, registrations, forms, statements, information
and other documents required to have been filed by the Company with the Commission pursuant to the reporting requirements of the Exchange
Act, including all material required to have been filed pursuant to Section 13(a) or 15(d) of the Exchange Act, after the Commencement
Date and prior to the applicable Fixed Purchase Date and the applicable VWAP Purchase Date and Additional VWAP Purchase Date (as applicable),
shall have been filed with the Commission and, if any Registrable Securities are covered by a Registration Statement on Form S-3, such
filings shall have been made within the applicable time period prescribed for such filing under the Exchange Act.
(vi) No Suspension of
Trading in or Notice of Delisting of Common Stock. Trading in the Common Stock shall not have been suspended by the Commission,
the Trading Market or FINRA (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall
be terminated prior to the applicable Fixed Purchase Date, VWAP Purchase Date or Additional VWAP Purchase Date, as applicable), the Company
shall not have received any final and non-appealable notice that the listing or quotation of the Common Stock on the Trading Market shall
be terminated on a date certain (unless, prior to such date certain, the Common Stock is listed or quoted on any other Eligible Market),
nor shall there have been imposed any suspension of, or restriction on, accepting additional deposits of the Common Stock, electronic
trading or book-entry services by DTC with respect to the Common Stock that is continuing, the Company shall not have received any notice
from DTC to the effect that a suspension of, or restriction on, accepting additional deposits of the Common Stock, electronic trading
or book-entry services by DTC with respect to the Common Stock is being imposed or is contemplated (unless, prior to such suspension or
restriction, DTC shall have notified the Company in writing that DTC has determined not to impose any such suspension or restriction).
(vii) Certain Limitations.
The issuance and sale of the Shares issuable pursuant to the applicable Fixed Purchase Notice, applicable VWAP Purchase Notice, and applicable
Additional VWAP Purchase Notice (as applicable) shall not (a) exceed the applicable Fixed Purchase Maximum Amount, the applicable VWAP
Purchase Maximum Amount and the applicable Additional VWAP Purchase Maximum Amount, respectively, or (b) cause the Aggregate Limit or
the Beneficial Ownership Limitation to be exceeded.
(viii) Shares Authorized
and Delivered. All of the Shares issuable pursuant to the applicable Fixed Purchase Notice, the applicable VWAP Purchase Notice,
and the applicable Additional VWAP Purchase Notice (as applicable) shall have been duly authorized by all necessary corporate action of
the Company. All Shares relating to all prior Fixed Purchase Notices, VWAP Purchase Notices, and Additional VWAP Purchase Notices required
to have been received by the Investor as DWAC Shares under this Agreement prior to the applicable Notice Delivery Time for the applicable
Fixed Purchase, applicable VWAP Purchase and applicable Additional VWAP Purchase (as applicable) shall have been delivered to the Investor
as DWAC Shares in accordance with this Agreement.
(ix) Bring Down Opinions
of Company Counsel. The Investor shall have received (a) all Bring Down Opinions from outside counsel to the Company for which
the Company was obligated to instruct their outside counsel to deliver to the Investor prior to the applicable Notice Delivery Time for
the applicable Fixed Purchase, applicable VWAP Purchase, and applicable Additional VWAP Purchase (as applicable) and (b) all Compliance
Certificates from the Company that the Company was obligated to deliver to the Investor prior to the applicable Notice Delivery Time for
the applicable Fixed Purchase, applicable VWAP Purchase and applicable Additional VWAP Purchase (as applicable), in each case in accordance
with Section 5.15.
Article
VII
TERMINATION
Section 7.1. Automatic
Termination; Termination by Consent. Unless earlier terminated as provided hereunder, this Agreement shall terminate automatically,
without any further action or notice by any Person, on the earliest to occur of (i) the expiration of the Registration Statement pursuant
to Rule 415(a)(5) of the Securities Act, (ii) the date on which the Investor shall have purchased the Aggregate Limit of Shares pursuant
to this Agreement, (iii) the date on which the Common Stock shall have failed to be listed or quoted on the Trading Market or any Eligible
Market, (iv) the thirtieth (30th) Trading Day next following the date on which, pursuant
to or within the meaning of any Bankruptcy Law, the Company commences a voluntary case or any Person commences a proceeding against the
Company, in each case that is not discharged or dismissed prior to such thirtieth (30th)
Trading Day, and (v) the date on which, pursuant to or within the meaning of any Bankruptcy Law, a Custodian is appointed for the Company
or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors. Subject to
Section 7.3, this Agreement may be terminated at any time by the mutual written consent of the parties, effective as of the date of such
mutual written consent unless otherwise provided in such written consent.
Section 7.2. Other Termination.
Subject to Section 7.3, the Company may terminate this Agreement after the Commencement Date effective upon one (1) Trading Day’s
prior written notice to the Investor in accordance with Section 9.4; provided, however, that (i) the Company shall have
issued all applicable Commitment Shares to the Investor and shall have paid all fees and amounts to the Investor’s counsel required
to be paid pursuant to Section 9.1 of this Agreement prior to such termination, and (ii) prior to issuing any press release, or making
any public statement or announcement, with respect to such termination, the Company shall consult with the Investor and its counsel on
the form and substance of such press release or other disclosure, which consent shall not be unreasonably delayed or withheld. Subject
to Section 7.3, this Agreement may be terminated at any time by the mutual written consent of the parties, effective as of the date of
such mutual written consent unless otherwise provided in such written consent. Subject to Section 7.3, the Investor shall have the right
to terminate this Agreement effective upon ten (10) Trading Days’ prior written notice to the Company in accordance with Section
9.4, if: (a) any condition, occurrence, state of facts or event constituting a Material Adverse Effect has occurred and is continuing;
(b) a Fundamental Transaction shall have occurred; (c) the Registration Statement is not filed by the applicable Filing Deadline therefor
or declared effective by the Commission by the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement) therefor,
or the Company is otherwise in breach or default in any material respect under any of the other provisions of the Registration Rights
Agreement, and, if such failure, breach or default is capable of being cured, such failure, breach or default is not cured within 10 Trading
Days after notice of such failure, breach or default is delivered to the Company pursuant to Section 9.4; (d) while a Registration Statement,
or any post-effective amendment thereto, is required to be maintained effective pursuant to the terms of the Registration Rights Agreement
and the Investor holds any Registrable Securities, the effectiveness of such Registration Statement, or any post-effective amendment thereto,
lapses for any reason (including, without limitation, the issuance of a stop order by the Commission) or such Registration Statement or
any post-effective amendment thereto, the Prospectus contained therein or any Prospectus Supplement thereto otherwise becomes unavailable
to the Investor for the resale of all of the Registrable Securities included therein in accordance with the terms of the Registration
Rights Agreement, and such lapse or unavailability continues for a period of 20 consecutive Trading Days, other than due to acts of the
Investor; (e) trading in the Common Stock on the Trading Market (or if the Common Stock is then listed on an Eligible Market, trading
in the Common Stock on such Eligible Market) shall have been suspended and such suspension continues for a period of three (3) consecutive
Trading Days; or (f) the Company is in material breach or default of this Agreement, and, if such breach or default is capable of being
cured, such breach or default is not cured within 10 Trading Days after notice of such breach or default is delivered to the Company (as
applicable) pursuant to Section 9.4. Unless notification thereof is required elsewhere in this Agreement (in which case such notification
shall be provided in accordance with such other provision), the Company shall promptly (but in no event later than 24 hours) notify the
Investor (and, if required under Applicable Law, including, without limitation, Regulation FD promulgated by the Commission, or under
the applicable rules and regulations of the Trading Market (or if the Common Stock is then listed on an Eligible Market, the rules and
regulations of such Eligible Market), the Company shall publicly disclose such information in accordance with Regulation FD and the applicable
rules and regulations of the Trading Market, or the applicable rules and regulations of such Eligible Market, as applicable) upon becoming
aware of any of the events set forth in the immediately preceding sentence.
Section 7.3. Effect
of Termination. In the event of termination by the Company or the Investor (other than by mutual termination) pursuant to Section
7.2, written notice thereof shall forthwith be given to the other party as provided in Section 9.4 and the transactions contemplated by
this Agreement shall be terminated without further action by either party. If this Agreement is terminated as provided in Section 7.1
or Section 7.2, this Agreement shall become void and of no further force and effect, except that (i) the provisions of Article IV (Representations
and Warranties of the Company), Article VIII (Indemnification), Article IX (Miscellaneous) and this Article VII (Termination) shall remain
in full force and effect indefinitely notwithstanding such termination and (ii) so long as the Investor owns any Securities, the covenants
and agreements of the Company contained in Article V (Covenants) shall remain in full force and effect for a period of six (6) months
following such termination. Notwithstanding anything in this Agreement to the contrary, no termination of this Agreement by any party
shall (i) become effective prior to the first Trading Day immediately following the settlement date related to any pending Fixed Purchase
Notice, any pending VWAP Purchase Notice, or any pending Additional VWAP Purchase Notice (as applicable) that has not been fully settled
in accordance with the terms and conditions of this Agreement (it being hereby acknowledged and agreed that no termination of this Agreement
shall limit, alter, modify, change or otherwise affect any of the parties’ respective rights or obligations under the Transaction
Documents with respect to any pending Fixed Purchase, pending VWAP Purchase, and pending Additional VWAP Purchase (as applicable), and
that the parties shall fully perform their respective obligations with respect to any such pending Fixed Purchase, any such pending VWAP
Purchase, and any such pending Additional VWAP Purchase (as applicable) under the Transaction Documents, provided all of the conditions
to the settlement thereof set forth in Article VI are timely satisfied), (ii) limit, alter, modify, change or otherwise affect the parties’
respective rights or obligations under the Registration Rights Agreement, all of which shall survive any such termination, (iii) affect
the Investor Expense Reimbursement paid to the Investor, all of which shall be non-refundable when paid as of the Closing Date pursuant
to Section 9.1(i), regardless of whether any Fixed Purchases, VWAP Purchases, or Additional VWAP Purchases are made or settled hereunder
or any subsequent termination of this Agreement, or (iv) affect any Commitment Shares previously issued or delivered, or any rights of
any holder thereof, it being hereby acknowledged and agreed that all of the Commitment Shares shall be fully earned as of the Closing
Date, regardless of whether any Fixed Purchases, VWAP Purchases or Additional VWAP Purchases are made or settled hereunder or any subsequent
termination of this Agreement. Nothing in this Section 7.3 shall be deemed to release the Company or the Investor from any liability for
any breach or default under this Agreement or any of the other Transaction Documents to which it is a party, or to impair the respective
rights of the Company and the Investor to compel specific performance by the other party of its obligations under the Transaction Documents
to which it is a party.
Article
VIII
INDEMNIFICATION
Section 8.1. Indemnification
of Investor. In consideration of the Investor’s execution and delivery of this Agreement and acquiring the Securities hereunder
and in addition to all of the other respective obligations of the Company under the Transaction Documents to which it is a party, subject
to the provisions of this Section 8.1, the Company shall indemnify and hold harmless the Investor, each of its directors, officers, shareholders,
members, partners, employees, representatives, agents and advisors (and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding the lack of such title or any other title), each Person, if any, who controls the Investor (within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act), and the respective directors, officers, shareholders,
members, partners, employees, representatives, agents and advisors (and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding the lack of such title or any other title) of such controlling Persons (each, an “Investor
Party”), from and against all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses (including
all judgments, amounts paid in settlement, court costs, reasonable attorneys’ fees and costs of defense and investigation) (collectively,
“Damages”) that any Investor Party may suffer or incur as a result of or relating to (a) any breach of any of
the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents to
which it is a party or (b) any action, suit, claim or proceeding (including for these purposes a derivative action brought on behalf of
the Company) instituted against such Investor Party arising out of or resulting from the execution, delivery, performance or enforcement
of the Transaction Documents, other than claims for indemnification within the scope of Section 6 of the Registration Rights Agreement;
provided, however, that (x) the foregoing indemnity shall not apply to any Damages to the extent, but only to the extent,
that such Damages resulted directly and primarily from any acts or failures to act, undertaken or omitted to be taken by such Investor
Party through its fraud, bad faith, gross negligence, or willful or reckless misconduct.
The Company shall reimburse
any Investor Party promptly upon demand (with accompanying presentation of documentary evidence) for all legal and other costs and expenses
reasonably incurred by such Investor Party in connection with (i) any action, suit, claim or proceeding, whether at law or in equity,
to enforce compliance by the Company with any provision of the Transaction Documents to which it is a party or (ii) any other any action,
suit, claim or proceeding, whether at law or in equity, with respect to which it is entitled to indemnification under this Section 8.1;
provided that the Investor shall promptly reimburse the Company for all such legal and other costs and expenses to the extent a
court of competent jurisdiction determines that any Investor Party was not entitled to such reimbursement.
An Investor Party’s
right to indemnification or other remedies based upon the representations, warranties, covenants and agreements of the Company set forth
in the Transaction Documents to which it is a party shall not in any way be affected by any investigation or knowledge of such Investor
Party. Such representations, warranties, covenants and agreements shall not be affected or deemed waived by reason of the fact that an
Investor Party knew or should have known that any representation or warranty might be inaccurate or that the Company failed to comply
with any agreement or covenant. Any investigation by such Investor Party shall be for its own protection only and shall not affect or
impair any right or remedy hereunder.
To the extent that the foregoing
joint and several undertakings by the Company set forth in this Section 8.1 may be unenforceable for any reason, the Company shall make
the maximum contribution to the payment and satisfaction of each of the Damages which is permissible under Applicable Law.
Section 8.2. Indemnification
Procedures. Promptly after an Investor Party receives notice of a claim or the commencement of an action for which the Investor
Party intends to seek indemnification under Section 8.1, the Investor Party will notify the Company in writing of the claim or commencement
of the action, suit or proceeding; provided, however, that failure to notify the Company will not relieve the Company from
liability under Section 8.1, except to the extent it has been materially prejudiced by the failure to give notice. The Company will be
entitled to participate in the defense of any claim, action, suit or proceeding as to which indemnification is being sought, and if the
Company acknowledges in writing the obligation to indemnify the Investor Party against whom the claim or action is brought, the Company
may (but will not be required to) assume the defense against the claim, action, suit or proceeding with counsel satisfactory to it. After
the Company notifies the Investor Party that the Company wishes to assume the defense of a claim, action, suit or proceeding, the Company
will not be liable for any further legal or other expenses incurred by the Investor Party in connection with the defense against the claim,
action, suit or proceeding except that if, in the opinion of counsel to the Investor Party, it would be inappropriate under the applicable
rules of professional responsibility for the same counsel to represent both the Company and such Investor Party. In such event, the Company
will pay the reasonable fees and expenses of no more than one separate counsel for all such Investor Parties promptly as such fees and
expenses are incurred. Each Investor Party, as a condition to receiving indemnification as provided in Section 8.1, will cooperate in
all reasonable respects with the Company in the defense of any action or claim as to which indemnification is sought. The Company will
not be liable for any settlement of any action effected without its prior written consent, which consent shall not be unreasonably withheld,
delayed or conditioned. The Company will not, without the prior written consent of the Investor Party, effect any settlement of a pending
or threatened action with respect to which an Investor Party is, or is informed that it may be, made a party and for which it would be
entitled to indemnification, unless the settlement includes an unconditional release of the Investor Party from all liability and claims
which are the subject matter of the pending or threatened action.
