Exhibit 4.1


 


AMERICAN VIRTUAL CLOUD TECHNOLOGIES, INC.


 


CERTIFICATE OF DESIGNATION OF PREFERENCES,


RIGHTS AND LIMITATIONS


OF


SERIES A CONVERTIBLE
PREFERRED STOCK


 


PURSUANT
TO SECTION 151 OF THE


DELAWARE
GENERAL CORPORATION LAW


 


American Virtual Cloud Technologies,
Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (hereinafter, the “Corporation”),
hereby certifies that:


 


1. The Corporation is authorized
to issue 5,000,000 shares of preferred stock, none of which have been issued.


 


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


 


WHEREAS, the certificate
of incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, consisting of 5,000,000 shares,
$0.0001 par value per share, issuable from time to time in one or more series;


 


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


 


WHEREAS, it is the desire
of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other matters relating
to a series of the preferred stock, which shall consist of up to 12,456 shares of the preferred stock which the Corporation has the authority
to issue, as follows:


 


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


 


TERMS OF PREFERRED STOCK


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Common
Stock” means the Corporation’s common stock, par value $0.0001 per share, and stock of any other class of securities into
which such securities may hereafter be reclassified or changed.


 






     


     


    

 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“GAAP”
means United States generally accepted accounting principles.


 


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


 


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


 


“New York
Courts” shall have the meaning set forth in Section 8(d).


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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“Transfer
Agent” means Continental Stock Transfer & Trust Company, the current transfer agent of the Corporation with a mailing address
of 17 Battery Place, New York, New York 10004, and any successor transfer agent of the Corporation.


 


Section 2. Designation,
Amount and Par Value.


The series of preferred stock
shall be designated as its Series A Convertible Preferred Stock (the “Preferred Stock”) and the number of shares so
designated shall be up to 12,456 (which shall not be subject to increase without the written consent of the holders of a majority of the
then outstanding shares of the Preferred Stock (each, a “Holder” and collectively, the “Holders”)).
Each share of Preferred Stock shall have a par value of $0.0001 per share and a stated value equal to $1,000, subject to increase set forth
in Section 3 below (the “Stated Value”). For Book-Entry: The Preferred Stock will initially be issued in book-entry
form and shall initially be represented only by one or more global certificates deposited with the Depository Trust Company (“DTC”)
and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC. As between the Corporation and a beneficial
owner of Preferred Stock shall have all of the rights and remedies of a Holder hereunder. In addition, a beneficial owner of Preferred
Stock has the right, upon written notice by such beneficial owner to the Corporation, to request the exchange of some or all of such beneficial
owner’s interest in Preferred Stock represented by one or more global Preferred Stock certificates deposited with Cede & Co.
(or its successor) for a physical Preferred Stock certificate (a “Preferred Stock Certificate Request Notice” and the
date of delivery of such Preferred Stock Certificate Request Notice by a beneficial owner, the “Preferred Stock Certificate Request
Notice Date” and the deemed surrender upon delivery by the beneficial owner of a number of global shares of Preferred Stock
for the same number of shares of Preferred Stock represented by a physical stock certificate, a “Preferred Stock Exchange”,
and such physical certificate(s), a “Preferred Stock Certificate”). Upon delivery of a Preferred Stock Certificate
Request Notice, the Corporation shall promptly effect the Preferred Stock Exchange and shall promptly issue and deliver to the beneficial
owner a physical Preferred Stock Certificate for such number of shares of Preferred Stock represented by its interest in such global certificates
in the name of the beneficial owner. Such Preferred Stock Certificate shall be dated the original issue date and shall be executed by
an authorized signatory of the Corporation. In connection with a Preferred Stock Exchange, the Corporation agrees to deliver the Preferred
Stock Certificate to the Holder within two (2) Business Days of the delivery of a properly completed and executed Preferred Stock Certificate
Request Notice pursuant to the delivery instructions in the Preferred Stock Certificate Request Notice. The Corporation covenants and
agrees that, upon the date of delivery of the properly completed and executed Preferred Stock Certificate Request Notice, the Holder shall
be deemed to be the holder of the Preferred Stock Certificate and further, for purposes of Regulation SHO, a Holder whose interest in
this Preferred Stock is a beneficial interest in certificate(s) representing this Preferred Stock held in book-entry form through DTC
shall be deemed to have converted its interest in this Preferred Stock upon instructing its broker that is a DTC participant to convert
its interest in this Preferred Stock, and, notwithstanding anything to the contrary set forth herein, the Preferred Stock Certificate
shall be deemed for all purposes to represent all of the terms and conditions of the Preferred Stock evidenced by such global Preferred
Stock certificates and the terms hereof.


