Exhibit
10.17


 


WAIVER,
CONSENT AND AMENDMENT TO CERTIFICATE OF DESIGNATIONS


 


This
WAIVER, CONSENT AND AMENDMENT TO CERTIFICATE OF DESIGNATIONS (this “Amendment”) is entered into as of February
16th, 2021 (the “Effective Date”), by and among the following:


 


(a)
Amergent Hospitality Group, Inc. a Delaware corporation (the “Company”); (b) Arena Special Opportunities Fund, LP,
a Delaware limited partnership (“Opportunities Fund”); and (c) Arena Origination Co., LLC, a Delaware limited liability
company (“Origination Co.” and collectively with “Opportunities Fund,” the “Arena Entities”).


 


RECITALS:


 


A.
The Arena Entities are holders of 100% of the Company’s Series 2 Convertible Preferred Stock (the “Preferred Stock”)
issued pursuant to the terms of that certain certificate of designation setting forth the powers, preference, rights, qualifications,
limitations and restrictions of such Preferred Stock as filed with the Delaware Secretary of State on April 1, 2020 and amended
on August 14, 2020 (as the same may from time to time be amended, restated or otherwise modified, the “Certificate of
Designations”).


 


B.
In accordance with Section 11(j) of the Certificate of Designations, the Company was required to make a true-up payment to the
Arena Entities on December 10, 2020.


 


C.
The Arena Entities orally agreed to waive the true-up payment date in anticipation of entering into this Amendment.


 


D.
The Company has requested that the Arena Entities agree to amend the Certificate of Designations to extend the requirement for
the true-up payment until April 1, 2021.


 


E.
The Arena Entities and the Company desire to amend the Certificate of Designations to modify certain provisions thereof in accordance
with, and subject to, the terms and conditions set forth herein.


 


AGREEMENT:


 


In
consideration of the premises and mutual covenants herein and for other valuable consideration, the Company and the Arena Entities
agree as follows:


 


Section
1. Definitions. Unless otherwise defined herein, each capitalized term used in this Amendment and not defined herein shall
be defined in accordance with the Certificate of Designations.


 


Section
2. Amendment. The Certificate of Designations is hereby amended and restated to read in its entirety as set forth on Appendix
1, attached hereto and incorporated herein by this reference.


 


Section
3. Expenses. The Company agrees to pay on demand all expenses of the Arena Entities (including, without limitation, the
fees and out-of-pocket expenses of Sheppard, Mullin, Richter & Hampton LLP, counsel to the Arena Entities) incurred in connection
with the negotiation, preparation, execution and delivery of this Amendment.


 


Section
4. Consent. Subject to the satisfactions of the conditions set forth in Section 5 below, the Arena Entities hereby consent
to the amendments to the Certificate of Designations set forth in this Amendment and the filing of an amendment as set forth in
Section 5(ii) below.


 


Section
5. Effectiveness. This Amendment shall be effective upon the satisfaction of the following conditions:


 


(i)
Amendment Executed. This Amendment shall have been executed by the Company and the Arena Entities.


 




    	 



    	 



    

 


(ii)
Filing of an Amendment to the Certificate of Designations. The Company shall have filed an amendment to the Certificate
of Designations with the Delaware Secretary of State.


 


(iii)
Segregated Cash Account. The Arena Entities shall receive written confirmation that the amount set forth in the Segregated
Cash Account is equal to $850,000.00.


 


Section
6. Miscellaneous.


 


6.1
Representations and Warranties. The Company, by signing below, hereby represents and warrants to each Arena Entity that:


 


(i)
the Company has the legal power and authority to execute and deliver this Amendment;


 


(ii)
the officer executing this Amendment on behalf of the Company has been duly authorized to execute and deliver the same and bind
the Company with respect to the provisions hereof;


 


(iii)
the execution and delivery hereof by the Company and the performance and observance by the Company of the provisions hereof do
not violate or conflict with the organizational documents of the Company or any law applicable to the Company or result in a breach
of any provision of or constitute a default under any other agreement, instrument or document binding upon or enforceable against
the Company;


 


(iv)
no Triggering Event exists under the Certificate of Designations, nor will any occur immediately after the execution and delivery
of this Amendment or by the performance or observance of any provision hereof;


 


(v)
the Segregated Cash Account is currently held in the name of Chanticleer SPE, LLC, a wholly owned subsidiary of the Company, is
segregated from all other assets of the Company free and clear of any liens, charges or encumbrances of the Company and has a
balance of $850,000.00 as of the date hereof; and


 


(vi)
this Amendment constitutes a valid and binding obligation of the Company in every respect, enforceable in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application
affecting the enforcement of creditors’ rights or by general principles of equity limiting the availability of equitable
remedies.