The remedies provided for
in this Article VIII are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Investor Party
at law or in equity.
Article
IX
MISCELLANEOUS
Section 9.1. Certain Fees and Expenses; Commitment
Shares; Commencement Irrevocable Transfer Agent Instructions.
(i) Certain Fees and Expenses.
Each party shall bear its own fees and expenses related to the transactions contemplated by this Agreement; provided, however,
that immediately following the execution of this Agreement, the Company shall pay, by wire transfer of immediately available funds to
an account designated by the Investor, an amount equal to $25,000 to be applied against the Investor’s reasonable out-of-pocket
expenses, including the legal fees and disbursements of the Investor’s legal counsel, incurred by the Investor in connection with
the preparation, negotiation, execution and delivery of the Transaction Documents by the Investor and its due diligence investigation
of the Company (such amount, the “Investor Expense Reimbursement”). For the avoidance of doubt, the Investor
Expense Reimbursement, shall be non-refundable when paid as of the Closing Date, regardless of whether any Fixed Purchases, VWAP Purchases
or Additional VWAP Purchases are made or settled hereunder or any subsequent termination of this Agreement. The Company shall pay all
U.S. federal, state and local stamp and other similar transfer and other taxes and duties levied in connection with issuance of the Securities
pursuant hereto.
(ii) Commitment Fee.
In consideration for the Investor’s execution and delivery of this Agreement, the Company shall pay the Commitment Fee (which may
be paid in the sole discretion of the Company in the form of cash or Commitment Shares) to the Investor or its designee (in which case
such designee name shall have been provided to the Company prior to January 2, 2025) not later than 4:00 p.m. (New York City time) on
the later of (A) January 2, 2025 and (B) the Trading Day following the date on which Stockholder Approval is obtained. All of the Commitment
Shares, if any, shall be included in the Registration Statement. For the avoidance of doubt, the Commitment Fee shall be fully earned
as of the Closing Date regardless of whether any Fixed Purchases or VWAP Purchases are effected hereunder regardless of any subsequent
termination of this Agreement; provided, that in the event that any issuance of Commitment Shares to the Investor would result
in the Investor exceeding the Beneficial Ownership Limitation, then any such Commitment Shares in excess of the Beneficial Ownership Limitation
shall be held in abeyance for the Investor until such time, if ever, as its rights thereto would not result in the Investor exceeding
the Beneficial Ownership Limitation.
(iii) Irrevocable
Transfer Agent Instructions; Notice of Effectiveness. On the later of (A) January 2, 2025 and (B) the Trading Day following the
date on which Stockholder Approval is obtained, provided that the Company has elected to pay the Commitment Fee in Commitment Shares,
the Company shall cause the Transfer Agent to credit the Investor’s or its designee’s account at DTC as DWAC Shares such number
of shares of Common Stock equal to the number of Commitment Shares issued to the Investor pursuant to Section 9.1(ii). The Company shall
take all actions to carry out the intent and accomplish the purposes of the immediately preceding sentence, including, without limitation,
delivering all such legal opinions, consents, certificates, resolutions and instructions to the Transfer Agent, and any successor transfer
agent of the Company, as may be requested from time to time by the Investor or necessary or desirable to carry out the intent and accomplish
the purposes of the immediately preceding sentence. Upon the effectiveness of the Registration Statement, the Company shall deliver or
cause to be delivered to the Transfer Agent (and thereafter, shall deliver or cause to be delivered to any subsequent transfer agent of
the Company), (i) irrevocable instructions executed by the Company and acknowledged in writing by the Transfer Agent (the “Commencement
Irrevocable Transfer Agent Instructions”) and (ii) the notice of effectiveness in the form attached as an exhibit to the
Registration Rights Agreement (the “Notice of Effectiveness”), in each case directing the Transfer Agent to
issue to the Investor or its designee all of the Commitment Shares as DWAC Shares in accordance with this Agreement and the Registration
Rights Agreement. With respect to any post-effective amendment to the Registration Statement or any post-effective amendment to any New
Registration Statement, in each case declared effective by the Commission after the Commencement Date, the Company shall deliver or cause
to be delivered to the Transfer Agent (and thereafter, shall deliver or cause to be delivered to any subsequent transfer agent of the
Company) (i) irrevocable instructions in the form substantially similar to the Commencement Irrevocable Transfer Agent Instructions executed
by the Company and acknowledged in writing by the Transfer Agent and (ii) the Notice of Effectiveness, in each case modified as necessary
to refer to such Registration Statement or post-effective amendment and the Registrable Securities included therein. For the avoidance
of doubt, all Shares and Commitment Shares to be issued from and after Commencement to or for the benefit of the Investor pursuant to
this Agreement shall be issued to the Investor or its designee only as DWAC Shares. The Company represents and warrants to the Investor
that, while this Agreement is effective, no instruction other than those referred to in this Section 9.1(iii) will be given by the Company
to the Transfer Agent, or any successor transfer agent of the Company, with respect to the Shares and the Commitment Shares from and after
Commencement, and the Shares and the Commitment Shares (as applicable) covered by any New Registration Statement or post-effective amendment
thereof, as applicable, shall otherwise be freely transferable on the books and records of the Company and no stop transfer instructions
shall be maintained against the transfer thereof. The Company agrees that if the Company fails to fully comply with the provisions of
this Section 9.1(iii) within three (3) Trading Days after the date on which the Investor has provided the deliverables referred to above
that the Investor is required to provide to the Company or the Transfer Agent, the Company shall, at the Investor’s written instruction,
purchase from the Investor all shares of Common Stock purchased or acquired by the Investor pursuant to this Agreement that contain restrictive
legends at the greater of (i) the purchase price paid for such shares of Common Stock (as applicable) and (ii) the Closing Sale Price
of the Common Stock on the date of the Investor’s written instruction.
Section 9.2. Specific Enforcement, Consent
to Jurisdiction, Waiver of Jury Trial.
(i) The Company and the Investor
acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Company, on the one hand, and the
Investor, on the other hand, shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement
by the other party and to enforce specifically the terms and provisions hereof (without the necessity of showing economic loss and without
any bond or other security being required), this being in addition to any other remedy to which either party may be entitled by law or
equity.
(ii) Each of the Company and
the Investor (a) hereby irrevocably submits to the jurisdiction of the U.S. District Court and other courts of the United States sitting
in the State of New York for the purposes of any suit, action or proceeding arising out of or relating to this Agreement, and (b) hereby
waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction
of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding
is improper. Each of the Company and the Investor consents to process being served in any such suit, action or proceeding by mailing a
copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this Section 9.2 shall affect or limit any right to serve process
in any other manner permitted by law.
(iii) EACH OF THE COMPANY AND
THE INVESTOR HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
DISPUTES RELATING HERETO. EACH OF THE COMPANY AND THE INVESTOR (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 9.2.
Section 9.3. Entire
Agreement. The Transaction Documents set forth the entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements, negotiations and understandings between the parties, both oral
and written, with respect to such matters. There are no promises, undertakings, representations or warranties by either party relative
to subject matter hereof not expressly set forth in the Transaction Documents. The Disclosure Schedule and all exhibits to this Agreement
are hereby incorporated by reference in, and made a part of, this Agreement as if set forth in full herein.
Section 9.4. Notices.
Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be
effective (a) upon hand delivery or electronic mail delivery at the address or number designated below (if delivered on a business day
during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the
date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The address for such communications shall be:
If to the Company:
Aditxt, Inc.
737 N. Fifth Street, Suite 200
Richmond, VA 23219
Attention:
Email:
With a copy (which shall not
constitute notice) to:
Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza
New York, NY 10112
Attention: Richard A. Friedman, Esq.
If to the Investor:
Seven Knots, LLC
400 E. 66th
Street
New York, NY 10065
Telephone Number: (516) 946-1288
Email: mjw@7-knots.com
Attention: Marissa J. Welner
With a copy (which shall not
constitute notice) to:
Pryor Cashman LLP
7 Times Square
New York, NY 10036
Attention: M. Ali
Panjwani, Esq.
Either party hereto may from time to time change
its address for notices by giving at least five (5) days’ advance written notice of such changed address to the other party hereto.
Section 9.5. Waivers.
No provision of this Agreement may be waived by the parties from and after the date that is one (1) Trading Day immediately preceding
the filing of the Registration Statement with the Commission. Subject to the immediately preceding sentence, no provision of this Agreement
may be waived other than in a written instrument signed by the party against whom enforcement of such waiver is sought. No failure or
delay 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 exercises thereof or of any other right, power or privilege.
Section 9.6. Amendments.
No provision of this Agreement may be amended by the parties from and after the date that is one (1) Trading Day immediately preceding
the filing of the Registration Statement with the Commission. Subject to the immediately preceding sentence, no provision of this Agreement
may be amended other than by a written instrument signed by both parties hereto.
Section 9.7. Headings.
The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this Agreement
for any other purpose and shall not be deemed to limit or affect any of the provisions hereof. 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 Agreement instead of just the provision in which they are found.
Section 9.8. Construction.
The parties agree that each of them and their respective counsel has reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents. In addition, each and every reference to share prices and number of
shares of Common Stock in any Transaction Document shall, in all cases, be subject to adjustment for any stock splits, stock combinations,
stock dividends, recapitalizations, reorganizations and other similar transactions that occur on or after the date of this Agreement.
Any reference in this Agreement to “Dollars” or “$” shall mean the lawful currency of the United States of America.
Any references to “Section” or “Article” in this Agreement shall, unless otherwise expressly stated herein, refer
to the applicable Section or Article of this Agreement.
Section 9.9. Binding
Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors. Neither
the Company nor the Investor may assign this Agreement or any of their respective rights or obligations hereunder to any Person.
Section 9.10. No Third
Party Beneficiaries. Except as expressly provided in Article VIII, this Agreement is intended only for the benefit of the parties
hereto and their respective successors, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
Section 9.11. Governing
Law. This Agreement shall be governed by and construed in accordance with the internal procedural and substantive laws of the
State of New York, without giving effect to the choice of law provisions of such state that would cause the application of the laws of
any other jurisdiction.
Section 9.12. Survival.
The representations, warranties, covenants and agreements of the Company and the Investor contained in this Agreement shall survive the
execution and delivery hereof until the termination of this Agreement; provided, however, that (i) the provisions of Article
IV (Representations and Warranties of the Company), Article VII (Termination), Article VIII (Indemnification) and this Article IX (Miscellaneous)
shall remain in full force and effect indefinitely notwithstanding such termination, and, (ii) so long as the Investor owns any Securities,
the covenants and agreements of the Company and the Investor contained in Article V (Covenants), shall remain in full force and effect
notwithstanding such termination for a period of six (6) months following such termination.
Section 9.13. Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile
signature or signature delivered by e-mail in a “.pdf” format data file, including any electronic signature complying with
the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com, www.echosign.adobe.com, etc., shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the signature were an original signature.
Section 9.14. Publicity.
The Company shall afford the Investor and its counsel with a reasonable opportunity to review and comment upon, shall consult with the
Investor and its counsel on the form and substance of, and shall give due consideration to all such comments from the Investor or its
counsel on, any press release, Commission filing or any other public disclosure made by or on behalf of the Company relating to the Investor,
its purchases hereunder or any aspect of the Transaction Documents or the transactions contemplated thereby, prior to the issuance, filing
or public disclosure thereof. For the avoidance of doubt, the Company shall not be required to submit for review any such disclosure (i)
contained in periodic reports filed with the Commission under the Exchange Act if it shall have previously provided the same disclosure
to the Investor or its counsel for review in connection with a previous filing or (ii) any Prospectus Supplement if it contains disclosure
that does not reference the Investor, its purchases hereunder or any aspect of the Transaction Documents or the transactions contemplated
thereby.
Section 9.15. Severability.
The provisions of this Agreement are severable and, in the event that any court of competent jurisdiction shall determine that any one
or more of the provisions or part of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision
of this Agreement, and this Agreement shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part
of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent
possible.
Section 9.16. Further
Assurances. From and after the Closing Date, upon the request of the Investor or the Company, each of the Company and the Investor
shall execute and deliver such instrument, documents and other writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement.
[Signature Pages Follow]
IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed by their respective authorized officer as of the date first above written.
THE COMPANY: |
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ADITXT, INC.: |
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By: |
/s/ Amro Albanna |
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Name: |
Amro Albanna |
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Title: |
Chief Executive Officer |
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THE INVESTOR: |
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SEVEN KNOTS, LLC: |
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By: |
/s/ Marissa Welner |
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Name: |
Marissa Welner |
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Title: |
Authorized Signatory |
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ANNEX
I TO THE
COMMON STOCK PURCHASE AGREEMENT
DEFINITIONS
“Additional VWAP
Purchase” shall have the meaning assigned to such term in Section 2.3.
“Additional VWAP
Purchase Commencement Time” means, the latest of (A) the applicable VWAP Purchase Termination Time with respect to the corresponding
VWAP Purchase on such Additional VWAP Purchase Date, (B) the applicable Additional VWAP Purchase Termination Time with respect to the
most recently completed prior Additional VWAP Purchase on such Additional VWAP Purchase Date, as applicable, and (C) the time at which
all shares of Common Stock subject to all prior VWAP Purchases and Additional VWAP Purchases (as applicable), including, without limitation,
those that have been effected on the same business day as the applicable Additional VWAP Purchase.
“Additional VWAP
Purchase Confirmation” shall have the meaning assigned to such term in Section 2.3 and shall be in the form attached hereto
as Annex 2.3C.
“Additional VWAP
Purchase Date” means, with respect to an Additional VWAP Purchase made pursuant to Section 2.3, the Trading Day (i) that
is also the VWAP Purchase Date for the corresponding VWAP Purchase referred to in clause (i) of the second sentence of Section 2.3 and
(ii) on which the Investor receives, prior to 2:00 p.m., New York City time, on such Trading Day, a valid Additional VWAP Purchase Notice
for such Additional VWAP Purchase in accordance with this Agreement.
“Additional VWAP
Purchase Maximum Amount” means, with respect to an Additional VWAP Purchase made pursuant to Section 2.3, a number of shares
of Common Stock equal to the lesser of (i) 300% of the number of Shares directed by the Company to be purchased by the Investor pursuant
to the corresponding Fixed Purchase Notice for the corresponding Fixed Purchase referred to in clause (i) of the second sentence of Section
2.3 and (ii) a number of Shares equal to (A) the Additional VWAP Purchase Share Percentage multiplied by (B) the trading volume of shares
of Common Stock traded on the Trading Market (or, if the Common Stock is then listed on an Eligible Market, on such Eligible Market) during
the applicable Additional VWAP Purchase Period on the applicable Additional VWAP Purchase Date for such Additional VWAP Purchase.
“Additional VWAP
Purchase Notice” means, with respect to an Additional VWAP Purchase made pursuant to Section 2.3, an irrevocable written
notice delivered by the Company to the Investor, prior to 2:00 p.m., New York City time, on the applicable Additional VWAP Purchase Date
for such Additional VWAP Purchase, directing the Investor to purchase an Additional VWAP Purchase Share Amount (such specified Additional
VWAP Purchase Share Amount subject to adjustment as set forth in Section 2.3 as necessary to give effect to the Additional VWAP Purchase
Maximum Amount), at the applicable Additional VWAP Purchase Price therefor on the applicable Additional VWAP Purchase Date for such Additional
VWAP Purchase in accordance with this Agreement.
“Additional VWAP
Purchase Period” means, with respect to an Additional VWAP Purchase made pursuant to Section 2.3, the period on the applicable
Additional VWAP Purchase Date for such Additional VWAP Purchase beginning at the applicable Additional VWAP Purchase Commencement Time
and ending at the applicable Additional VWAP Purchase Termination Time.
“Additional VWAP
Purchase Price” means, with respect to an Additional VWAP Purchase made pursuant to Section 2.3, the purchase price per
Share to be purchased by the Investor in such Additional VWAP Purchase equal to ninety-five percent (95%) of the lower of (i) the VWAP
for the applicable Additional VWAP Purchase Period during the applicable Additional VWAP Purchase Date for such Additional VWAP Purchase,
and (ii) the Closing Sale Price of the Common Stock on such applicable Additional VWAP Purchase Date for such Additional VWAP Purchase
(to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar
transaction).
“Additional VWAP
Purchase Share Amount” means, with respect to an Additional VWAP Purchase made pursuant to Section 2.3, the number of Shares
to be purchased by the Investor in such Additional VWAP Purchase as specified by the Company in the applicable Additional VWAP Purchase
Notice, which number of Shares shall not exceed the applicable Additional VWAP Purchase Maximum Amount.
“Additional VWAP
Purchase Share Percentage” means, with respect to an Additional VWAP Purchase made pursuant to Section 2.3, thirty percent
(30%).
“Additional VWAP
Purchase Share Volume Maximum” means, with respect to an Additional VWAP Purchase made pursuant to Section 2.3, a number
of shares of Common Stock equal to (i) the number of Shares specified by the Company in the applicable Additional VWAP Purchase Notice
as the Additional VWAP Purchase Share Amount to be purchased by the Investor in such Additional VWAP Purchase, divided by (ii) the Additional
VWAP Purchase Share Percentage (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split,
reverse stock split or other similar transaction).
“Additional VWAP
Purchase Termination Time” means, with respect to an Additional VWAP Purchase made pursuant to Section 2.3, the earliest
of (i) 2:00 p.m., New York City time, on the applicable Additional VWAP Purchase Date, or such other time publicly announced by the Trading
Market as the official close of trading on the Trading Market (or, if the Common Stock is then listed on an Eligible Market, by such Eligible
Market as the official close of trading on such Eligible Market) on such applicable Additional VWAP Purchase Date, (ii) such time, from
and after the Additional VWAP Purchase Commencement Time for such Additional VWAP Purchase, that the trading volume of shares of Common
Stock traded on the Trading Market (or, if the Common Stock is then listed on an Eligible Market, on such Eligible Market) has exceeded
the applicable Additional VWAP Purchase Share Volume Maximum and (iii) such time, from and after the Additional VWAP Purchase Commencement
Time for such Additional VWAP Purchase, that any sale price of the Common Stock traded on the Trading Market (or, if the Common Stock
is then listed on an Eligible Market, on such Eligible Market) has fallen below the applicable Floor Price for such applicable Additional
VWAP Purchase.
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control
with a Person, as such terms are used in and construed under Rule 144. With respect to the Investor, without limitation, any Person owning,
owned by, or under common ownership with the Investor, and any investment fund or managed account that is managed on a discretionary basis
by the same investment manager as the Investor will be deemed to be an Affiliate.
“Aggregate Limit”
shall have the meaning assigned to such term in Section 2.4(a).
“Agreement”
shall have the meaning assigned to such term in the preamble of this Agreement.
“Applicable Laws”
shall have the meaning assigned to such term in Section 4.13.
“Bankruptcy Law”
means Title 11, U.S. Code, or any similar U.S. federal or state law for the relief of debtors.
“Beneficial Ownership
Limitation” shall have the meaning assigned to such term in Section 2.5.
“Bloomberg”
means Bloomberg, L.P.
“Bring Down Opinion”
shall have the meaning assigned to such term in Section 5.15.
“Broker-Dealer”
shall have the meaning assigned to such term in Section 5.13.
“Bylaws”
shall have the meaning assigned to such term in Section 4.4.
“Charter”
shall have the meaning assigned to such term in Section 3.3.
“Closing”
shall have the meaning assigned to such term in Section 1.2
“Closing Date”
means the date of this Agreement.
“Closing Sale
Price” means, for the Common Stock as of any date, the last closing trade price for the Common Stock on the Trading Market
(or, if the Common Stock is then listed on an Eligible Market, on such Eligible Market), as reported by the Eligible Market.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Commencement”
shall have the meaning assigned to such term in Section 2.1
“Commencement
Date” shall have the meaning assigned to such term in Section 2.1.
“Commencement
Irrevocable Transfer Agent Instructions” shall have the meaning assigned to such term in Section 9.1(iii).
“Commission”
means the U.S. Securities and Exchange Commission or any successor entity.
“Commission Documents”
shall mean (1) all reports, schedules, registrations, forms, statements, information and other documents filed with or furnished to the
Commission by the Company pursuant to the reporting requirements of the Exchange Act, including all material filed with or furnished to
the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, and which hereafter shall be filed with or furnished
to the Commission by the Company, including, without limitation, the Current Report, (2) each Registration Statement, as the same may
be amended from time to time, the Prospectus contained therein and each Prospectus Supplement thereto and (3) all information contained
in such filings and all documents and disclosures that have been and heretofore shall be incorporated by reference therein.
“Commitment Fee”
means $2,250,000, which, in the sole discretion of the Company, may be payable in cash or shares of the Company’s Common Stock (the
“Commitment Shares”), which Commitment Shares (if the Company elects to pay the Commitment Fee in Commitment
Shares) shall be issuable on the later of (i) January 2, 2025 and (ii) the Trading Day following the date on which Stockholder Approval
is obtained.
“Common Stock”
shall have the meaning assigned to such term in the recitals of this Agreement.
“Common Stock
Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at
any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at
any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Company”
shall have the meaning assigned to such term in the preamble of this Agreement.
“Compliance Certificate”
shall have the meaning assigned to such term in Section 6.2(ii).
“Current Report”
shall have the meaning assigned to such term in Section 1.3.
“Custodian”
shall mean any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
“Damages”
shall have the meaning assigned to such term in Section 8.1.
“Dilutive Issuance”
shall have the meaning assigned to such term in Section 5.6(ii).
“Disclosure Schedule”
shall have the meaning assigned to such term in Section 4.1.
“Disqualification
Event” shall have the meaning assigned to such term in Section 4.37.
“DTC”
means The Depository Trust Company, a subsidiary of The Depository Trust & Clearing Corporation, or any successor thereto.
“DWAC”
shall have the meaning assigned to such term in Section 2.6.
“DWAC Shares”
means shares of Common Stock issued pursuant to this Agreement that are (i) issued in electronic form, (ii) freely tradable and transferable
and without restriction on resale and without stop transfer instructions maintained against the transfer thereof and (iii) timely credited
by the Company to the Investor’s or its designated Broker-Dealer at which the account or accounts to be credited with the Securities
being purchased by Investor are maintained specified DWAC account with DTC under its Fast Automated Securities Transfer (FAST) Program,
or any similar program hereafter adopted by DTC performing substantially the same function.
“EDGAR”
means the Commission’s Electronic Data Gathering, Analysis and Retrieval System.
“Effective Date”
means, with respect to the Registration Statement filed pursuant to Section 2(a) of the Registration Rights Agreement (or any post-effective
amendment thereto) or any New Registration Statement filed pursuant to Section 2(c) of the Registration Rights Agreement (or any post-effective
amendment thereto), as applicable, the date on which the Registration Statement (or any post-effective amendment thereto) is declared
effective by the Commission.
“Effectiveness
Deadline” shall have the meaning assigned to such term in the Registration Rights Agreement.
“Eligible Market”
means The New York Stock Exchange American, Nasdaq Capital Market (“NCM”), The Nasdaq Global Market, or The Nasdaq Global
Select Market (or any nationally recognized successor to any of the foregoing).
“Environmental
Laws” shall have the meaning assigned to such term in Section 4.16 hereof.
“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.
“Exempt Issuance”
means the issuance of (a) Common Stock, options or other equity incentive awards to employees, officers, directors or vendors of the Company
pursuant to any equity incentive plan duly adopted for such purpose, by the Company’s Board of Directors or a majority of the members
of a committee of the Board of Directors established for such purpose, (b) (1) any Securities issued to the Investor pursuant to this
Agreement, (2) any securities issued upon the exercise or exchange of or conversion of any shares of Common Stock or Common Stock Equivalents
held by the Investor at any time, or (3) any securities issued upon the exercise or exchange of or conversion of any Common Stock Equivalents
that are (x) issued and outstanding on the date of this Agreement, or (y) issued subsequent to the date hereof on substantially equivalent
terms as those outstanding as of the date hereof, provided that such securities referred to in this clause (3) have not been amended since
the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price
of such securities, (c) securities issued pursuant to acquisitions, divestitures, licenses, partnerships, collaborations or strategic
transactions approved by the Company’s Board of Directors or a majority of the members of a committee of directors established for
such purpose, which acquisitions, divestitures, licenses, partnerships, collaborations or strategic transactions can have a Variable Rate
Transaction component, provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself
or through its subsidiaries, an operating company or an asset in a business synergistic with the business of the Company and shall provide
to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, or
(d) Common Stock issued by the Company by any method deemed to be an “at the market offering” as defined in Rule 415(a)(4)
under the Securities Act, exclusively through a registered broker-dealer, as the Company’s sales agent, pursuant to one or more
written agreements between the Company and such registered broker-dealer.
“FCPA”
shall have the meaning assigned to such term in Section 4.33.
“Filed Commission
Document” shall have the meaning assigned to such term in Section 4.6.
“Filing Deadline”
shall have the meaning assigned to such term in the Registration Rights Agreement.
“FINRA”
means the Financial Industry Regulatory Authority.
“Fixed Purchase”
shall have the meaning assigned to such term in Section 2.1.
“Fixed Purchase
Date” means, with respect to a Fixed Purchase made pursuant to Section 2.1, the Trading Day on which the Investor receives,
after 4:00 p.m., New York City time, but prior to 5:30 p.m., New York City time, on such Trading Day, a valid Fixed Purchase Notice for
such Fixed Purchase in accordance with this Agreement.
“Fixed Purchase
Maximum Amount” means, with respect to a Fixed Purchase made pursuant to Section 2.1, the lesser of 100,000 shares of Common
Stock or $200,000.
“Fixed Purchase
Notice” means, with respect to a Fixed Purchase pursuant to Section 2.1, an irrevocable written notice delivered by the
Company to the Investor directing the Investor to purchase a Fixed Purchase Share Amount (such specified Fixed Purchase Share Amount subject
to adjustment as set forth in Section 2.1 as necessary to give effect to the Fixed Purchase Maximum Amount), at the applicable Fixed Purchase
Price therefor on the applicable Fixed Purchase Date for such Fixed Purchase in accordance with this Agreement.
“Fixed Purchase
Price” means, with respect to a Fixed Purchase made pursuant to Section 2.1, the purchase price per Share to be purchased
by the Investor in such Fixed Purchase equal to the lesser of 95% (i) of the daily volume weighted average price of the Company’s
Common Stock on the NCM, as reported by Bloomberg Financial LP using the AQR function for the five (5) Trading Days immediately preceding
the applicable Fixed Purchase Date for such Fixed Purchase and (ii) the lowest trading price of a share of Common Stock on the applicable
Fixed Purchase Date for such Fixed Purchase during the full Trading Day on the NCM on such applicable Purchase Date (in each case, to
be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction that occurs
on or after the date of this Agreement); provided, however, that if the closing price of the Common Stock on the date such Fixed
Purchase Share Amount corresponding to a Fixed Purchase Notice is delivered, then the Fixed Purchase Price for such Fixed Purchase Price
Share Amount shall be reduced to equal such closing price.
“Fixed Purchase
Share Amount” means, with respect to a Fixed Purchase made pursuant to Section 2.1, the number of Shares to be purchased
by the Investor in such Fixed Purchase as specified by the Company in the applicable Fixed Purchase Notice, which number of Shares shall
not exceed the applicable Fixed Purchase Maximum Amount (calculated as of the applicable Fixed Purchase Date).
“Floor Price”
means a price equal to 85% of the Closing Price on the Trading Day the applicable Additional VWAP Purchase Notice or VWAP Purchase Notice
is delivered to Investor along with the Fixed Purchase Notice.
“Fundamental Transaction”
means that (i) the Company shall, directly or indirectly, in one or more related transactions, (1) consolidate or merge with or into (whether
or not the Company is the surviving corporation) another Person, with the result that the holders of the Company’s capital stock
immediately prior to such consolidation or merger together beneficially own less than 50% of the outstanding voting power of the surviving
or resulting corporation, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company to another Person, or (3) take action to facilitate a purchase, tender or exchange offer by another
Person that is accepted by the holders of the Company’s Voting Stock representing more than 50% of the total voting power of the
Company’s Voting Stock (excluding any Voting Stock held by the Person or Persons making or party to, or associated or affiliated
with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement or
other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires Voting Stock of the Company representing more than 50% of the total voting power of
the Company’s Voting Stock (not including any Voting Stock held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), or (5)
reorganize, recapitalize or reclassify its Common Stock, or (ii) any “person” or “group” (as these terms are used
for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of Voting Stock of the Company representing more than 50% of the total voting power
of the Company’s Voting Stock.
“GAAP”
shall have the meaning assigned to such term in Section 4.6(b).
“Investment Period”
means the period commencing on the Effective Date of the Registration Statement and expiring on the date this Agreement is terminated
pursuant to Article VII.
“Investor”
shall have the meaning assigned to such term in the preamble of this Agreement.
“Investor Expense
Reimbursement” shall have the meaning assigned to such term in Section 9.1(i).
“Investor Party”
shall have the meaning assigned to such term in Section 8.1.
“Issuer Covered
Person” shall have the meaning assigned to such term in Section 4.37.
“IT Systems”
shall have the meaning assigned to such term in Section 4.36.
“Knowledge”
means, with respect to the Company, the actual knowledge of the Company’s Chief Executive Officer Chief Medical Officer, and President,
its Chief Financial Officer and Treasurer, and its General Counsel, in each case after reasonable inquiry of all officers, directors and
employees of the Company and its Subsidiaries under their direct supervision who would reasonably be expected to have knowledge or information
with respect to the matter in question.