 


Section 3. Dividends.
Except for stock dividends or distributions for which adjustments are to be made pursuant to Section 7, Holders shall be entitled to receive,
and the Corporation shall pay, dividends on shares of Preferred Stock equal (on an as-if-converted-to-Common-Stock basis, disregarding
for such purpose any conversion limitations hereunder) to and in the same form as dividends actually paid on shares of the Common Stock
when, as and if such dividends are paid on shares of the Common Stock. No other dividends shall be paid on shares of Preferred Stock.
The Corporation shall not pay any dividends on the Common Stock unless the Corporation simultaneously complies with this provision.


 


Section 4. Voting
Rights. Except as otherwise provided herein or as otherwise required by law, the Preferred Stock shall have no voting rights. However,
as long as any shares of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a
majority of the then outstanding shares of the Preferred Stock, (a) alter or change adversely the powers, preferences or rights given
to the Preferred Stock or alter or amend this Certificate of Designation, (b) amend its certificate of incorporation or other charter
documents in any manner that adversely affects any rights of the Holders, (c) increase the number of authorized shares of Preferred Stock,
or (d) enter into any agreement with respect to any of the foregoing.


 






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Section 5. Liquidation.
Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”),
the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation the same amount that a holder
of Common Stock would receive if the Preferred Stock were fully converted (disregarding for such purposes any conversion limitations hereunder)
to Common Stock which amounts shall be paid pari passu with all holders of Common Stock. The Corporation shall mail written notice of
any such Liquidation, not less than 30 days prior to the payment date stated therein, to each Holder.


 


Section 6. Conversion.


 


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


 


b) Conversion
Price. The conversion price for the Preferred Stock shall equal $1.60, subject to adjustment herein (the “Conversion
Price”).


 


c) Mechanics
of Conversion


 


i. Delivery
of Conversion Shares Upon Conversion. Not later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising
the Standard Settlement Period (as defined below) after each Conversion Date (the “Share Delivery Date”), the Corporation
shall deliver, or cause to be delivered, to the converting Holder (A) the number of Conversion Shares being acquired upon the conversion
of the Preferred Stock, which Conversion Shares shall be free of restrictive legends and trading restrictions, and (B) a bank check in
the amount of accrued and unpaid dividends, if any. The Corporation shall use its reasonable best efforts to deliver the Conversion Shares
required to be delivered by the Corporation under this Section 6 electronically through the Depository Trust Company or another established
clearing corporation performing similar functions. As used herein, “Standard Settlement Period” means the standard
settlement period, expressed in a number of Trading Days, on the Corporation’s primary Trading Market with respect to the Common
Stock as in effect on the date of delivery of the Notice of Conversion. Notwithstanding the foregoing, with respect to any Notice(s) of
Conversion delivered by 4:00 p.m. (New York City time) on the date immediately prior to the Original Issue Date, the Corporation agrees
to deliver the Conversion Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Original Issue Date, and the Original
Issue Date being deemed the “Share Delivery Date” with respect to any Notice(s) of Conversion.


 


 


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


 






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


 


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


 






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v. Reservation
of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Preferred Stock as herein provided, free from
preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Preferred
Stock), not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments and
restrictions of Section 7) upon the conversion of the then outstanding shares of Preferred Stock. The Corporation covenants that all shares
of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.


 


vi. Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Preferred Stock. As
to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Corporation shall at its
election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion
Price or round up to the next whole share. Notwithstanding anything to the contrary contained herein, but consistent with the provisions
of this subsection with respect to fractional Conversion Shares, nothing shall prevent any Holder from converting fractional shares of
Preferred Stock.


 


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


 



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


 






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Section 7. Certain
Adjustments.


 


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


 


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


 


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


 






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


 






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


 


f) Notice
to the Holders.


 


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


 


ii. Notice
to Allow Conversion by Holder. If (A) the Corporation shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Corporation
shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the Corporation shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any sale or transfer of all or
substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property or (E) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up
of the affairs of the Corporation, then, in each case, the Corporation shall cause to be filed at each office or agency maintained for
the purpose of conversion of this Preferred Stock, and shall cause to be delivered by facsimile or email to each Holder at its last facsimile
number or email address as it shall appear upon the stock books of the Corporation, at least ten (10) calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock
for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange,
provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material,
non-public information regarding the Corporation or any of the Subsidiaries, the Corporation shall simultaneously file such notice with
the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert the Conversion Amount of this Preferred
Stock (or any part hereof) during the 20-day period commencing on the date of such notice through the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.


 






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g) Adjustment Upon Issuance of Shares of Common Stock. If and
whenever on or after the date hereof, the Company grants, issues or sells (or enters into any agreement to grant, issue or sell), or in
accordance with this Section 7 is deemed to have granted, issued or sold, any shares of Common Stock (including the 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 7(g)), the following shall be applicable, with all terms used and not defined
herein being used as defined in the Corporation’s Series D Warrant:


 


(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 or sale of such Option for such price per share. For purposes of this Section 7(g)(i),
the “lowest price per share for which one share of Common Stock is at any time issuable 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” 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) upon the granting, issuance or sale of such Option, upon
exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or
otherwise pursuant to the terms thereof plus the value of any other consideration 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 shares of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise
pursuant to the terms of or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible
Securities.