 


6.2
Certificate of Designations Unaffected. Each reference to the Certificate of Designations shall hereafter be construed
as a reference to the Certificate of Designations as amended hereby. Except as herein otherwise specifically provided, all provisions
of the Certificate of Designations shall remain in full force and effect and be unaffected hereby.


 


6.3
No Implied Amendment or Waiver. Except as expressly set forth in this Amendment, this Amendment shall not, by implication
or otherwise, limit, impair, constitute a waiver of or otherwise affect any rights or remedies of the Arena Entities under the
Certificate of Designations, or alter, modify, amend or in any way affect any of the terms, obligations or covenants contained
in the Certificate of Designations, which shall continue in full force and effect. Nothing in this Amendment shall be construed
to imply any willingness on the part of the Arena Entities to agree to or grant any similar or future amendment, consent or waiver
of any of the terms and conditions of the Certificate of Designations.


 




    	-2-



    	 



    

 


6.4
Entire Agreement. This Amendment, together with the Certificate of Designations integrate all the terms and conditions
mentioned herein or incidental hereto and supersede all oral representations and negotiations and prior writings with respect
to the subject matter hereof.


 


6.5
Counterparts This Amendment may be executed in any number of counterparts, by different parties hereto in separate counterparts
and by facsimile signature, each of which when so executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page of this Amendment
by e-mail (e.g., “pdf” or “tiff”) or fax transmission shall be effective as delivery of a manually executed
counterpart of this Amendment.


 


6.6
Release of Claims. To induce the Arena Entities to agree to the terms of this Amendment, the Company hereby (i) represents
and warrants that as of the date of this Amendment there are no claims or offsets against or defenses or counterclaims to its
obligations under the Certificate of Designations and waives any and all such claims, offsets, defenses, or counterclaims, whether
known or unknown, arising prior to the date of this Agreement and (ii) releases and forever discharges each Arena Entity, together
with their respective partners, managers, parents, subsidiaries, affiliates, employees, agents, attorneys, officers, and directors
(all of the foregoing hereinafter called the “Released Parties”), from any and all actions and causes of action,
judgments, executions, suits, debts, claims, demands, liabilities, obligations, damages and expenses of any and every character,
known or unknown, direct or indirect, at law or in equity, of whatsoever kind or nature, whether heretofore or hereafter
accruing, for or because of any matter or things done, omitted or suffered to be done by any of the Released Parties prior to
and including the date hereof to the extent in any way directly or indirectly arising out of or in any way connected to the Certificate
of Designations or the Arena Entities investment in the Company or its predecessor, (all of the foregoing hereinafter
called the “Released Matters”). The Company acknowledges that the agreements in this Section are intended to
cover and be in full satisfaction for all or any alleged injuries or damages arising in connection with the Released Matters herein
compromised and settled. The Company understands, acknowledges and agrees that the release set forth above may be pleaded as a
full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may
be instituted, prosecuted or attempted in breach of the provisions of such release. The Company agrees that no fact, event, circumstance,
evidence or transaction that could now be asserted or that may hereafter be discovered shall affect in any manner the final, absolute
and unconditional nature of the release set forth above.


 


6.7
Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED
IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.


 


[Signature
pages follow.]


 




    	-3-



    	 



    

 


IN
WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the date first above written.


 


	 	AMERGENT
    HOSPITALITY GROUP, INC.
	 	 	 
	 	By:	
	 	Name: 	Michael
    D. Pruitt
	 	Title:	February
    16, 2021


 




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SIGNATURE
PAGE TO CONSENT, WAIVER AND AMENDMENT TO CERTIFICATE OF DESIGNATIONS

 AMERGENT HOSPITALITY GROUP, INC.


(February
2021)


 


	 	ARENA
    SPECIAL OPPORTUNITIES FUND, LP
	 	 	 
	 	By:	
	 	Name: 	Lawrence
    Cutler
	 	Title:	Authorized
    Signatory
	 	 	 
	 	ARENA
    ORIGINATING CO., LLC
	 	 
	 	By:	
	 	Name:	Lawrence
    Cutler
	 	Title:	Authorized
    Signatory


 




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APPENDIX
1


 


AMERGENT
HOSPITALITY GROUP, INC.


 


SECOND
AMENDED AND RESTATED CERTIFICATE OF DESIGNATION OF


SERIES
2 CONVERTIBLE PREFERRED STOCK, SETTING FORTH THE POWERS, PREFERENCES, RIGHTS, QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS OF
SUCH SERIES OF PREFERRED STOCK


 


Pursuant
to Section 151 of the Delaware General Corporation Law (“DGCL”), Amergent Hospitality Group, Inc., a Delaware corporation
(the “Corporation”), DOES HEREBY CERTIFY:


 


The
Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”) confers upon the Board of Directors
of the Corporation (the “Board of Directors”) the authority to provide for the issuance of shares of preferred stock
in series and to establish the number of shares to be included in each such series and to fix the powers, preferences, rights,
qualifications, limitations and restrictions of the shares of each such series and any qualifications, limitations or restrictions
thereof. The Board of Directors previously adopted a resolution creating a series of preferred stock designated as the Series
2 Convertible Preferred Stock (“Series 2 Preferred Stock”), and the Certificate of Designations for the Series 2 Preferred
Stock was filed with the Secretary of State of the State of Delaware on April 1, 2020 and amended on August 14, 2020. On February
[  ], 2021, the Board of Directors approved and adopted the following resolution (this “Certificate of Designations”
or this “Certificate”) for purposes of amending certain provisions of the Series 2 Preferred Stock. On
February [  ], 2021, the holders of 100% of the shares of Series 2 Preferred Stock then outstanding (the “Requisite Series
2 Holders”), voting separately as a class, approved the following resolution to amend the Certificate of Designations
for the Series 2 Preferred Stock:


 


RESOLVED
that, pursuant to the authority vested in the Board of Directors in accordance with the provisions of the Certificate of Incorporation,
and in accordance with the provisions of the Certificate of Incorporation and the DGCL, the Certificate of Designations for the
Series 2 Preferred Stock shall, subject to approval of the Requisite Series 2 Holders, be amended and the designation and amount
thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such
series and the qualifications, limitations or restrictions thereof are as follows:


 






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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(e).


 


“Bankruptcy
Event” means any of the following events: (a) the Corporation or any Significant Subsidiary (as such term is defined
in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the
Corporation or any Significant Subsidiary thereof, (b) there is commenced against the Corporation or any Significant Subsidiary
thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Corporation or any Significant
Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding
is entered, (d) the Corporation or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for
it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e)
the Corporation or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Corporation
or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring
of its debts, or (g) the Corporation or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates
its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of
effecting any of the foregoing.


 


“Base
Conversion Price” shall have the meaning set forth in Section 7(b).


 


“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).


 




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“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise)
of in excess of 33% of the voting securities of the Corporation (other than by means of conversion or exercise of Preferred Stock
and the Securities issued together with the Preferred Stock), (b) the Corporation merges into or consolidates with any other Person,
or any Person merges into or consolidates with the Corporation and, after giving effect to such transaction, the stockholders
of the Corporation immediately prior to such transaction own less than 66% of the aggregate voting power of the Corporation or
the successor entity of such transaction, (c) the Corporation sells or transfers all or substantially all of its assets to another
Person and the stockholders of the Corporation immediately prior to such transaction own less than 66% of the aggregate voting
power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a one year period of
more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members
of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors
on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who
are members on the Original Issue Date), or (e) the execution by the Corporation of an agreement to which the Corporation is a
party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.


 


“Chanticleer
Conversion Shares” means any shares of Chanticleer Holdings Inc. held by the Original Holders as of the date of the
Original Closing Date.


 


“Closing
Date” means February 7, 2020.


 


“Closing
Price” means on any particular date (a) the last reported closing bid price per share of Common Stock on such date on
the Trading Market (as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), (b) if there is no such price on such date,
then the closing bid price on the Trading Market on the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15
p.m. (New York City time)), (c) if the Common Stock is not then listed or quoted on a Trading Market and if prices for the Common
Stock are then reported in the “pink sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d)
if the shares of Common Stock are not then publicly traded the fair market value as of such date of a share of Common Stock as
determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the shares then outstanding
and reasonably acceptable to the Corporation, the fees and expenses of which shall be paid by the Corporation. “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.


 




    	6



    	 



    

 


“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.


 


“Dilutive
Issuance” shall have the meaning set forth in Section 7(b).


 


“Dilutive
Issuance Notice” shall have the meaning set forth in Section 7(b).


 


“Equity
Conditions” means, during the period in question, (a) the Corporation shall have duly honored all conversions scheduled
to occur or occurring by virtue of one or more Notices of Conversion of the applicable Holder on or prior to the dates so requested
or required, if any, (b) the Corporation shall have paid all liquidated damages and other amounts owing to the applicable Holder
in respect of the Preferred Stock, (c)(i) there is an effective registration statement pursuant to which either (A) the Corporation
may issue Conversion Shares or (B) the Original Holders are permitted to utilize the prospectus thereunder to resell all of the
shares of Common Stock issuable pursuant to the Transaction Documents (and the Corporation believes, in good faith, that such
effectiveness will continue uninterrupted for the foreseeable future) or (ii) all of the Conversion Shares issuable pursuant to
the Transaction Documents (and shares issuable in lieu of cash payments of dividends) may be resold pursuant to Rule 144 without
volume or manner-of- sale restrictions or current public information requirements as determined by the counsel to the Corporation
as set forth in a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders
or (iii) all of the Conversion Shares may be issued to the Holder pursuant to Section 3(a)(9) of the Securities Act and immediately
resold without restriction, (d) the Common Stock is trading on a Trading Market and all of the shares issuable pursuant to the
Transaction Documents are listed or quoted for trading on such Trading Market (and the Corporation believes, in good faith, that
trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (e) there is a sufficient
number of authorized, but unissued and otherwise unreserved, shares of Common Stock for the issuance of all of the shares then
issuable pursuant to the Transaction Documents, (f) there is no existing Triggering Event and no existing event which, with the
passage of time or the giving of notice, would constitute a Triggering Event, (g) the issuance of the shares in question (or,
in the case of a redemption, the shares issuable upon conversion in full of the redemption amount) to the applicable Holder would
not violate the limitations set forth in Section 6(d) and Section 6(e) herein, (h) there has been no public announcement of a
pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated, (i) the applicable
Holder is not in possession of any information provided by the Corporation, any of its Subsidiaries, or any of their officers,
directors, employees, agents or Affiliates, that constitutes, or may constitute, material non-public information.


 




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


 


“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Corporation
pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Corporation
or a majority of the members of a committee of non-employee directors established for such purpose and (b) securities upon the
exercise or exchange of or conversion of any securities issued to the Holders and/or other securities exercisable or exchangeable
for or convertible into shares of Common Stock issued and outstanding on the Original Issue Date, provided that such securities
have not been amended since the Original Issue Date to increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of any such securities. “Fundamental Transaction” shall have the meaning
set forth in Section 7(e).


 


“GAAP”
means United States generally accepted accounting principles.


 


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


 


“Indebtedness”
means (a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred
in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Corporation’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 $50,000 due under leases required to be capitalized
in accordance with GAAP.


 


“Issuable
Maximum” shall have the meaning set forth in Section 6(e).


 


“Junior
Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities
which are explicitly senior or pari passu to the Preferred Stock in dividend rights or liquidation preference.


 


“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


 




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


 


“Material
Adverse Effect” means a material adverse effect on (a) the business, assets, property, operations, or condition (financial
or otherwise) of the Corporation, (b) the validity or enforceability of this Certificate of Designations or any of the other Transaction
Documents or (c) the rights or remedies of the Holder hereunder.


 


“New
York Courts” shall have the meaning set forth in Section 11(d).


 


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


 


“Original
Holders” means the Holders of the Preferred Stock as of the Second Amendment Filing Date”


 


“Original
Issue Date” means March 31, 2020.


 


“Permitted
Indebtedness” means the Indebtedness existing on the Original Issue Date and related to the restructuring of the Corporation’s
outstanding secured 8% debentures in the aggregate principal amount of $6,000,000.


 


Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Corporation)
have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Corporation’s
business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of the Corporation’s business, and which (x) do not individually or in the
aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of
the business of the Corporation and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings,
which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject
to such Lien, and (c) Liens incurred in connection with Permitted Indebtedness under clause (a) thereunder.


 


“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.


 




    	9



    	 



    

 


“Registration
Rights Agreement” means the Registration Rights Agreement dated March 31, 2020 by and among the Company, the Original
Holders and certain other holders of securities of the company.


 


“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale of the Conversion Shares issuable upon conversion of the Preferred Stock as provided for in the Registration
Rights Agreement.


 


“Securities”
means the Preferred Stock and the Underlying Shares.


 


“Second
Amendment Filing Date” means date this Second Amended and Restated Certificate of Designations is filed with the Delaware
Secretary of State.


 


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


 


“Segregated
Cash Account” means $850,000.00 of cash proceeds which is held is a segregated control account for the Original Holders
that is bankruptcy remote and not subject to any security interest of the Company.


 


“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.


 


“Subsidiary”
means any direct or indirect subsidiary of the Corporation formed or acquired after the date of the Closing Date.


 


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


 


“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 MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).


 


“Transaction
Documents” means this Certificate of Designation, the Registration Rights Agreement with the Original Holders, all exhibits
and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions consummated
on the Original Issue Date.


 


“Triggering
Event” shall have the meaning set forth in Section 10(a).


 




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“Triggering
Redemption Amount” means, for each share of Preferred Stock, 125% of the Stated Value.


 


“Triggering
Redemption Payment Date” shall have the meaning set forth in Section 10(b).


 


“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Preferred Stock in
accordance with the terms of this Certificate of Designation.


 


“Variable
Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A)
at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices
of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity 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 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 or (ii) enters into, or effects a transaction under, any agreement, including,
but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price. Any Purchaser
shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition
to any right to collect damages.


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX
as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common
Stock are then reported in the “Pink Sheets” published by OTC Markets, Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other
cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the
Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Corporation, the fees and
expenses of which shall be paid by the Corporation.


 


Section
2. Designation, Amount and Par Value. The series of preferred stock shall be designated as its Series 2 Convertible
Preferred Stock (the “Preferred Stock”) and the number of shares so designated shall be up to 787 (which shall
not be subject to increase without the written consent of all of the holders of the Preferred Stock (each, a “Holder”
and collectively, the “Holders”)). Each share of Preferred Stock shall have $0.0001 per share and a stated
value equal to $1,000, subject to increase set forth in Section 3 below (the “Stated Value”).


 




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Section
3. Dividends. Except as otherwise required by law, no dividends shall be declared or paid on the Preferred Stock. So
long as any Preferred Stock shall remain outstanding, neither the Corporation nor any Subsidiary thereof shall redeem, purchase
or otherwise acquire directly or indirectly any Junior Securities except as expressly permitted by Section 10. So long as any
Preferred Stock shall remain outstanding, neither the Corporation nor any Subsidiary thereof shall directly or indirectly pay
or declare any dividend or make any distribution upon nor shall any distribution be made in respect of, any Junior Securities
as long as any dividends due on the Preferred Stock remain unpaid, nor shall any monies be set aside for or applied to the purchase
or redemption (through a sinking fund or otherwise) of any Junior Securities or shares pari passu with the Preferred Stock.


 


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 approval
of the Holder, the Corporation will not, among other things, (i) sell all or substantially all of its assets, merge or consolidate
with another entity or voluntarily liquidate or dissolve the Corporation, (ii) alter or change the rights, preferences or privileges
of the Preferred Stock, (iii) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets
upon a Liquidation (as defined in Section 5) senior to, or otherwise pari passu with, the Preferred Stock, (iv) amend its
certificate of incorporation or other charter documents in any manner that adversely affects any rights of the Holder, (v) increase
the number of authorized shares of Preferred Stock, (vi) redeem any shares of capital stock of the Corporation (other than any
redemption of securities from officers or employees of the Corporation pursuant to existing contractual arrangements with such
officers or employees or in connection with the termination of their employment) or (vii) enter into any agreement with respect
to any of the foregoing.


 


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 an amount equal to the sum of (a) 125% of the aggregate Stated Value of the Preferred Stock
then outstanding (b) all liquidated damages and other amounts due in respect of the Preferred Stock and (iii) any Default
Interest and any other fees or liquidated damages then due and owing thereon under this Certificate of Designation, for each
share of Preferred Stock before any distribution or payment shall be made to the holders of any Junior Securities, and if the
assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the
Holders shall be ratably distributed among the Holders in accordance with the respective amounts that would be payable on
such shares if all amounts payable thereon were paid in full. The Corporation shall mail written notice of any such
Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.


 




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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) and Section 6(e)) 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 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 the lesser of (i) $1.00 (subject to adjustment
for forward and reverse stock splits, recapitalizations and the like) or (ii) 90% of the five day average VWAP of the Common Stock
(which period ends on the Trading Day prior to the Conversion Date), subject to adjustment herein (the “Conversion Price”);
provided, that if the amount calculated pursuant to the foregoing clause (ii) is less than $0.50 per share (subject to
adjustment for forward and reverse stock splits, recapitalizations and the like), then the Conversion Price shall be $0.50 (subject
to adjustment for forward and reverse stock splits, recapitalizations and the like). Notwithstanding the foregoing, no adjustment
pursuant to this Certificate of Designations shall cause the Conversion Price of the Preferred Stock to be less than $0.50 per
share (subject to adjustment for forward and reverse stock splits, recapitalizations and the like).


 






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c)
Mechanics of Conversion


 


i.
Delivery of Conversion Shares Upon Conversion. Not later than two (2) Trading Days after each Conversion Date (the “Share
Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the converting Holder 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. The Corporation shall deliver the Conversion Shares electronically through the Depository Trust Company
or another established clearing corporation performing similar functions.


 


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 Conversion
Notice.


 


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 or declare a Triggering Event pursuant to Section 10 hereof 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.


 




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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
and payment of dividends on the Preferred Stock, each 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 and payment of dividends hereunder. 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.


 


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 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 of a Holder, the Corporation shall within two Trading Days 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 Equity Sales. If, at any time while this Preferred Stock is outstanding, the Corporation or any Subsidiary,
as applicable sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues
(or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling
any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such
lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”)
(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 that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion
Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price and
only reduced to equal the Base Share Price and the number of Conversion Shares issuable hereunder shall be increased such that
the aggregate Conversion Price payable hereunder, after taking into account the decrease in the Conversion Price, shall be equal
to the aggregate Conversion Price prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common
Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 7(b) in respect of
an Exempt Issuance. If the Corporation enters into a Variable Rate Transaction, despite the prohibition set forth herein, the
Corporation shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion price at
which such securities may be converted or exercised. The Corporation shall notify the Holders in writing, no later than the Trading
Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 7(b), indicating therein the
applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the
“Dilutive Issuance Notice”). For purposes of clarification, whether or not the Corporation provides a Dilutive
Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive
a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless
of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion.


 




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c)
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).


 


d)
Pro Rata Distributions. During such time as this Preferred Stock is outstanding, if the Corporation shall declare or make
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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e)
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) and Section 6(e) 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) and Section 6(e) 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 and the other Transaction Documents in accordance with the provisions of this Section 7(e) 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 of this Preferred Stock, 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 and the other Transaction Documents 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 and the other Transaction Documents with the same effect as if such Successor Entity had
been named as the Corporation herein.


 




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f)
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.


 


g)
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 twenty (20) 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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Section
8. Intentionally Omitted.


 


Section
9. Negative Covenants. As long as any shares of Preferred Stock are outstanding, unless the holders of the then
outstanding shares of Preferred Stock shall have otherwise given prior written consent, the Corporation shall not, and shall not
permit any of the Subsidiaries to, directly or indirectly:


 


a)
other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed
money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or
hereafter acquired or any interest therein or any income or profits therefrom;


 


b)
other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to
any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;


 


c)
amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder;


 


d)
repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common
Stock, Common Stock Equivalents or Junior Securities, other than as to (i) the Conversion Shares and (ii) repurchases of Common
Stock or Common Stock Equivalents of departing officers and directors of the Corporation, provided that such repurchases shall
not exceed an aggregate of $100,000 for all officers and directors for so long as the Preferred Stock is outstanding;


 


e)
pay cash dividends or distributions on Junior Securities of the Corporation;


 


f)
enter into any transaction with any Affiliate of the Corporation which would be required to be disclosed in any public filing
with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the
disinterested directors of the Corporation (even if less than a quorum otherwise required for board approval); or


 


g)
enter into any agreement with respect to any of the foregoing.



 




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Section
10. Redemption Upon Triggering Events.


 


a)
“Triggering Event” means, wherever used herein any of the following events (whatever the reason for such event
and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or
order of any court, or any order, rule or regulation of any administrative or governmental body):


 


i.
if the Corporation fails to provide at all times after the effective date the Registration Statement or usable prospectus that
permits the Corporation to issue the Conversion Shares or which allows the Original Holder to sell the Conversion Shares pursuant
thereto, subject to a grace period of 20 calendar days in the aggregate in any 365-day period or the Corporation cannot issue
the Conversion Shares pursuant to Section 3(a)(9) of the Securities Act;


 


ii.
the Corporation shall fail to deliver Conversion Shares issuable upon a conversion hereunder that comply with the provisions hereof
prior to the fifth Trading Day after such shares are required to be delivered hereunder, or the Corporation shall provide written
notice to any Holder, including by way of public announcement, at any time, of its intention not to comply with requests for conversion
of any shares of Preferred Stock in accordance with the terms hereof;


 


iii.
the Corporation shall fail for any reason to pay in full the amount of cash due pursuant to a Buy-In within five calendar days
after notice therefor is delivered hereunder;


 


iv.
the Corporation shall fail to have available a sufficient number of authorized and unreserved shares of Common Stock to issue
to such Holder upon a conversion hereunder;


 


v.
unless specifically addressed elsewhere in this Certificate of Designation as a Triggering Event, the Corporation shall fail to
observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach of the Transaction Documents,
and such failure or breach shall not, if subject to the possibility of a cure by the Corporation, have been cured within 30 calendar
days after the date on which written notice of such failure or breach shall have been delivered;


 


vi.
the Corporation shall redeem more than a de minimis number of Junior Securities other than as to repurchases of Common
Stock or Common Stock Equivalents from departing officers and directors, provided that, while any of the Preferred Stock remains
outstanding, such repurchases shall not exceed an aggregate of $100,000 from all officers and directors;


 


vii.
the Corporation shall be party to a Change of Control Transaction;


 


viii.
there shall have occurred a Bankruptcy Event;


 


ix.
the Corporation experiences a Material Adverse Effect;


 




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x.
the Common Stock shall fail to be listed or quoted for trading on a Trading Market for more than five Trading Days, which need
not be consecutive Trading Days;


 


xi.
any monetary judgment, writ or similar final process shall be entered or filed against the Corporation, any subsidiary or any
of their respective property or other assets for more than $100,000, and such judgment, writ or similar final process shall remain
unvacated, unbonded or unstayed for a period of 45 calendar days;


 


xii.
any representation or warranty made in this Certificate of Designations,, any other Transaction Documents, any written statement
pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other
Holder shall be untrue or incorrect in any material respect as of the date when made or deemed made;


 


xiii.
the electronic transfer by the Corporation of shares of Common Stock through the Depository Trust Company or another established
clearing corporation is no longer available or is subject to a “chill”;


 


xiv.
the Corporation fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that
it is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable);


 


xv.
the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of or damage to, any property of the Corporation
or any Subsidiary having an aggregate fair value or repair cost (as the case may be) in excess of $100,000 individually or in
the aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged within forty-five (45) days
after the date thereof;


 


xvi.
enter into a Variable Rate Transaction;



 


xvii.
any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose, or any actual transmittal,
conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material non-public information concerning
the Borrower, to the Holder or its successors and assigns, which is not immediately cured by Borrower’s filing of a Form
8-K pursuant to Regulation FD on that same date;


 


xviii.
If, at any time on or after the date which is six (6) months after the Original Issue Date, the Holder is unable to (i)
obtain a standard “144 legal opinion letter” from an attorney reasonably acceptable to the Holder, the
Holder’s brokerage firm (and respective clearing firm), and the Borrower’s transfer agent in order to facilitate
the Holder’s conversion of any portion of the Note into free trading shares of the Borrower’s Common Stock
pursuant to Rule 144, and/or (ii) thereupon deposit such shares into the Holder’s brokerage account;


 




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xix.
if either (a) the effectiveness of the Registration Statement lapses for any reason or (b) the Holder shall not be permitted to
resell Registrable Securities (as defined in the Registration Rights Agreement) under the Registration Statement for a period
of more than 20 consecutive Trading Days or 30 non-consecutive Trading Days during any 12 month period; provided, however,
that if the Corporation is negotiating a merger, consolidation, acquisition or sale of all or substantially all of its assets
or a similar transaction and, in the written opinion of counsel to the Corporation, the Registration Statement would be required
to be amended to include information concerning such pending transaction(s) or the parties thereto which information is not available
or may not be publicly disclosed at the time, the Corporation shall be permitted an additional 10 consecutive Trading Days during
any 12 month period pursuant to this Section;


 


xxi.
the Corporation fails to pay the True Up Amount when due;


 


b)
Upon the occurrence of a Triggering Event, the Holder shall (in addition to all other rights it may have hereunder or under
applicable law) have the right, exercisable at the sole option of such Holder, to require the Corporation to redeem all of
the Preferred Stock then held by such Holder for a redemption price, equal the Triggering Redemption Amount. The Triggering
Redemption Amount, shall be due and payable within three Trading Days of the date on which the notice for the payment
therefor is provided by a Holder (the “Triggering Redemption Payment Date”). If the Company shall fail for
any reason to pay in full the Triggering Redemption Amount hereunder on the date such amount is due in accordance with this
Section then, in addition to Holder’s other available remedies, the Company shall pay to the Holder, in cash, as
partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to, among other
things, sell the Securities, an amount in cash equal to ten percent (10.0%) of the aggregate Stated Value of such
Holder’s Preferred Stock on the first Business Day after the Triggering Redemption Payment Date and on every thirtieth
(30th) day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (a) the date
such Triggering Redemption Amount, plus all such interest thereon, is paid in full. In addition, if the Corporation fails to
pay in full the Triggering Redemption Amount and all other amounts set forth in this Section hereunder on the date such
amount is due in accordance with this Section, the Corporation will pay interest thereon at a rate equal to the lesser of 18%
per annum or the maximum rate permitted by applicable law, accruing daily from such date until the Triggering Redemption
Amount, plus all such interest and liquidated damages thereon, is paid in full. For purposes of this Section, a share of
Preferred Stock is outstanding until such date as the applicable Holder shall have received Conversion Shares upon a
conversion (or attempted conversion) thereof that meets the requirements hereof or has been paid the Triggering Redemption
Amount in cash.


 




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Section
11. 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 sent by a nationally recognized
overnight courier service, addressed to the Corporation, at the address set forth above Attention: Chief Financial Officer,
facsimile number 704- 366-2463, or such other facsimile number or address as the Corporation may specify for such purposes by
notice to the Holders delivered in accordance with this Section 11. Any and all notices or other communications or deliveries
to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally
recognized overnight courier service addressed to each Holder at the facsimile number or address of such Holder appearing on the
books of the Corporation, or if no such facsimile number or address appears on the books of the Corporation, at the principal
place of business of such Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number
set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number 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, accrued dividends and
accrued interest, 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. Each party agrees that all legal proceedings concerning the interpretation,
enforcement and defense of the transactions contemplated by any of the Transaction Documents (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”). Each party hereto
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 (including with respect to the enforcement
of any of the Transaction Documents), 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. Each party 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. Each party 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 any party
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, an Original Holder or a Holder (if not an Original 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,
the Original Holders or a Holder (if not an Original 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, the Original Holders or a Holder (if not an Original 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.


 




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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 Class 2 Preferred Stock.


 


j)
True-Up.



 


 i. In the event that the proceeds received by the Original Holders from the sale of all the Preferred Stock, Conversion Shares, shares of the Common Stock of the Corporation received by the Original Holders in connection with the spinoff of the Corporation from Sonnet Biotherapeutics Holdings, Inc. (f/k/a Chanticleer Holdings, Inc.) (the “Spinoff Shares”) and the proceeds of the Chanticleer Conversion Shares do not equal at least $1,875,000 on April 1, 2021 (the “True-Up Payment Date”), the Corporation shall pay the Holder an amount in cash (the “True-Up Payment”) equal to $1,875,000 less the proceeds previously realized by the Original Holders from the sale of the Preferred Stock, the Conversion Shares, the Spinoff Shares and Chanticleer Conversion Shares, net of brokerage commissions and any other fees incurred by Holder in connection with the sale of any Conversion Shares (“Net Proceeds”). For purposes of clarity, Net Proceeds shall not include any proceeds received by the Original Holders upon the receipt of any shares of Common Stock of the Corporation issued upon exercise of warrants of the Corporation held by the Original Holders or any shares of Common Stock of the Corporation held or acquired by Original Holders which are not Spinoff Shares.



 


ii.
The True-Up Payment will be paid by Corporation out of either (i) the proceeds from the exercise by Corporation of existing
warrants to purchase shares of the common stock of Sonnet Biotherapeutics Holdings, Inc. (f/k/a Chanticleer Holdings, Inc.)
held by Corporation or (ii) the Segregated Cash Account. If any portion of the True-Up Payment has not been paid by
Corporation, on the True-Up Payment Date, interest shall accrue on such unpaid amount until such amount is paid in full at a
rate equal to the lesser of (i) 18% per annum or (ii) the maximum rate permitted by applicable law. Upon payment in full of
the True-Up Payment and all unpaid liquidated damages and other amounts due in respect of the Preferred Stock, any portion of
the Segregated Cash Account not used to pay the True-Up Payment will be transferred to the Corporation and any remaining
outstanding shares of Preferred Stock held by the Original Holders will be cancelled with no further obligations of the
Corporation to the Original Holders thereunder, without any further action on behalf of the Corporation, Original Holders or
the Holders.


 


 iii. The Segregated Cash Account will be maintained until the True-Up Payment is paid in full.



 




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IN
WITNESS WHEREOF, the undersigned has executed this Certificate on February [  ], 2021.


 


	 	AMERGENT HOSPITALITY GROUP, INC.
	 	 	 
	 	By:	 
	 	Name: 	Michael
    D. Pruitt
	 	Title:	Chief
    Executive Officer


 




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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 2 Convertible Preferred Stock indicated below into shares
of common stock, par value $0.0001 per share (the “Common Stock”), of Amergent Hospitality Group 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 and is delivering herewith such certificates and opinions as may be required under applicable laws.
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:	 


 




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