“Material Adverse
Effect” means any material adverse effect on (i) the enforceability of any Transaction Document, (ii) the results of operations,
assets, business or financial condition of the Company and its Subsidiaries, taken as a whole, other than any material adverse effect
that resulted primarily from (A) any change in the United States or foreign economies or securities or financial markets in general, (B)
any change that generally affects the industry in which the Company and its Subsidiaries operate, (C) any change arising in connection
with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such
hostilities, acts of war, sabotage or terrorism or military actions existing as of the date hereof, (D) any action taken by the Investor,
its Affiliates or its or their successors and assigns with respect to the transactions contemplated by this Agreement and the Registration
Rights Agreement, (E) the effect of any change in applicable laws or accounting rules, or (F) any change resulting from compliance with
terms of this Agreement or the Registration Rights Agreement or the consummation of the transactions contemplated by this Agreement and
the Registration Rights Agreement, or (iii) the Company’s ability to perform in any material respect on a timely basis its obligations
under any Transaction Document to which it is a party to be performed as of the date of determination.
“Material Agreements”
shall have the meaning assigned to such term in Section 4.17.
“Money Laundering
Laws” shall have the meaning assigned to such term in Section 4.34.
“New Registration
Statement” shall have the meaning assigned to such term in the Registration Rights Agreement.
“Notice Delivery
Time” shall have the meaning assigned to such term in Section 6.3.
“Notice of Effectiveness”
shall have the meaning assigned to such term in Section 9.1(iii).
“OFAC”
shall have the meaning assigned to such term in Section 4.35.
“Person”
means any person or entity, whether a natural person, trustee, corporation, partnership, limited partnership, limited liability company,
trust, unincorporated organization, business association, firm, joint venture, governmental agency or authority.
“Personal Data”
shall have the meaning assigned to such term in Section 4.36.
“Prospectus”
means the prospectus in the form included in a Registration Statement, as supplemented from time to time by any Prospectus Supplement,
including the documents incorporated by reference therein.
“Prospectus Supplement”
means any prospectus supplement to the Prospectus filed with the Commission from time to time pursuant to Rule 424(b) under the Securities
Act, including the documents incorporated by reference therein.
“Reference Period”
shall have the meaning assigned to such term in Section 5.6(ii).
“Reference Price”
shall have the meaning assigned to such term in Section 5.6(ii).
“Registrable Securities”
shall have the meaning assigned to such term in the Registration Rights Agreement, and shall include all of the Commitment Shares, if
any.
“Registration
Rights Agreement” shall have the meaning assigned to such term in the recitals hereof.
“Regulation D”
shall have the meaning assigned to such term in the recitals of this Agreement.
“Restricted Period”
shall have the meaning assigned to such term in Section 5.9(i).
“Restricted Person”
shall have the meaning assigned to such term in Section 5.9(i).
“Restricted Persons”
shall have the meaning assigned to such term in Section 5.9(i).
“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the same effect.
“Sale Price”
means any trade price for a share of Common Stock executed on the Trading Market (or if the Common Stock is then traded on an Eligible
Market, on such Eligible Market) between 9:30 a.m., New York City time, or such other time publicly announced by the Trading Market or
such other Eligible Market, as the case may be, and ending at 4:00 p.m., New York City time, on the applicable Purchase Date, as reported
by Bloomberg.
“Sanctioned Countries”
shall have the meaning assigned to such term in Section 4.35.
“Sanctioned Country”
shall have the meaning assigned to such term in Section 4.35.
“Sanctioned Persons”
shall have the meaning assigned to such term in Section 4.35.
“Sanctions”
shall have the meaning assigned to such term in Section 4.35.
“Section 4(a)(2)”
shall have the meaning assigned to such term in the recitals of this Agreement.
“Securities”
means, collectively, the Shares and the Commitment Share,if any.
“Securities Act”
shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder.
“Shares”
shall mean the shares of Common Stock that are and/or may be purchased by the Investor under this Agreement pursuant to one or more Fixed
Purchase Notices, VWAP Purchase Notices or Additional VWAP Purchase Notices, but not including the Commitment Shares, if any.
“Short Sales”
shall mean “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act.
“Stock Plan”
shall have the meaning assigned to such term in Section 4.22.
“Subsidiary”
and “Subsidiaries” shall have the meanings assigned to such terms in Section 4.7.
“Total Purchase
Commitment” shall have the meaning assigned to such term in Section 1.1.
“Trading Day”
shall mean any day on which the Trading Market or, if the Common Stock is then listed on an Eligible Market, such Eligible Market is open
for trading, including any day on which the Trading Market (or such Eligible Market, as applicable) is open for trading for a period of
time less than the customary time.
“Trading Market”
means the Nasdaq Capital Market (or any nationally recognized successor thereto).
“Transaction Documents”
means, collectively, this Agreement (as qualified by the Disclosure Schedule) and the exhibits hereto, the Registration Rights Agreement
and each of the other agreements, documents, certificates and instruments entered into or furnished by the parties hereto in connection
with the transactions contemplated hereby and thereby.
“Transfer Agent”
means VStock Transfer, LLC, or such other Person who is then serving as the transfer agent for the Company in respect of the Common Stock.
“Variable Rate
Transaction” means a transaction in which the Company (i) issues or sells any equity or debt securities that are convertible
into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock or Common Stock Equivalents either
(A) at a conversion price, exercise price, exchange rate or other price that is based upon and/or varies with the trading prices of or
quotations for the Common Stock at any time after the initial issuance of such equity or debt securities, or (B) with a conversion, exercise
or exchange price that is subject to being reset at some future date after the initial issuance of such equity or debt security or upon
the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common
Stock (including, without limitation, any “full ratchet” or “weighted average” anti-dilution provisions, but not
including any standard anti-dilution protection for any reorganization, recapitalization, non-cash dividend, stock split or other similar
transaction), (ii) issues or sells any equity or debt securities, including without limitation, Common Stock or Common Stock Equivalents,
either (A) at a price that is subject to being reset at some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for
the Common Stock (other than standard anti-dilution protection for any reorganization, recapitalization, non-cash dividend, stock split
or other similar transaction), or (B) that are subject to or contain any put, call, redemption, buy-back, price-reset or other similar
provision or mechanism (including, without limitation, a “Black-Scholes” put or call right, other than in connection with
a “fundamental transaction”) that provides for the issuance of additional equity securities of the Company or the payment
of cash by the Company, or (iii) enters into any agreement with any Person other than the Investor or an Affiliate of the Investor, including,
but not limited to, an “equity line of credit” or “at the market offering” or other continuous offering or similar
offering of Common Stock or Common Stock Equivalents, whereby the Company may sell Common Stock or Common Stock Equivalents at a future
determined price.
“Voting Stock”
means securities of any class or kind having the power to vote generally for the election of directors, managers or other voting members
of the governing body of the Company or any successor thereto.
“VWAP”
means, for the Common Stock for a specified period, the dollar volume-weighted average price for the Common Stock on the Trading Market
(or, if the Common Stock is then listed on an Eligible Market, on such Eligible Market), for such period, as reported by Bloomberg through
its “AQR” function. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination,
recapitalization or other similar transaction during such period.
“VWAP Purchase”
shall have the meaning assigned to such term in Section 2.2.
“VWAP Purchase
Commencement Time” means, with respect to a VWAP Purchase made pursuant to Section 2.2, 9:30 a.m., New York City time, on
the applicable VWAP Purchase Date, or such other time publicly announced by the Trading Market (or, if the Common Stock is then listed
on an Eligible Market, by such Eligible Market) as the official open (or commencement) of trading on the Trading Market (or such Eligible
Market, as applicable) on such applicable VWAP Purchase Date.
“VWAP Purchase
Confirmation” shall have the meaning assigned to such term in Section 2.2 and shall be in the form attached hereto as Annex
2.2B.
“VWAP Purchase
Date” means, with respect to a VWAP Purchase made pursuant to Section 2.2, the Trading Day immediately following the applicable
Fixed Purchase Date with respect to the corresponding Fixed Purchase referred to in clause (i) of the second sentence of Section 3.2,
on which the Investor receives, concurrently with the receipt of the applicable Fixed Purchase Notice for such corresponding Fixed Purchase,
after 4:00 p.m., New York City time, but prior to 5:30 p.m., New York City time, on such applicable Fixed Purchase Date, a valid VWAP
Purchase Notice for such VWAP Purchase in accordance with this Agreement.
“VWAP Purchase
Maximum Amount” means, with respect to a VWAP Purchase made pursuant to Section 3.2, a number of shares of Common Stock
equal to the lesser of (i) 300% of the number of Shares directed by the Company to be purchased by the Investor pursuant to the corresponding
Fixed Purchase Notice for the corresponding Fixed Purchase referred to in clause (i) of the second sentence of Section 2.2 and (ii) 30%
of the trading volume in the Company’s Common Stock on the NCM during the applicable VWAP Purchase Period on the applicable VWAP
Purchase Date.
“VWAP Purchase
Notice” means, with respect to a VWAP Purchase made pursuant to Section 2.2, an irrevocable written notice delivered by
the Company to the Investor (concurrently with the delivery of the applicable Fixed Purchase Notice by the Company to the Investor on
the applicable Fixed Purchase Date with respect to the corresponding Fixed Purchase referred to in clause (i) of the second sentence of
Section 2.2) directing the Investor to purchase a VWAP Purchase Share Amount (such specified VWAP Purchase Share Amount subject to adjustment
as set forth in Section 3.2 as necessary to give effect to the VWAP Purchase Maximum Amount), at the applicable VWAP Purchase Price therefor
on the applicable VWAP Purchase Date for such VWAP Purchase in accordance with this Agreement.
“VWAP Purchase
Period” means, with respect to a VWAP Purchase made pursuant to Section 2.2, the period on the applicable VWAP Purchase
Date for such VWAP Purchase beginning at the applicable VWAP Purchase Commencement Time and ending at the applicable VWAP Purchase Termination
Time.
“VWAP Purchase
Price” means, with respect to a VWAP Purchase made pursuant to Section 2.2, the purchase price per Share to be purchased
by the Investor in such VWAP Purchase equal to the lesser of ninety-five percent (95%) of (i) the Closing Sale Price of the Common Stock
on the applicable VWAP Purchase Date and (ii) the VWAP during the applicable VWAP Purchase Period.
“VWAP Purchase
Share Amount” means, with respect to a VWAP Purchase made pursuant to Section 2.2, the number of Shares to be purchased
by the Investor in such VWAP Purchase as specified by the Company in the applicable VWAP Purchase Notice, which number of Shares shall
not exceed the applicable VWAP Purchase Maximum Amount.
“VWAP Purchase
Share Percentage” means, with respect to a VWAP Purchase made pursuant to Section 2.2, thirty percent (30%).
“VWAP Purchase
Share Volume Maximum” means, with respect to a VWAP Purchase made pursuant to Section 2.2, a number of shares of Common
Stock equal to (i) the number of Shares specified by the Company in the applicable VWAP Purchase Notice as the VWAP Purchase Share Amount
to be purchased by the Investor in such VWAP Purchase, divided by (ii) the VWAP Purchase Share Percentage (to be appropriately adjusted
for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction).
“VWAP
Purchase Termination Time” means, with respect to a VWAP Purchase made pursuant to Section 2.2, the earliest of (i)
2:00 p.m., New York City time, on the applicable VWAP Purchase Date, or such other time publicly announced by the Trading Market
(or, if the Common Stock is then listed on an Eligible Market, by such Eligible Market) as the official close of trading on the
Trading Market on such applicable VWAP Purchase Date, (ii) such time, from and after the VWAP Purchase Commencement Time for such
VWAP Purchase, that the trading volume of shares of Common Stock traded on the Trading Market (or, if the Common Stock is then
listed on an Eligible Market, on such Eligible Market) has exceeded the applicable VWAP Purchase Share Volume Maximum and (iii) such
time, from and after the VWAP Purchase Commencement Time for such VWAP Purchase, that any sale price of the Common Stock traded on
the Trading Market (or, if the Common Stock is then listed on an Eligible Market, on such Eligible Market) has fallen below the
applicable Floor Price for such applicable VWAP Purchase.
EXHIBIT
A TO THE
COMMON STOCK PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
[TO BE FURNISHED SEPARATELY]
EXHIBIT
B TO THE
COMMON STOCK PURCHASE AGREEMENT
CERTiFICATE OF THE COMPANY
CLOSING
CERTIFICATE
__, 2024
The undersigned, the [●]
of Aditxt, Inc., a Delaware corporation (the “Company”), delivers this certificate in connection with the Common
Stock Purchase Agreement, dated as of [●], 2024 (the “Agreement”), by and between the Company and Seven
Knots, LLC, a Montana limited liability company (the “Investor”), and hereby certifies on the date hereof that
(capitalized terms used herein without definition have the meanings assigned to them in the Agreement):
1. Attached hereto as Exhibit
A is a true, complete and correct copy of the Certificate of Incorporation of the Company, as amended through the date hereof, as
filed with the State of Delaware. The Certificate of Incorporation of the Company has not been further amended or restated, and no document
with respect to any amendment to the Certificate of Incorporation of the Company has been filed in the State of Delaware since the date
shown on the face of the state certification relating to the Company’s Certificate of Incorporation, which is in full force and
effect on the date hereof, and no action has been taken by the Company in contemplation of any such amendment or the dissolution, merger
or consolidation of the Company.
2. Attached hereto as Exhibit
B is a true and complete copy of the Bylaws of the Company, as amended and restated through, and as in full force and effect on, the
date hereof, and no proposal for any amendment, repeal or other modification to the Bylaws of the Company has been taken or is currently
pending before the Board of Directors or stockholders of the Company.
3. The Board of Directors
of the Company has approved the transactions contemplated by the Transaction Documents; said approval has not been amended, rescinded
or modified and remains in full force and effect as of the date hereof. Attached hereto as Exhibit C are true, correct and complete
copies of the resolutions duly adopted by the Board of Directors of the Company via unanimous written consent on [●], 2024.
4. Each person who, as an
officer of the Company, or as attorney-in-fact of an officer of the Company, signed the Transaction Documents to which the Company is
a party, was duly elected, qualified and acting as such officer or duly appointed and acting as such attorney-in-fact, and the signature
of each such person appearing on any such document is his genuine signature.
IN WITNESS WHEREOF,
I have signed my name as of the date first above written.
EXHIBIT
C TO THE
COMMON STOCK PURCHASE AGREEMENT
COMPLIANCE CERTIFICATE
The undersigned, the [●]
of Aditxt, Inc., a Delaware corporation (the “Company”), delivers this certificate in connection with the Common
Stock Purchase Agreement, dated as of [●], 2024 (the “Agreement”), by and between the Company and Seven
Knots, LLC, a Montana limited liability company (the “Investor”), and hereby certifies on the date hereof that,
to the best of his knowledge after reasonable investigation, on behalf of the Company (capitalized terms used herein without definition
have the meanings assigned to them in the Agreement):
1. The undersigned is the
duly appointed [●] of the Company.
2. Except as set forth in
the attached Disclosure Schedule, the representations and warranties of the Company set forth in Article IV of the Agreement (i) that
are not qualified by “materiality” or “Material Adverse Effect” are true and correct in all material respects
as of [the Commencement Date] [the date hereof] with the same force and effect as if made on [the Commencement Date] [the date hereof],
except to the extent such representations and warranties are as of another date, in which case, such representations and warranties are
true and correct in all material respects as of such other date and (ii) that are qualified by “materiality” or “Material
Adverse Effect” are true and correct as of [the Commencement Date] [the date hereof] with the same force and effect as if made on
[the Commencement Date] [the date hereof], except to the extent such representations and warranties are as of another date, in which case,
such representations and warranties are true and correct as of such other date.
3. Each of the Company has
performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Agreement and
the Registration Rights Agreement to be performed, satisfied or complied with by the Company, respectively, [at or prior to Commencement][on
or prior to the date hereof].
4. The Shares issuable in
respect of each Fixed Purchase Notice, each VWAP Purchase Notice, and each Additional VWAP Purchase Notice effected pursuant to the Agreement
shall be delivered to the Investor electronically as DWAC Shares, and shall be freely tradable and transferable and without restriction
on resale and without any stop transfer instructions maintained against such Shares.
5. As of [the Commencement
Date][the date hereof], the Company does not possess any material non-public information.
6. As of [the Commencement
Date][the date hereof], the Company has reserved out of its authorized and unissued Common Stock, [●] shares of Common Stock solely
for the purpose of effecting Fixed Purchases, VWAP Purchases and Additional VWAP Purchases under the Agreement.
7. No stop order suspending
the effectiveness of the Registration Statement or the use of the Prospectus under the Securities Act has been issued and no proceedings
for such purpose or pursuant to Section 8A of the Securities Act are pending before or, to the Knowledge of the Company, threatened by
the Commission.
The undersigned has executed
this Certificate this [●] day of [●], 2024.
DISCLOSURE
SCHEDULEs
RELATING TO THE COMMON STOCK
PURCHASE AGREEMENT, DATED AS OF [●], 2024
BY AND AMONG ADITXT, INC. AND SEVEN KNOTS, LLC
This disclosure schedules
are made and given pursuant to Article IV of the Common Stock Purchase Agreement, dated as of [●], 2024 (the “Agreement”),
by and between Aditxt, Inc., a Delaware corporation (the “Company”), and Seven Knots, LLC, a Montana limited
liability company (the “Investor”). Unless the context otherwise requires, all capitalized terms are used herein
as defined in the Agreement. The numbers below correspond to the section numbers of representations and warranties in the Agreement most
directly modified by the below exceptions.
ANNEX 2.1 TO THE
COMMON STOCK PURCHASE AGREEMENT FORM OF FIXED
PURCHASE NOTICE
Reference is made to the Common
Stock Purchase Agreement dated as of [__] 2024, (the “Purchase Agreement”) between Aditxt, Inc., a Delaware corporation
(the “Company”), and Seven Knots, LLC, a Montana limited liability company. Capitalized terms used and not otherwise
defined herein shall have the meanings given such terms in the Purchase Agreement.
In accordance with and pursuant
to Section 2.1 of the Purchase Agreement, the Company hereby issues this Fixed Purchase Notice to exercise a Fixed Purchase for the Fixed
Purchase Share Amount indicated below.
Fixed Purchase Share Amount (number of Shares): |
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Fixed Purchase Exercise Date: |
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Fixed Purchase Price (per Share): |
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Total Aggregate Fixed Purchase Price: |
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Fixed Purchase Share Delivery Date: |
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Fixed Purchase Settlement Date: |
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Dollar Amount of Common Stock Currently Available under the Aggregate Limit: |
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AGREED AND ACCEPTED:
SEVEN KNOTS, LLC
ANNEX 2.2 TO THE
COMMON STOCK PURCHASE AGREEMENT FORM OF VWAP
PURCHASE NOTICE
Reference is made to the Common
Stock Purchase Agreement dated as of [__], 2024, (the “Purchase Agreement”) between Aditxt, Inc., a Delaware corporation
(the “Company”), and Seven Knots, LLC, a Montana limited liability company. Capitalized terms used and not otherwise
defined herein shall have the meanings given such terms in the Purchase Agreement.
In accordance with and pursuant
to Section 2.2 of the Purchase Agreement, the Company hereby issues this VWAP Purchase Notice to exercise a VWAP Purchase for the VWAP
Purchase Share Amount indicated below.
VWAP Purchase Share Amount (number of Shares): |
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VWAP Purchase Exercise Date: |
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VWAP Purchase Date: |
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VWAP Purchase Share Delivery Date: |
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VWAP Purchase Settlement Date: |
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Dollar Amount of Common Stock Currently Available under the Aggregate Limit: |
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AGREED AND ACCEPTED:
SEVEN KNOTS, LLC
ANNEX 2.2B TO THE
COMMON STOCK PURCHASE AGREEMENT FORM OF VWAP
PURCHASE CONFIRMATION
Reference is made to the Common
Stock Purchase Agreement dated as of [__], 2024, (the “Purchase Agreement”) between Aditxt, Inc., a Delaware corporation
(the “Company”), and Seven Knots, LLC, a Montana limited liability company. Capitalized terms used and not otherwise
defined herein shall have the meanings given such terms in the Purchase Agreement.
In accordance with and pursuant
to Section 2.2 of the Purchase Agreement, the Investor hereby issues this VWAP Purchase Confirmation for the VWAP Purchase Share Amount
indicated below.
VWAP Purchase Share Amount (number of Shares): |
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VWAP Purchase Exercise Date: |
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VWAP Purchase Date: |
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VWAP Purchase Commencement Time: |
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VWAP Purchase Termination Time: |
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VWAP during the VWAP Purchase Period: |
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Closing Sale Price on the VWAP Purchase Date: |
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VWAP Purchase Price (per Share) (90% of lower of two line items immediately above): |
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Total Aggregate VWAP Purchase Price: |
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VWAP Purchase Share Delivery Date: |
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VWAP Purchase Settlement Date: |
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AGREED AND ACCEPTED:
Aditxt, Inc.
ANNEX 2.3 TO THE
COMMON STOCK PURCHASE AGREEMENT FORM OF ADDITIONAL
VWAP
PURCHASE NOTICE
Reference is made to the Common
Stock Purchase Agreement dated as of [__], 2024 (the “Purchase Agreement”) between Aditxt, Inc., a Delaware corporation
(the “Company”), and Seven Knots, LLC, a Montana limited liability company. Capitalized terms used and not otherwise
defined herein shall have the meanings given such terms in the Purchase Agreement.
In accordance with and pursuant
to Section 2.3 of the Purchase Agreement, the Company hereby issues this Additional VWAP Purchase Notice to exercise an Additional VWAP
Purchase for the Additional VWAP Purchase Share Amount indicated below.
Additional VWAP Purchase Share Amount (number of Shares): |
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Additional VWAP Purchase Date (indicate whether this is for the first, second, third, etc. Additional VWAP exercised by the Company on such Additional VWAP Purchase Date): |
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Additional VWAP Purchase Share Delivery Date: |
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Additional VWAP Purchase Settlement Date: |
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Dollar Amount of Common Stock Currently Available under the Aggregate Limit: |
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AGREED AND ACCEPTED:
SEVEN KNOTS, LLC
ANNEX 2.3B TO THE
COMMON STOCK PURCHASE AGREEMENT
FORM OF ADDITIONAL VWAP PURCHASE CONFIRMATION
Reference is made to the Common
Stock Purchase Agreement dated as of [__], 2024, (the “Purchase Agreement”) between Aditxt, Inc., a Delaware corporation
(the “Company”), and Seven Knots, LLC, a Montana limited liability company. Capitalized terms used and not otherwise
defined herein shall have the meanings given such terms in the Purchase Agreement.
In accordance with and pursuant
to Section 2.3 of the Purchase Agreement, the Investor hereby issues this Additional VWAP Purchase Confirmation for the Additional VWAP
Purchase Share Amount indicated below.
Additional VWAP Purchase Share Amount (number of Shares): |
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Additional VWAP Purchase Date (indicate whether this is for the first, second, third, etc. Additional VWAP exercised by the Company on such Additional VWAP Purchase Date): |
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Additional VWAP Purchase Commencement Time: |
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Additional VWAP Purchase Termination Time: |
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VWAP during the Additional VWAP Purchase Period: |
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Closing Sale Price on the Additional VWAP Purchase Date: |
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Additional VWAP Purchase Price (per Share) (90% of lower of two line items immediately above): |
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Total Aggregate Additional VWAP Purchase Price: |
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Additional VWAP Purchase Share Delivery Date: |
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Additional VWAP Purchase Settlement Date: |
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AGREED AND ACCEPTED:
Aditxt, Inc.
APPENDIX
E
CERTIFICATE OF AMENDMENT
to the
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
of
ADITXT, INC.
ADITXT, INC., a corporation
organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify
as follows:
FIRST: The name of the Corporation
is Aditxt, Inc. The Certificate of Incorporation was filed with the Secretary of State of the State of Delaware (the “Secretary
of State”) on September 28, 2017, as amended ( the “Certificate of Incorporation”).
SECOND: ARTICLE 4, SECTION
4.1 of the Corporation’s Certificate of Incorporation shall be amended and restated which shall read as follows:
4.1. Authorized Capital
Stock. The total number of shares of all classes of capital stock which the Corporation is authorized to issue is 1,003,000,000 shares,
consisting of 1,000,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”), and 3,000,000 shares
of preferred stock, par value $0.001 per share (the “Preferred Stock”).
THIRD: The stockholders of
the Corporation have duly approved the foregoing amendment in accordance with the provisions of Section 242 of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation
has caused this Certificate of Amendment to be duly adopted and executed in its corporate name and on its behalf by its duly authorized
officer as of the [*] day of [*], 2024.
ADITXT, INC. |
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By: |
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Name: |
Amro Albanna |
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Title: |
Chief Executive Officer |
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APPENDIX F
CERTIFICATE OF AMENDMENT
to the
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
of
ADITXT, INC.
ADITXT, INC., a corporation
organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify
as follows:
FIRST: The name of the Corporation
is Aditxt, Inc. The Certificate of Incorporation was filed with the Secretary of State of the State of Delaware (the “Secretary
of State”) on September 28, 2017, as amended ( the “Certificate of Incorporation”).
SECOND: ARTICLE IV, SECTION
I of the Corporation’s Certificate of Incorporation shall be amended by inserting Subsection “(e)” at the end of such
section which shall read as follows:
e. Reverse Stock Split.
As of [*], 202[*] at 4:01 p.m. Eastern Time (the “Effective Time”) of this Certificate of Amendment pursuant to the Section
242 of the General Corporation Law of the State of Delaware, each [*] ([*]) shares of the Corporation’s Common Stock, issued and
outstanding immediately prior to the Effective Time (the “Old Common Stock”) shall automatically without further action on
the part of the Corporation or any holder of Old Common Stock, be reclassified, combined, converted and changed into one (1) fully paid
and nonassessable shares of common stock, par value of $0.001 per share (the “New Common Stock”), subject to the treatment
of fractional share interests as described below (the “Reverse Stock Split”). The conversion of the Old Common Stock into
New Common Stock will be deemed to occur at the Effective Time. From and after the Effective Time, certificates representing the Old Common
Stock shall represent the number of shares of New Common Stock into which such Old Common Stock shall have been converted pursuant to
this Certificate of Amendment. Holders who otherwise would be entitled to receive fractional share interests of New Common Stock upon
the effectiveness of the reverse stock split shall be entitled to receive a whole share of New Common Stock in lieu of any fractional
share created as a result of such Reverse Stock Split.
THIRD: The stockholders of
the Corporation have duly approved the foregoing amendment in accordance with the provisions of Section 242 of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation
has caused this Certificate of Amendment to be duly adopted and executed in its corporate name and on its behalf by its duly authorized
officer as of the [*]h day of [*], 202[*].
ADITXT, INC. |
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By: |
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Name: |
Amro Albanna |
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Title: |
Chief Executive Officer |
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APPENDIX G
ADITX THERAPEUTICS, INC.
2021 OMNIBUS EQUITY INCENTIVE PLAN
Section 1. Purpose of Plan.
The name of the Plan is
the Aditx Therapeutics, Inc. (the “Company” or “Aditxt”) 2021 Omnibus Equity Incentive Plan (the
“Plan”).The purposes of the Plan are to (i) provide an additional incentive to selected employees, directors,
and independent contractors of the Company or its Affiliates whose contributions are essential to the growth and success of the Company,
(ii) strengthen the commitment of such individuals to the Company and its Affiliates, (iii) motivate those individuals to faithfully
and diligently perform their responsibilities and (iv) attract and retain competent and dedicated individuals whose efforts will
result in the long-term growth and profitability of the Company. To accomplish these purposes, the Plan provides that the Company
may grant Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Stock-Based Awards or any combination
of the foregoing.
Section 2. Definitions.
For purposes of the Plan,
the following terms shall be defined as set forth below:
(a) “Administrator”
means the Board, or, if and to the extent the Board does not administer the Plan, the Committee in accordance with Section 3 hereof.
(b) “Affiliate”
means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control
with, the Person specified as of any date of determination.
(c) “Applicable
Laws” means the applicable requirements under U.S. federal and state corporate laws, U.S. federal and state securities laws,
including the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any
other country or jurisdiction where Awards are granted under the Plan, as are in effect from time to time.
(d) “Award”
means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit or Other Stock-Based Award granted under the
Plan.
(e) “Award Agreement”
means any written notice, agreement, contract or other instrument or document evidencing an Award, including through electronic medium,
which shall contain such terms and conditions with respect to an Award as the Administrator shall determine, consistent with the Plan.
(f) “Beneficial
Owner” (or any variant thereof) has the meaning defined in Rule 13d-3 under the Exchange Act.
(g) “Board”
means the Board of Directors of the Company.
(h) “Bylaws”
mean the bylaws of the Company, as may be amended and/or restated from time to time.
(i) “Cause”
has the meaning assigned to such term in any individual service, employment or severance agreement or Award Agreement with the Participant
or, if no such agreement exists or if such agreement does not define “Cause,” then “Cause” means (i) a continuing
material breach or material breach or material default (including, without limitation, any material dereliction of duty) by the Participant
of any agreement between the Participant and the Company, except for any such breach or default which is caused by the physical disability
of the Participant (as determined by a neutral physician), or a continuing failure by the Participant to follow the direction of a duly
authorized representative of the Company; (ii) gross negligence, willful misfeasance or breach of fiduciary duty by the Participant;
(iii) the commission by the Participant of an act of fraud, embezzlement or any felony or other crime of dishonesty in connection
with the Participant’s duties; or (iv) conviction of the Participant of a felony or any other crime that would materially
and adversely affect: (A) the business reputation of the Company or (B) the performance of the Participant’s duties to the Company.
Any voluntary termination of employment or service by the Participant in anticipation of an involuntary termination of the Participant’s
employment or service, as applicable, for Cause shall be deemed to be a termination for Cause.
(j) “Change in
Capitalization” means any (i) merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase
or other reorganization or corporate transaction or event, (ii) special or extraordinary dividend or other extraordinary distribution
(whether in the form of cash, Common Stock or other property), stock split, reverse stock split, share subdivision or consolidation,
(iii) combination or exchange of shares or (iv) other change in corporate structure, which, in any such case, the Administrator
determines, in its sole discretion, affects the Shares such that an adjustment pursuant to Section 5 hereof is appropriate.
(k) “Change in
Control” means the first occurrence of an event set forth in any one of the following paragraphs following the Effective Date:
(1) any Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such
Person which were acquired directly from the Company or any Affiliate thereof) representing more than fifty percent (50%) of the combined
voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection
with a transaction described in clause (i) of paragraph (3) below; or
(2) the date on which individuals
who constitute the Board as of the Effective Date and any new director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including, but not limited to, a consent solicitation, relating to the election
of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders
was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors
on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended cease for any
reason to constitute a majority of the number of directors serving on the Board; or
(3) there is consummated
a merger or consolidation of the Company or any direct or indirect Subsidiary with any other corporation or other entity, other than
(i) a merger or consolidation (A) which results in the voting securities of the Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving
entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary, fifty percent (50%) or more of the combined voting power of the securities of the Company
or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation and (B) following which the
individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the Company,
the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger or consolidation is then a Subsidiary,
the ultimate parent thereof, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including
in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing
more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities; or
(4) the stockholders of
the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets, other than (A) a sale or disposition by the Company
of all or substantially all of the Company’s assets to an entity, more than fifty percent (50%) of the combined voting power of
the voting securities of which are owned by stockholders of the Company following the completion of such transaction in substantially
the same proportions as their ownership of the Company immediately prior to such sale or (B) a sale or disposition of all or substantially
all of the Company’s assets immediately following which the individuals who comprise the Board immediately prior thereto constitute
at least a majority of the board of directors of the entity to which such assets are sold or disposed or, if such entity is a subsidiary,
the ultimate parent thereof.
Notwithstanding the foregoing,
(i) a Change in Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated
transactions immediately following which the holders of Common Stock immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the
Company immediately following such transaction or series of transactions and (ii) to the extent required to avoid accelerated taxation
and/or tax penalties under Section 409A of the Code, a Change in Control shall be deemed to have occurred under the Plan with respect
to any Award that constitutes deferred compensation under Section 409A of the Code only if a change in the ownership or effective
control of the Company or a change in ownership of a substantial portion of the assets of the Company shall also be deemed to have occurred
under Section 409A of the Code. For purposes of this definition of Change in Control, the term “Person” shall not include
(i) the Company or any Subsidiary thereof, (ii) a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or any Subsidiary thereof, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as
their ownership of shares of the Company.
(l) “Code”
means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.
(m) “Committee”
means any committee or subcommittee the Board may appoint to administer the Plan. Subject to the discretion of the Board, the Committee
shall be composed entirely of individuals who meet the qualifications of a “non-employee director” within the meaning
of Rule 16b-3 under the Exchange Act and any other qualifications required by the applicable stock exchange on which the Common
Stock is traded.
(n) “Common Stock”
means the common stock of the Company, par value $0.001.
(o) “Company”
means Aditx Therapeutics, Inc., a Delaware corporation (or any successor company, except as the term “Company” is used in
the definition of “Change in Control” above).
(p) “Disability”
has the meaning assigned to such term in any individual service, employment or severance agreement or Award Agreement with the Participant
or, if no such agreement exists or if such agreement does not define “Disability,” then “Disability” means that
a Participant, as determined by the Administrator in its sole discretion, (i) is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve
(12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering
employees of the Company or an Affiliate thereof.
(q) “Effective
Date” has the meaning set forth in Section 17 hereof.
(r) “Eligible
Recipient” means an employee, director or independent contractor of the Company or any Affiliate of the Company who has been
selected as an eligible participant by the Administrator; provided, however, to the extent required to avoid
accelerated taxation and/or tax penalties under Section 409A of the Code, an Eligible Recipient of an Option or a Stock Appreciation
Right means an employee, non-employee director or independent contractor of the Company or any Affiliate of the Company with respect
to whom the Company is an “eligible issuer of service recipient stock” within the meaning of Section 409A of the Code.
(s) “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time.
(t) “Exempt Award”
shall mean the following:
(1) An Award granted in
assumption of, or in substitution for, outstanding awards previously granted by a corporation or other entity acquired by the Company
or any of its Subsidiaries or with which the Company or any of its Subsidiaries combines by merger or otherwise. The terms and conditions
of any such Awards may vary from the terms and conditions set forth in the Plan to the extent the Administrator at the time of grant
may deem appropriate, subject to Applicable Laws.
(2) An award that an Eligible
Recipient purchases at Fair Market Value (including awards that an Eligible Recipient elects to receive in lieu of fully vested compensation
that is otherwise due) whether or not the Shares are delivered immediately or on a deferred basis.
(u) “Exercise
Price” means, (i) with respect to any Option, the per share price at which a holder of such Option may purchase Shares
issuable upon exercise of such Award, and (ii) with respect to a Stock Appreciation Right, the base price per share of such Stock
Appreciation Right.
(v) “Fair
Market Value” of a share of Common Stock or another security as of a particular date shall mean the fair market value as determined
by the Administrator in its sole discretion; provided, that, (i) if the Common Stock or other security is admitted to trading on
a national securities exchange, the fair market value on any date shall be the closing sale price reported on such date, or if no shares
were traded on such date, on the last preceding date for which there was a sale of a share of Common Stock on such exchange, or (ii) if
the Common Stock or other security is then traded in an over-the-counter market, the fair market value on any date shall be the
average of the closing bid and asked prices for such share in such over-the-counter market for the last preceding date on which
there was a sale of such share in such market.
(w) “Free Standing
Rights” has the meaning set forth in Section 8.
(x) “Good Reason”
has the meaning assigned to such term in any individual service, employment or severance agreement or Award Agreement with the Participant
or, if no such agreement exists or if such agreement does not define “Good Reason,” “Good Reason” and any provision
of this Plan that refers to “Good Reason” shall not be applicable to such Participant.
(y) “Grandfathered
Arrangement” means an Award which is provided pursuant to a written binding contract in effect on November 2, 2017, and
which was not modified in any material respect on or after November 2, 2017, within the meaning of Section 13601(e)(2) of P.L.
115.97, as may be amended from time to time (including any rules and regulations promulgated thereunder).
(z) “Incentive
Compensation” means annual cash bonus and any Award.
(aa) “ISO”
means an Option intended to be and designated as an “incentive stock option” within the meaning of Section 422 of the
Code.
(bb) “Nonqualified
Stock Option” shall mean an Option that is not designated as an ISO.
(cc) “Option”
means an option to purchase shares of Common Stock granted pursuant to Section 7 hereof. The term “Option” as used in
the Plan includes the terms “Nonqualified Stock Option” and “ISO.”
(dd) “Other Stock-Based Award”
means a right or other interest granted pursuant to Section 10 hereof that may be denominated or payable in, valued in whole or
in part by reference to, or otherwise based on or related to, Common Stock, including, but not limited to, unrestricted Shares, dividend
equivalents or performance units, each of which may be subject to the attainment of performance goals or a period of continued provision
of service or employment or other terms or conditions as permitted under the Plan.
(ee) “Participant”
means any Eligible Recipient selected by the Administrator, pursuant to the Administrator’s authority provided for in Section 3
below, to receive grants of Awards, and, upon his or her death, his or her successors, heirs, executors and administrators, as the case
may be.
(ff) “Person”
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof.
(gg) “Plan”
means this 2021 Omnibus Equity Incentive Plan.
(hh) “Prior Plan”
means the Company’s 2017 Equity Incentive Plan, as in effect immediately prior to the Effective Date.
(ii) “Related
Rights” has the meaning set forth in Section 8.
(jj) “Restricted
Period” has the meaning set forth in Section 9.
(kk) “Restricted
Stock” means a Share granted pursuant to Section 9 below subject to certain restrictions that lapse at the end of a specified
period (or periods) of time and/or upon attainment of specified performance objectives.
(ll) “Restricted
Stock Unit” means the right granted pursuant to Section 9 hereof to receive a Share at the end of a specified restricted
period (or periods) of time and/or upon attainment of specified performance objectives.
(mm) “Rule 16b-3”
has the meaning set forth in Section 3.
(nn) “Section 16
Officer” means any officer of the Company whom the Board has determined is subject to the reporting requirements of Section 16
of the Exchange Act, whether or not such individual is a Section 16 Officer at the time the determination to recoup compensation
is made.
(oo) “Shares”
means Common Stock reserved for issuance under the Plan, as adjusted pursuant to the Plan, and any successor (pursuant to a merger, consolidation
or other reorganization) security.
(pp) “Stock Appreciation
Right” means a right granted pursuant to Section 8 hereof to receive an amount equal to the excess, if any, of (i) the
aggregate Fair Market Value, as of the date such Award or portion thereof is surrendered, of the Shares covered by such Award or such
portion thereof, over (ii) the aggregate Exercise Price of such Award or such portion thereof.
(qq) “Subsidiary”
means, with respect to any Person, as of any date of determination, any other Person as to which such first Person owns or otherwise
controls, directly or indirectly, more than 50% of the voting shares or other similar interests or a sole general partner interest or
managing member or similar interest of such other Person.
(rr) “Transfer”
has the meaning set forth in Section 15.
Section 3. Administration.
(a) The Plan shall be administered
by the Administrator and shall be administered, to the extent applicable, in accordance with Rule 16b-3 under the Exchange
Act (“Rule 16b-3”).
(b) Pursuant to the terms
of the Plan, the Administrator, subject, in the case of any Committee, to any restrictions on the authority delegated to it by the Board,
shall have the power and authority, without limitation:
(1) to select those Eligible
Recipients who shall be Participants;
(2) to determine whether
and to what extent Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Stock-Based Awards or
a combination of any of the foregoing, are to be granted hereunder to Participants;
(3) to determine the number
of Shares to be covered by each Award granted hereunder;
(4) to determine the terms
and conditions, not inconsistent with the terms of the Plan, of each Award granted hereunder (including, but not limited to, (i) the
restrictions applicable to Restricted Stock or Restricted Stock Units and the conditions under which restrictions applicable to such
Restricted Stock or Restricted Stock Units shall lapse, (ii) the performance goals and periods applicable to Awards, (iii) the
Exercise Price of each Option and each Stock Appreciation Right or the purchase price of any other Award, (iv) the vesting schedule
and terms applicable to each Award, (v) the number of Shares or amount of cash or other property subject to each Award and (vi) subject
to the requirements of Section 409A of the Code (to the extent applicable) any amendments to the terms and conditions of outstanding
Awards, including, but not limited to, extending the exercise period of such Awards and accelerating the payment schedules of such Awards
and/or, to the extent specifically permitted under the Plan, accelerating the vesting schedules of such Awards);
(5) to determine the terms
and conditions, not inconsistent with the terms of the Plan, which shall govern all written instruments evidencing Awards;
(6) to determine the Fair
Market Value in accordance with the terms of the Plan;
(7) to determine the duration
and purpose of leaves of absence which may be granted to a Participant without constituting termination of the Participant’s service
or employment for purposes of Awards granted under the Plan;
(8) to adopt, alter and
repeal such administrative rules, regulations, guidelines and practices governing the Plan as it shall from time to time deem advisable;
(9) to construe and interpret
the terms and provisions of, and supply or correct omissions in, the Plan and any Award issued under the Plan (and any Award Agreement
relating thereto), and to otherwise supervise the administration of the Plan and to exercise all powers and authorities either specifically
granted under the Plan or necessary and advisable in the administration of the Plan; and
(10) to prescribe, amend
and rescind rules and regulations relating to sub-plans established for the purpose of satisfying applicable non-United States
laws or for qualifying for favorable tax treatment under applicable non-United States laws, which rules and regulations may be set
forth in an appendix or appendixes to the Plan.
(c) Subject to Section 5,
neither the Board nor the Committee shall have the authority to (i) reprice or cancel and regrant any Award at a lower exercise,
base or purchase price or cancel any Award with an exercise, base or purchase price in exchange for cash, property or other Awards without
first obtaining the approval of the Company’s stockholders; or (ii) accelerate the vesting of any Awards (except pursuant
to Section 11).
(d) All decisions made
by the Administrator pursuant to the provisions of the Plan shall be final, conclusive and binding on all Persons, including the Company
and the Participants.
(e) The expenses of administering
the Plan shall be borne by the Company and its Affiliates.
(f) If at any time or to
any extent the Board shall not administer the Plan, then the functions of the Administrator specified in the Plan shall be exercised
by the Committee. Except as otherwise provided in the Articles of Incorporation or Bylaws of the Company, any action of the Committee
with respect to the administration of the Plan shall be taken by a majority vote at a meeting at which a quorum is duly constituted or
unanimous written consent of the Committee’s members.
Section 4. Shares Reserved for
Issuance Under the Plan.
(a) Subject to Section 5
hereof, the number of shares of Common Stock that are reserved and available for issuance pursuant to Awards granted under the Plan shall
be equal to the sum of (i) 3,000,000 shares, plus (ii) the number of shares of Common Stock reserved, but unissued under
the Prior Plan; (iii) the number of shares of Common Stock underlying forfeited awards under the Prior Plan; and (iv) an annual
increase on the first day of each calendar year beginning with the first January 1 following the Effective Date and ending with the last
January 1 during the initial ten-year term of the Plan, equal to the lesser of (A) five percent (5%) of the Shares outstanding (on
an as-converted basis) on the final day of the immediately preceding calendar year and (B) such lesser number of Shares as determined
by the Board; provided, that, shares of Common Stock issued under the Plan with respect to an Exempt Award shall
not count against such share limit. Following the Effective Date, no further awards shall be issued under the Prior Plan, but all awards
under the Prior Plan which are outstanding as of the Effective Date (including any Grandfathered Arrangement) shall continue to be governed
by the terms, conditions and procedures set forth in the Prior Plan and any applicable Award Agreement.
(b) Shares issued under
the Plan may, in whole or in part, be authorized but unissued Shares or Shares that shall have been or may be reacquired by the Company
in the open market, in private transactions or otherwise. If an Award entitles the Participant to receive or purchase Shares, the number
of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate
number of Shares available for granting Awards under the Plan. If any Shares subject to an Award are forfeited, cancelled, exchanged
or surrendered or if an Award otherwise terminates or expires without a distribution of Shares to the Participant, the Shares with respect
to such Award shall, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available
for granting Awards under the Plan. Notwithstanding the foregoing, Shares surrendered or withheld as payment of either the Exercise Price
of an Award (including Shares otherwise underlying a Stock Appreciation Right that are retained by the Company to account for the Exercise
Price of such Stock Appreciation Right) and/or withholding taxes in respect of an Award shall no longer be available for grant under
the Plan. In addition, (i) to the extent an Award is denominated in shares of Common Stock, but paid or settled in cash, the number
of shares of Common Stock with respect to which such payment or settlement is made shall again be available for grants of Awards pursuant
to the Plan and (ii) shares of Common Stock underlying Awards that can only be settled in cash shall not be counted against the
aggregate number of shares of Common Stock available for Awards under the Plan. Upon the exercise of any Award granted in tandem with
any other Awards, such related Awards shall be cancelled to the extent of the number of Shares as to which the Award is exercised and,
notwithstanding the foregoing, such number of Shares shall no longer be available for grant under the Plan.
(c) No more than 500,000
Shares (as increased on an annual basis, on the first day of each calendar year beginning with the first January 1 following the Effective
Date and ending with the last January 1 during the initial ten-year term of the Plan, by the lesser of (A) five percent (5%) of
the Shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year; (B) 500,000 Shares,
and (C) such lesser number of Shares as determined by the Board) shall be issued pursuant to the exercise of ISOs.
Section 5. Equitable Adjustments.
In the event of any Change
in Capitalization, an equitable substitution or proportionate adjustment shall be made in (i) the aggregate number and kind of securities
reserved for issuance under the Plan pursuant to Section 4, (ii) the kind, number of securities subject to, and the Exercise
Price subject to outstanding Options and Stock Appreciation Rights granted under the Plan, (iii) the kind, number and purchase price
of Shares or other securities or the amount of cash or amount or type of other property subject to outstanding Restricted Stock, Restricted
Stock Units or Other Stock-Based Awards granted under the Plan; and/or (iv) the terms and conditions of any outstanding Awards
(including, without limitation, any applicable performance targets or criteria with respect thereto); provided, however,
that any fractional shares resulting from the adjustment shall be eliminated. Such other equitable substitutions or adjustments shall
be made as may be determined by the Administrator, in its sole discretion. Without limiting the generality of the foregoing, in connection
with a Change in Capitalization, the Administrator may provide, in its sole discretion, but subject in all events to the requirements
of Section 409A of the Code, for the cancellation of any outstanding Award granted hereunder in exchange for payment in cash or
other property having an aggregate Fair Market Value equal to the Fair Market Value of the Shares, cash or other property covered by
such Award, reduced by the aggregate Exercise Price or purchase price thereof, if any; provided, however, that
if the Exercise Price or purchase price of any outstanding Award is equal to or greater than the Fair Market Value of the shares of Common
Stock, cash or other property covered by such Award, the Administrator may cancel such Award without the payment of any consideration
to the Participant. Further, without limiting the generality of the foregoing, with respect to Awards subject to foreign laws, adjustments
made hereunder shall be made in compliance with applicable requirements. Except to the extent determined by the Administrator, any adjustments
to ISOs under this Section 5 shall be made only to the extent not constituting a “modification” within the meaning of
Section 424(h)(3) of the Code. The Administrator’s determinations pursuant to this Section 5 shall be final, binding
and conclusive.
Section 6. Eligibility.
The Participants in the
Plan shall be selected from time to time by the Administrator, in its sole discretion, from those individuals that qualify as Eligible
Recipients.
Section 7. Options.
(a) General.
Options granted under the Plan shall be designated as Nonqualified Stock Options or ISOs. Each Participant who is granted an Option shall
enter into an Award Agreement with the Company, containing such terms and conditions as the Administrator shall determine, in its sole
discretion, including, among other things, the Exercise Price of the Option, the term of the Option and provisions regarding exercisability
of the Option, and whether the Option is intended to be an ISO or a Nonqualified Stock Option (and in the event the Award Agreement has
no such designation, the Option shall be a Nonqualified Stock Option). The provisions of each Option need not be the same with respect
to each Participant. More than one Option may be granted to the same Participant and be outstanding concurrently hereunder. Options granted
under the Plan shall be subject to the terms and conditions set forth in this Section 7 and shall contain such additional terms
and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable and set forth in the applicable
Award Agreement.
(b) Exercise Price.
The Exercise Price of Shares purchasable under an Option shall be determined by the Administrator in its sole discretion at the time
of grant, but in no event shall the exercise price of an Option be less than one hundred percent (100%) of the Fair Market Value of a
share of Common Stock on the date of grant.
(c) Option Term.
The maximum term of each Option shall be fixed by the Administrator, but no Option shall be exercisable more than ten (10) years after
the date such Option is granted. Each Option’s term is subject to earlier expiration pursuant to the applicable provisions in the
Plan and the Award Agreement. Notwithstanding the foregoing, subject to Section 4(d) of the Plan, the Administrator shall have the
authority to accelerate the exercisability of any outstanding Option at such time and under such circumstances as the Administrator,
in its sole discretion, deems appropriate.
(d) Exercisability.
Each Option shall be exercisable at such time or times and subject to such terms and conditions, including the attainment of performance
goals, as shall be determined by the Administrator in the applicable Award Agreement. The Administrator may also provide that any Option
shall be exercisable only in installments, and the Administrator may waive such installment exercise provisions at any time, in whole
or in part, based on such factors as the Administrator may determine in its sole discretion.
(e) Method of Exercise.
Options may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of whole Shares
to be purchased, accompanied by payment in full of the aggregate Exercise Price of the Shares so purchased in cash or its equivalent,
as determined by the Administrator. As determined by the Administrator, in its sole discretion, with respect to any Option or category
of Options, payment in whole or in part may also be made (i) by means of consideration received under any cashless exercise procedure
approved by the Administrator (including the withholding of Shares otherwise issuable upon exercise), (ii) in the form of unrestricted
Shares already owned by the Participant which have a Fair Market Value on the date of surrender equal to the aggregate exercise price
of the Shares as to which such Option shall be exercised, (iii) any other form of consideration approved by the Administrator and
permitted by Applicable Laws or (iv) any combination of the foregoing.
(f) ISOs. The
terms and conditions of ISOs granted hereunder shall be subject to the provisions of Section 422 of the Code and the terms, conditions,
limitations and administrative procedures established by the Administrator from time to time in accordance with the Plan. At the discretion
of the Administrator, ISOs may be granted only to an employee of the Company, its “parent corporation” (as such term is defined
in Section 424(e) of the Code) or a Subsidiary of the Company.
(1) ISO Grants
to 10% Stockholders. Notwithstanding anything to the contrary in the Plan, if an ISO is granted to a Participant who owns shares
representing more than ten percent (10%) of the voting power of all classes of shares of the Company, its “parent corporation”
(as such term is defined in Section 424(e) of the Code) or a Subsidiary of the Company, the term of the ISO shall not exceed five
(5) years from the time of grant of such ISO and the Exercise Price shall be at least one hundred and ten percent (110%) of the Fair
Market Value of the Shares on the date of grant.
(2) $100,000 Per
Year Limitation For ISOs. To the extent the aggregate Fair Market Value (determined on the date of grant) of the Shares for which
ISOs are exercisable for the first time by any Participant during any calendar year (under all plans of the Company) exceeds $100,000,
such excess ISOs shall be treated as Nonqualified Stock Options.
(3) Disqualifying
Dispositions. Each Participant awarded an ISO under the Plan shall notify the Company in writing immediately after the date the Participant
makes a “disqualifying disposition” of any Share acquired pursuant to the exercise of such ISO. A “disqualifying disposition”
is any disposition (including any sale) of such Shares before the later of (i) two years after the date of grant of the ISO and
(ii) one year after the date the Participant acquired the Shares by exercising the ISO. The Company may, if determined by the Administrator
and in accordance with procedures established by it, retain possession of any Shares acquired pursuant to the exercise of an ISO as agent
for the applicable Participant until the end of the period described in the preceding sentence, subject to complying with any instructions
from such Participant as to the sale of such Shares.
(g) Rights as Stockholder.
A Participant shall have no rights to dividends, dividend equivalents or distributions or any other rights of a stockholder with respect
to the Shares subject to an Option until the Participant has given written notice of the exercise thereof, and has paid in full for such
Shares and has satisfied the requirements of Section 15 hereof.
(h) Termination
of Employment or Service. Treatment of an Option upon termination of employment of a Participant shall be provided for by the Administrator
in the Award Agreement.
(i) Other Change
in Employment or Service Status. An Option shall be affected, both with regard to vesting schedule and termination, by leaves of
absence, including unpaid and un-protected leaves of absence, changes from full-time to part-time employment, partial
Disability or other changes in the employment status or service status of a Participant, in the discretion of the Administrator.
Section 8. Stock Appreciation
Rights.
(a) General.
Stock Appreciation Rights may be granted either alone (“Free Standing Rights”) or in conjunction with all or part
of any Option granted under the Plan (“Related Rights”). Related Rights may be granted either at or after the time
of the grant of such Option. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, grants
of Stock Appreciation Rights shall be made. Each Participant who is granted a Stock Appreciation Right shall enter into an Award Agreement
with the Company, containing such terms and conditions as the Administrator shall determine, in its sole discretion, including, among
other things, the number of Shares to be awarded, the Exercise Price per Share, and all other conditions of Stock Appreciation Rights.
Notwithstanding the foregoing, no Related Right may be granted for more Shares than are subject to the Option to which it relates. The
provisions of Stock Appreciation Rights need not be the same with respect to each Participant. Stock Appreciation Rights granted under
the Plan shall be subject to the following terms and conditions set forth in this Section 8 and shall contain such additional terms
and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable, as set forth in the applicable
Award Agreement.
(b) Awards; Rights
as Stockholder. A Participant shall have no rights to dividends or any other rights of a stockholder with respect to the shares of
Common Stock, if any, subject to a Stock Appreciation Right until the Participant has given written notice of the exercise thereof and
has satisfied the requirements of Section 15 hereof.
(c) Exercise Price.
The Exercise Price of Shares purchasable under a Stock Appreciation Right shall be determined by the Administrator in its sole discretion
at the time of grant, but in no event shall the exercise price of a Stock Appreciation Right be less than one hundred percent (100%)
of the Fair Market Value of a share of Common Stock on the date of grant.
(d) Exercisability.
(1) Stock Appreciation
Rights that are Free Standing Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be
determined by the Administrator in the applicable Award Agreement.
(2) Stock Appreciation
Rights that are Related Rights shall be exercisable only at such time or times and to the extent that the Options to which they relate
shall be exercisable in accordance with the provisions of Section 7 hereof and this Section 8 of the Plan.
(e) Payment Upon
Exercise.
(1) Upon the exercise of
a Free Standing Right, the Participant shall be entitled to receive up to, but not more than, that number of Shares equal in value to
the excess of the Fair Market Value as of the date of exercise over the Exercise Price per share specified in the Free Standing Right
multiplied by the number of Shares in respect of which the Free Standing Right is being exercised.
(2) A Related Right may
be exercised by a Participant by surrendering the applicable portion of the related Option. Upon such exercise and surrender, the Participant
shall be entitled to receive up to, but not more than, that number of Shares equal in value to the excess of the Fair Market Value as
of the date of exercise over the Exercise Price specified in the related Option multiplied by the number of Shares in respect of which
the Related Right is being exercised. Options which have been so surrendered, in whole or in part, shall no longer be exercisable to
the extent the Related Rights have been so exercised.
(3) Notwithstanding the
foregoing, the Administrator may determine to settle the exercise of a Stock Appreciation Right in cash (or in any combination of Shares
and cash).
(f) Termination
of Employment or Service. Treatment of a Stock Appreciation Right upon termination of employment of a Participant shall be provided
for by the Administrator in the Award Agreement.
(g) Term.
(1) The term of each Free
Standing Right shall be fixed by the Administrator, but no Free Standing Right shall be exercisable more than ten (10) years after the
date such right is granted.
(2) The term of each Related
Right shall be the term of the Option to which it relates, but no Related Right shall be exercisable more than ten (10) years after the
date such right is granted.
(h) Other Change
in Employment or Service Status. Stock Appreciation Rights shall be affected, both with regard to vesting schedule and termination,
by leaves of absence, including unpaid and un-protected leaves of absence, changes from full-time to part-time employment,
partial Disability or other changes in the employment or service status of a Participant, in the discretion of the Administrator.
Section 9. Restricted Stock and
Restricted Stock Units.
(a) General.
Restricted Stock or Restricted Stock Units may be issued under the Plan. The Administrator shall determine the Eligible Recipients to
whom, and the time or times at which, Restricted Stock or Restricted Stock Units shall be made. Each Participant who is granted Restricted
Stock or Restricted Stock Units shall enter into an Award Agreement with the Company, containing such terms and conditions as the Administrator
shall determine, in its sole discretion, including, among other things, the number of Shares to be awarded; the price, if any, to be
paid by the Participant for the acquisition of Restricted Stock or Restricted Stock Units; the period of time restrictions, performance
goals or other conditions that apply to Transferability, delivery or vesting of such Awards (the “Restricted Period”);
and all other conditions applicable to the Restricted Stock and Restricted Stock Units. If the restrictions, performance goals or conditions
established by the Administrator are not attained, a Participant shall forfeit his or her Restricted Stock or Restricted Stock Units,
in accordance with the terms of the grant. The provisions of the Restricted Stock or Restricted Stock Units need not be the same with
respect to each Participant.
(b) Awards and
Certificates. Except as otherwise provided below in Section 9(c), (i) each Participant who is granted an Award of Restricted
Stock may, in the Company’s sole discretion, be issued a share certificate in respect of such Restricted Stock; and (ii) any
such certificate so issued shall be registered in the name of the Participant, and shall bear an appropriate legend referring to the
terms, conditions and restrictions applicable to any such Award. The Company may require that the share certificates, if any, evidencing
Restricted Stock granted hereunder be held in the custody of the Company until the restrictions thereon shall have lapsed, and that,
as a condition of any Award of Restricted Stock, the Participant shall have delivered a share transfer form, endorsed in blank, relating
to the Shares covered by such Award. Certificates for shares of unrestricted Common Stock may, in the Company’s sole discretion,
be delivered to the Participant only after the Restricted Period has expired without forfeiture in such Restricted Stock Award. With
respect to Restricted Stock Units to be settled in Shares, at the expiration of the Restricted Period, share certificates in respect
of the shares of Common Stock underlying such Restricted Stock Units may, in the Company’s sole discretion, be delivered to the
Participant, or his legal representative, in a number equal to the number of shares of Common Stock underlying the Restricted Stock Units
Award. Notwithstanding anything in the Plan to the contrary, any Restricted Stock or Restricted Stock Units to be settled in Shares (at
the expiration of the Restricted Period, and whether before or after any vesting conditions have been satisfied) may, in the Company’s
sole discretion, be issued in uncertificated form. Further, notwithstanding anything in the Plan to the contrary, with respect to Restricted
Stock Units, at the expiration of the Restricted Period, Shares, or cash, as applicable, shall promptly be issued (either in certificated
or uncertificated form) to the Participant, unless otherwise deferred in accordance with procedures established by the Company in accordance
with Section 409A of the Code, and such issuance or payment shall in any event be made within such period as is required to avoid
the imposition of a tax under Section 409A of the Code.
(c) Restrictions
and Conditions. The Restricted Stock or Restricted Stock Units granted pursuant to this Section 9 shall be subject to the following
restrictions and conditions and any additional restrictions or conditions as determined by the Administrator at the time of grant or,
subject to Section 409A of the Code where applicable, thereafter:
(1) The Administrator may,
in its sole discretion, provide for the lapse of restrictions in installments and may accelerate or waive such restrictions in whole
or in part based on such factors and such circumstances as the Administrator may determine, in its sole discretion, including, but not
limited to, the attainment of certain performance goals, the Participant’s termination of employment or service with the Company
or any Affiliate thereof, or the Participant’s death or Disability. Notwithstanding the foregoing, upon a Change in Control, the
outstanding Awards shall be subject to Section 11 hereof.
(2) Except as provided
in the applicable Award Agreement, the Participant shall generally have the rights of a stockholder of the Company with respect to Restricted
Stock during the Restricted Period; provided, however, that dividends declared during the Restricted Period with
respect to an Award, shall only become payable if (and to the extent) the underlying Restricted Stock vests. Except as provided in the
applicable Award Agreement, the Participant shall generally not have the rights of a stockholder with respect to Shares subject to Restricted
Stock Units during the Restricted Period; provided, however, that, subject to Section 409A of the Code,
an amount equal to dividends declared during the Restricted Period with respect to the number of Shares covered by Restricted Stock Units
shall, unless otherwise set forth in an Award Agreement, be paid to the Participant at the time (and to the extent) Shares in respect
of the related Restricted Stock Units are delivered to the Participant. Certificates for Shares of unrestricted Common Stock may, in
the Company’s sole discretion, be delivered to the Participant only after the Restricted Period has expired without forfeiture
in respect of such Restricted Stock or Restricted Stock Units, except as the Administrator, in its sole discretion, shall otherwise determine.
(3) The rights of Participants
granted Restricted Stock or Restricted Stock Units upon termination of employment or service as a director or independent contractor
to the Company or to any Affiliate thereof terminates for any reason during the Restricted Period shall be set forth in the Award Agreement.
(d) Form of Settlement.
The Administrator reserves the right in its sole discretion to provide (either at or after the grant thereof) that any Restricted Stock
Unit represents the right to receive the amount of cash per unit that is determined by the Administrator in connection with the Award.
Section 10. Other Stock-Based Awards.
Other Stock-Based Awards
may be issued under the Plan. Subject to the provisions of the Plan, the Administrator shall have sole and complete authority to determine
the individuals to whom and the time or times at which such Other Stock-Based Awards shall be granted. Each Participant who is granted
an Other Stock-Based Award shall enter into an Award Agreement with the Company, containing such terms and conditions as the Administrator
shall determine, in its sole discretion, including, among other things, the number of shares of Common Stock to be granted pursuant to
such Other Stock-Based Awards, or the manner in which such Other Stock-Based Awards shall be settled (e.g., in shares of Common
Stock, cash or other property), or the conditions to the vesting and/or payment or settlement of such Other Stock-Based Awards (which
may include, but not be limited to, achievement of performance criteria) and all other terms and conditions of such Other Stock-Based Awards.
In the event that the Administrator grants a bonus in the form of Shares, the Shares constituting such bonus shall, as determined by
the Administrator, be evidenced in uncertificated form or by a book entry record or a certificate issued in the name of the Participant
to whom such grant was made and delivered to such Participant as soon as practicable after the date on which such bonus is payable. Notwithstanding
anything set forth in the Plan to the contrary, any dividend or dividend equivalent Award issued hereunder shall be subject to the same
restrictions, conditions and risks of forfeiture as apply to the underlying Award.
Section 11. Change in Control.
Unless otherwise determined
by the Administrator and evidenced in an Award Agreement, in the event that (a) a Change in Control occurs, and (b) the Participant
is employed by the Company or any of its Affiliates immediately prior to the consummation of such Change in Control then upon the consummation
of such Change in Control, the Administrator, in its sole and absolute discretion, may:
(a) provide that any unvested
or unexercisable portion of any Award carrying a right to exercise become fully vested and exercisable; and
(b) cause the restrictions,
deferral limitations, payment conditions and forfeiture conditions applicable to an Award granted under the Plan to lapse and such Awards
shall be deemed fully vested and any performance conditions imposed with respect to such Awards shall be deemed to be fully achieved
at target performance levels.
If the Administrator determines
in its discretion pursuant to Section 3(b)(4) hereof to accelerate the vesting of Options and/or Share Appreciation Rights in connection
with a Change in Control, the Administrator shall also have discretion in connection with such action to provide that all Options and/or
Stock Appreciation Rights outstanding immediately prior to such Change in Control shall expire on the effective date of such Change in
Control.
Section 12. Amendment and Termination.
The Board may amend, alter
or terminate the Plan at any time, but no amendment, alteration or termination shall be made that would impair the rights of a Participant
under any Award theretofore granted without such Participant’s consent. The Board shall obtain approval of the Company’s
stockholders for any amendment that would require such approval in order to satisfy the requirements of any rules of the stock exchange
on which the Common Stock is traded or other Applicable Law. Subject to Section 3(c), the Administrator may amend the terms of any
Award theretofore granted, prospectively or retroactively, but, subject to Section 5 of the Plan and the immediately preceding sentence,
no such amendment shall materially impair the rights of any Participant without his or her consent.
Section 13. Unfunded Status of
Plan.
The Plan is intended to
constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the
Company.
Section 14. Withholding Taxes.
Each Participant shall,
no later than the date as of which the value of an Award first becomes includible in the gross income of such Participant for purposes
of applicable taxes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of an amount up to
the maximum statutory tax rates in the Participant’s applicable jurisdiction with respect to the Award, as determined by the Company.
The obligations of the Company under the Plan shall be conditional on the making of such payments or arrangements, and the Company shall,
to the extent permitted by Applicable Laws, have the right to deduct any such taxes from any payment of any kind otherwise due to such
Participant. Whenever cash is to be paid pursuant to an Award, the Company shall have the right to deduct therefrom an amount sufficient
to satisfy any applicable withholding tax requirements related thereto. Whenever Shares or property other than cash are to be delivered
pursuant to an Award, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient
to satisfy any related taxes to be withheld and applied to the tax obligations; provided, that, with the approval
of the Administrator, a Participant may satisfy the foregoing requirement by either (i) electing to have the Company withhold from
delivery of Shares or other property, as applicable, or (ii) delivering already owned unrestricted shares of Common Stock, in each
case, having a value not exceeding the applicable taxes to be withheld and applied to the tax obligations. Such already owned and unrestricted
shares of Common Stock shall be valued at their Fair Market Value on the date on which the amount of tax to be withheld is determined
and any fractional share amounts resulting therefrom shall be settled in cash. Such an election may be made with respect to all or any
portion of the Shares to be delivered pursuant to an award. The Company may also use any other method of obtaining the necessary payment
or proceeds, as permitted by Applicable Laws, to satisfy its withholding obligation with respect to any Award.
Section 15. Transfer of Awards.
Until such time as the
Awards are fully vested and/or exercisable in accordance with the Plan or an Award Agreement, no purported sale, assignment, mortgage,
hypothecation, transfer, charge, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation
of a security interest in or lien on, any Award or any agreement or commitment to do any of the foregoing (each, a “Transfer”)
by any holder thereof in violation of the provisions of the Plan or an Award Agreement will be valid, except with the prior written consent
of the Administrator, which consent may be granted or withheld in the sole discretion of the Administrator. Any purported Transfer of
an Award or any economic benefit or interest therein in violation of the Plan or an Award Agreement shall be null and void ab
initio and shall not create any obligation or liability of the Company, and any Person purportedly acquiring any Award or any
economic benefit or interest therein transferred in violation of the Plan or an Award Agreement shall not be entitled to be recognized
as a holder of such Shares or other property underlying such Award. Unless otherwise determined by the Administrator in accordance with
the provisions of the immediately preceding sentence, an Option or a Stock Appreciation Right may be exercised, during the lifetime of
the Participant, only by the Participant or, during any period during which the Participant is under a legal Disability, by the Participant’s
guardian or legal representative.
Section 16. Continued Employment
or Service.
Neither the adoption of
the Plan nor the grant of an Award shall confer upon any Eligible Recipient any right to continued employment or service with the Company
or any Affiliate thereof, as the case may be, nor shall it interfere in any way with the right of the Company or any Affiliate thereof
to terminate the employment or service of any of its Eligible Recipients at any time.
Section 17. Effective Date.
The Plan was approved by
the Board on February 24, 2021 and shall be adopted and become effective on the date that it is approved by the Company’s
stockholders (the “Effective Date”).
Section 18. Electronic Signature.
Participant’s electronic
signature of an Award Agreement shall have the same validity and effect as a signature affixed by hand.
Section 19. Term of Plan.
No Award shall be granted
pursuant to the Plan on or after the tenth anniversary of the Effective Date, but Awards theretofore granted may extend beyond that date.
Section 20. Securities Matters
and Regulations.
(a) Notwithstanding anything
herein to the contrary, the obligation of the Company to sell or deliver Shares with respect to any Award granted under the Plan shall
be subject to all Applicable Laws, rules and regulations, including all applicable federal and state securities laws, and the obtaining
of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Administrator. The Administrator may
require, as a condition of the issuance and delivery of certificates evidencing shares of Common Stock pursuant to the terms hereof,
that the recipient of such shares make such agreements and representations, and that such certificates bear such legends, as the Administrator,
in its sole discretion, deems necessary or advisable.
(b) Each Award is subject
to the requirement that, if at any time the Administrator determines that the listing, registration or qualification of Shares is required
by any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with, the grant of an Award or the issuance of Shares, no such Award shall be granted
or payment made or Shares issued, in whole or in part, unless listing, registration, qualification, consent or approval has been effected
or obtained free of any conditions not acceptable to the Administrator.
(c) In the event that the
disposition of Shares acquired pursuant to the Plan is not covered by a then current registration statement under the Securities Act
and is not otherwise exempt from such registration, such Shares shall be restricted against transfer to the extent required by the Securities
Act or regulations thereunder, and the Administrator may require a Participant receiving Common Stock pursuant to the Plan, as a condition
precedent to receipt of such Common Stock, to represent to the Company in writing that the Common Stock acquired by such Participant
is acquired for investment only and not with a view to distribution.
Section 21. Section 409A
of the Code.
The Plan as well as payments
and benefits under the Plan are intended to be exempt from, or to the extent subject thereto, to comply with Section 409A of the
Code, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted in accordance therewith. Notwithstanding anything
contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A
of the Code, the Participant shall not be considered to have terminated employment or service with the Company for purposes of the Plan
and no payment shall be due to the Participant under the Plan or any Award until the Participant would be considered to have incurred
a “separation from service” from the Company and its Affiliates within the meaning of Section 409A of the Code. Any
payments described in the Plan that are due within the “short term deferral period” as defined in Section 409A of the
Code shall not be treated as deferred compensation unless Applicable Law requires otherwise. Notwithstanding anything to the contrary
in the Plan, to the extent that any Awards (or any other amounts payable under any plan, program or arrangement of the Company or any
of its Affiliates) are payable upon a separation from service and such payment would result in the imposition of any individual tax and
penalty interest charges imposed under Section 409A of the Code, the settlement and payment of such awards (or other amounts) shall
instead be made on the first business day after the date that is six (6) months following such separation from service (or death, if
earlier). Each amount to be paid or benefit to be provided under this Plan shall be construed as a separate identified payment for purposes
of Section 409A of the Code. The Company makes no representation that any or all of the payments or benefits described in this Plan
will be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from
applying to any such payment. The Participant shall be solely responsible for the payment of any taxes and penalties incurred under Section 409A.
Section 22. Notification of Election
Under Section 83(b) of the Code.
If any Participant shall,
in connection with the acquisition of shares of Common Stock under the Plan, make the election permitted under Section 83(b) of
the Code, such Participant shall notify the Company of such election within ten (10) days after filing notice of the election with the
Internal Revenue Service.
Section 23. No Fractional Shares.
No fractional shares of
Common Stock shall be issued or delivered pursuant to the Plan. The Administrator shall determine whether cash, other Awards, or other
property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited
or otherwise eliminated.
Section 24. Beneficiary.
A Participant may file
with the Administrator a written designation of a beneficiary on such form as may be prescribed by the Administrator and may, from time
to time, amend or revoke such designation. If no designated beneficiary survives the Participant, the executor or administrator of the
Participant’s estate shall be deemed to be the Participant’s beneficiary.
Section 25. Paperless Administration.
In the event that the Company
establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards,
such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards
by a Participant may be permitted through the use of such an automated system.
Section 26. Severability.
If any provision of the
Plan is held to be invalid or unenforceable, the other provisions of the Plan shall not be affected but shall be applied as if the invalid
or unenforceable provision had not been included in the Plan.
Section 27. Clawback.
(a) If the Company is required
to prepare a financial restatement due to the material non-compliance of the Company with any financial reporting requirement, then
the Committee may require any Section 16 Officer to repay or forfeit to the Company, and each Section 16 Officer agrees to
so repay or forfeit, that part of the Incentive Compensation received by that Section 16 Officer during the three-year period
preceding the publication of the restated financial statement that the Committee determines was in excess of the amount that such Section 16
Officer would have received had such Incentive Compensation been calculated based on the financial results reported in the restated financial
statement. The Committee may take into account any factors it deems reasonable in determining whether to seek recoupment of previously
paid Incentive Compensation and how much Incentive Compensation to recoup from each Section 16 Officer (which need not be the same
amount or proportion for each Section 16 Officer), including any determination by the Committee that a Section 16 Officer engaged
in fraud, willful misconduct or committed grossly negligent acts or omissions which materially contributed to the events that led to
the financial restatement. The amount and form of the Incentive Compensation to be recouped shall be determined by the Committee in its
sole and absolute discretion, and recoupment of Incentive Compensation may be made, in the Committee’s sole and absolute discretion,
through the cancellation of vested or unvested Awards, cash repayment or both.
(b) Notwithstanding any
other provisions in this Plan, any Award which is subject to recovery under any Applicable Laws, government regulation or stock exchange
listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such Applicable Law, government
regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation
or stock exchange listing requirement).
Section 28. Governing Law.
The Plan shall be governed
by, and construed in accordance with, the laws of the State of Delaware, without giving effect to principles of conflicts of law of such
state.
Section 29. Indemnification.
To the extent allowable
pursuant to applicable law, each member of the Board and the Administrator and any officer or other employee to whom authority to administer
any component of the Plan is designated shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding
to which he or she may be a party or in which he or she may be a party or in which he or she may be involved by reason of any action
or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such
action, suit, or proceeding against him or her; provided, however, that he or she gives the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification
shall not be exclusive of any other rights of indemnification to which such individuals may be entitled pursuant to the Company’s
Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
Section 30. Titles and Headings,
References to Sections of the Code or Exchange Act.
The titles and headings
of the sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than
such titles or headings, shall control. References to sections of the Code or the Exchange Act shall include any amendment or successor
thereto.
Section 31. Successors.
The obligations of the
Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other
reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business
of the Company.
Section 32. Relationship to other
Benefits.
No payment pursuant to
the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance,
welfare, or other benefit plan of the Company or any Affiliate except to the extent otherwise expressly provided in writing in such other
plan or an agreement thereunder.
Aditxt (NASDAQ:ADTX)
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