 






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(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 7(g)(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) 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 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 this Warrant has
been or is to be made pursuant to other provisions of this Section 7(g), 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 7), 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 7(g)(iii),
if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that was outstanding
as of the Subscription Date) are increased or decreased in the manner described in the immediately preceding sentence, then such Option
or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to
have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 7 shall be made if such adjustment
would result in an increase of the Conversion Price then in effect.


 






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(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 Holder, the “Primary Security”,
and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”), together comprising
one integrated transaction, (or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the
Company either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or
(C) are consummated under the same plan of financing) the aggregate consideration per share of Common Stock with respect to such Primary
Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one share of Common Stock was issued
(or was deemed to be issued pursuant to Section 7(g)(i)(b)(i) or (ii) above, as applicable) in such integrated transaction solely with
respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (I) the Black Scholes Consideration
Value of each such Option, if any, (II) the fair market value (as determined by the Holder in good faith) or the Black Scholes Consideration
Value, as applicable, of such Adjustment Right, if any, and (III) the fair market value (as determined by the Holder) of such Convertible
Security, if any, in each case, as determined on a per share basis in accordance with this Section7(g)(iv). If any shares of Common Stock,
Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor
(for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose
of the calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company
therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the
amount of such consideration received by the Company (for the purpose of determining the consideration paid for such Common Stock, Option
or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be the fair value of
such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration
received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading
Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners
of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor
(for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose
of the calculation of the Black Scholes Consideration Value) will be deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case
may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and
the 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 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).


 






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(h) Intentionally
Omitted.


 


(i)Holder’s
Right of Alternative Conversion Price Following Issuance of Certain Options or Convertible Securities. In addition to and not in limitation
of the other provisions of this Section 7, 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 date hereof 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 customary anti-dilution provisions (such as share splits, share combinations,
share dividends and similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable
Price”), the Company shall provide written notice thereof via facsimile and overnight courier to the Holder on the date of such
agreement and the issuance of such Convertible Securities or Options. From and after the date the Company enters into such agreement or
issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute
the Variable Price for the Conversion Price upon exercise of Preferred Shares by designating in the Exercise Notice delivered upon any
exercise of Preferred Shares that solely for purposes of such conversion the Holder is relying on the Variable Price rather than the Conversion
Price then in effect. The Holder’s election to rely on a Variable Price for a particular exercise of Preferred Shares shall not
obligate the Holder to rely on a Variable Price for any future conversions of Preferred Shares.


 


Section 8. Miscellaneous.


 


a) Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice
of Conversion, shall be in writing and delivered personally, by facsimile or e-mail, or sent by a nationally recognized overnight courier
service, addressed to the Corporation, at the address set forth above Attention: Chief Financial Officer, e-mail address tking@avctechnologies.com,
or such other e-mail address or address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance
with this Section 8. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in
writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at
the e-mail address or address of such Holder appearing on the books of the Corporation. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered
via e-mail at the e-mail address set forth in this Section 8 prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading
Day after the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number or e-mail at the
e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv)
upon actual receipt by the party to whom such notice is required to be given.


 


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


 


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


 






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


 


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


 


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


 


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


 


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


 


i) Status
of Converted or Redeemed Preferred Stock. If any shares of Preferred Stock shall be converted, redeemed or reacquired by the Corporation,
such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series A
Convertible Preferred Stock.


 


*********************






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


 


IN WITNESS WHEREOF, the undersigned has executed
this Certificate this 13th day of December, 2021.


 


	 	 
	Name:	 
	Title:	 



 




     


     


    

 


ANNEX A


 


NOTICE OF CONVERSION


 


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


 


The undersigned hereby elects to convert the number
of shares of Series A Convertible Preferred Stock indicated below into shares of common stock, par value $0.0001 per share (the “Common
Stock”), of American Virtual Cloud Technologies, Inc., a Delaware corporation (the “Corporation”), according
to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a Person other than
the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. No fee will be charged to the Holders for any
conversion, except for any such transfer taxes.


 


Conversion calculations:


 


	 	Date to Effect Conversion: _____________________________________________
	 	 
	 	Number of shares of Preferred Stock owned prior to Conversion: _______________ 
	 	 
	 	Number of shares of Preferred Stock to be Converted: ________________________ 
	 	 
	 	Stated Value of shares of Preferred Stock to be Converted: ____________________ 
	 	 
	 	Number of shares of Common Stock to be Issued: ___________________________ 
	 	 
	 	Applicable Conversion Price:____________________________________________ 
	 	 
	 	Number of shares of Preferred Stock subsequent to Conversion: ________________ 
	 	 
	 	
    Address for Delivery: ______________________

    or

    DWAC Instructions:

    Broker no: _________

    Account no: ___________



 


	 	[HOLDER]
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title: