Exhibit 4.1


 







ATOSSA GENETICS INC.


 


CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES B CONVERTIBLE PREFERRED STOCK


 


PURSUANT TO SECTION 151 OF THE

DELAWARE GENERAL CORPORATION LAW


 


The undersigned, Steven C. Quay and Kyle
Guse, do hereby certify that:


 


1.          They are the President and Secretary, respectively, of Atossa Genetics Inc., a Delaware corporation (the “Corporation”).


 


2.          The Corporation is authorized to issue 10,000,000 shares of preferred stock, 3,502 of which have been issued and none of
which are outstanding.


 


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


 


WHEREAS, the certificate of incorporation
of the Corporation provides for a class of its authorized stock known as preferred stock, consisting of 10,000,000 shares, $0.001
par value per share, issuable from time to time in one or more series;


 


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


 


WHEREAS, it is the desire of the Board of
Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other matters relating to a
series of the preferred stock, which shall consist of 20,000 shares of the preferred stock which the Corporation has the authority
to issue, as follows:


 


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


 






     


    


    

 


TERMS OF PREFERRED STOCK


 


SECTION
1      DEFINITIONS.
For the purposes hereof, the following terms shall have the following meanings:


 


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


 


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


 


“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).


 


“Closing” means the closing
of the purchase and sale of the Securities pursuant to the Dealer-Manager Agreement.


 


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


 


“Common Stock” means
the Corporation’s common stock, par value $0.18 per share, and stock of any other class of securities into which such securities
may hereafter be reclassified or changed.


 


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


 


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


 


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


 


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


 


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


 


“Dealer-Manager Agreement”
means the dealer-manager agreement dated [●], 2018, between the Corporation and Maxim Group LLC.


 


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


 






    2 


    


    

 


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


 


“Holders” shall mean
holders of the Preferred Stock (each, a “Holder” and collectively, the “Holders”).


 


“Junior Securities” means
the Common Stock and all other Common Stock Equivalents of the Corporation other than (1) those securities which are explicitly
senior or pari passu to the Preferred Stock in dividend rights or liquidation preference and (2) the Warrants.


 


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


 


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


 


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


 


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


 


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


 


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


 


“Securities” means the
Preferred Stock, the Warrants, the Warrant Shares and the Underlying Shares.


 


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


 


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


 


“Stated Value” shall
have the meaning set forth in Section 2.


 


“Subscription Rights Certificate”
shall mean, as to each Holder, the subscription rights certificate completed by such Holder and countersigned by Broadridge Corporate
Issuer Solutions, Inc.


 


“Subsidiary” means any
direct or indirect subsidiary of the Corporation.


 


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


 


“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 or the New York Stock Exchange,
OTCQB or OTCQX (or any successors to any of the foregoing).


 






    3 


    


    

 


“Transaction Documents”
means this Certificate of Designation, the Dealer-Manager Agreement, the Warrant Agreement, the Warrants, all exhibits and schedules
thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated therein.


 


“Transfer Agent” means
VStock Transfer, LLC, the current transfer agent of the Corporation, and any successor transfer agent of the Corporation.


 


“Underlying Shares” means
the shares of Common Stock issued and issuable upon conversion of the Preferred Stock and upon exercise of the Warrants.


 


“Warrant Agreement” means
the warrant agency agreement dated on or about [●], 2018, between the Corporation and VStock Transfer, LLC.


 


“Warrants” means, collectively,
the Common Stock purchase warrants delivered to the Holder at the Closing in accordance with the Warrant Agreement, which Warrants
shall be exercisable upon issuance and have a term of exercise equal to four years from the Closing Date, in the form of Exhibit
A attached to the Warrant Agreement.


 


“Warrant Shares” means
the shares of Common Stock issuable upon exercise of the Warrants.


 


SECTION
2      DESIGNATION,
AMOUNT AND PAR VALUE. The series of preferred stock shall be designated as its Series B Convertible Preferred Stock (the “Preferred
Stock”) and the number of shares so designated shall be 20,000. Each share of Preferred Stock shall have a par value
of $0.001 per share and a stated value equal to $1,000 (the “Stated Value”).


 


SECTION
3      DIVIDENDS.
Except for stock dividends or distributions for which adjustments are to be made pursuant to Section 7, the Holders shall be entitled
to receive, and the Corporation shall pay, dividends on shares of Preferred Stock equal (on an as-if-converted-to-Common-Stock
basis, disregarding for such purposes any conversion limitations hereunder) to and in the same form as dividends actually paid
on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends shall be
paid on shares of Preferred Stock, subject to and in accordance with Section 7 below.


 


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


 






    4 


    


    

 


SECTION
5      LIQUIDATION.
Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”),
the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation the same amount that
a holder of Common Stock would receive if the Preferred Stock were fully converted (disregarding for such purpose any conversion
limitations hereunder) to Common Stock, which amounts shall be paid pari passu with all holders of Common Stock. A Fundamental
Transaction shall not be deemed a Liquidation. 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.


 


SECTION
6      CONVERSION.


 


(a)          Optional Conversion. 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 or at any time and from time to time on or after the
first anniversary of the Original Issue Date at the option of the Corporation, into that number of shares of Common Stock (subject
in each case to the limitations set forth in Section 6(d)) determined by dividing the Stated Value of such share of Preferred Stock
by the Conversion Price. Holders shall effect conversions by providing the Corporation with the form of conversion notice attached
hereto as Annex A (a “Notice of Conversion”). Each Notice of Conversion shall specify the number of shares
of Preferred Stock to be converted, the number of shares of Preferred Stock owned prior to the conversion at issue, the number
of shares of Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected,
which date may not be prior to the date the applicable Holder delivers by facsimile such Notice of Conversion to the Corporation
(such date or the date the Corporation effects an optional conversion, 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 $3.52, subject to adjustment
herein (the “Conversion Price”).


 


(c)          Mechanics of Conversion


 


(i)          Delivery of Conversion Shares Upon Conversion. Not later than the earlier of (x) two (2) Trading Days after
each Conversion Date and (y) the number of Trading Days comprising the Standard Settlement Period (as defined below) (the “Share
Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the converting Holder (A) the number of
Conversion Shares being acquired upon the conversion of the Preferred Stock, which Conversion Shares shall be free of restrictive
legends and trading restrictions if there is an effective registration statement or an exemption from registration under the Securities
Act, and (B) a bank check in the amount of accrued and unpaid dividends (if the Corporation is required to pay accrued dividends
in cash). The Corporation shall deliver the Conversion Shares electronically through the Depository Trust Company or another established
clearing corporation performing similar functions. As used herein, “Standard Settlement Period” means the standard
settlement period, expressed in a number of Trading Days, on the Corporation’s primary Trading Market with respect to the
Common Stock as in effect on the date of delivery of the Notice of Conversion.


 






    5 


    


    

 


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


 


(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 anyone associated or affiliated with such Holder has been engaged
in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining
and/or enjoining conversion of all or part of the Preferred Stock of such Holder shall have been sought and obtained, and the Corporation
posts a surety bond for the benefit of such Holder in the amount of 150% of the Stated Value of Preferred Stock which is subject
to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and
the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of such injunction, the
Corporation shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion. If the Corporation fails
to deliver to a Holder such Conversion Shares pursuant to Section 6(c)(i) by the Share Delivery Date applicable to such conversion,
the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $5,000 of Stated Value
of Preferred Stock being converted, $50 per Trading Day (increasing to $100 per Trading Day on the third Trading Day and increasing
to $200 per Trading Day on the sixth Trading Day after such damages begin to accrue) for each Trading Day after the Share Delivery
Date until such Conversion Shares are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s
right to pursue actual damages for the Corporation’s failure to deliver Conversion Shares within the period specified herein
and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit a Holder from seeking
to enforce damages pursuant to any other Section hereof or under applicable law.


 






    6 


    


    

 


(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.


 






    7 


    


    

 


(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 (subject to the terms and conditions set forth in the Warrant
Agreement) 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.


 






    8 


    


    

 


(d)          Beneficial Ownership Limitation. The Corporation shall not effect any conversion of the Preferred Stock, and
a Holder shall not have the right to convert any portion of the Preferred Stock, to the extent that, after giving effect to the
conversion set forth on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any
Persons acting as a group together with such Holder or any of such Holder’s Affiliates (such persons, “Attribution
Parties”)) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates and Attribution Parties
shall include the number of shares of Common Stock issuable upon conversion of the Preferred Stock with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining,
unconverted Stated Value of Preferred Stock beneficially owned by such Holder or any of its Affiliates or Attribution Parties and
(ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation subject to a limitation
on conversion or exercise analogous to the limitation contained herein (including, without limitation, the Preferred Stock or the
Warrants) beneficially owned by such Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding
sentence, for purposes of this Section 6(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 6(d) applies,
the determination of whether the Preferred Stock is convertible (in relation to other securities owned by such Holder together
with any Affiliates and Attribution Parties) and of how many shares of Preferred Stock are convertible shall be in the sole discretion
of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder’s determination of whether
the shares of Preferred Stock may be converted (in relation to other securities owned by such Holder together with any Affiliates
and Attribution Parties) and how many shares of the Preferred Stock are convertible, in each case subject to the Beneficial Ownership
Limitation. To ensure compliance with this restriction, each Holder will be deemed to represent to the Corporation each time it
delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and
the Corporation shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination
as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. For purposes of this Section 6(d), in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i)
the Corporation’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent
public announcement by the Corporation or (iii) a more recent written notice by the Corporation or the Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the written or oral request (which may be via email) of a Holder, the Corporation
shall within 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 4.99% 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 not less than 61 days’
prior 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 or decrease 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.


 






    9 


    


    

 


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 that is 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)          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).


 






    10 


    


    

 


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


 






    11 


    


    

 


(d)          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.


 


(e)          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 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 to each Holder at its last 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.


 






    12 


    


    

 


SECTION
8      MISCELLANEOUS.


 


(a)          Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder
including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile or email, 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 (206) 430-1228, or e-mail to kyle.guse@atossagenetics.com, or such other facsimile number,
e-mail or address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section
8. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and
delivered personally, by 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, as set forth in such Holder’s
Subscription Rights Certificate. 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
or e-mail at the e-mail address 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 or e-mail
at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time)
on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.


 


(b)          Absolute Obligation. Except as expressly provided herein, no provision of this Certificate of Designation
shall alter or impair the obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, 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.


 



    13 


    


    




 


(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.


 


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


 






    14 


    


    

 


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


 


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


 


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


 


(i)           Status of Converted or Redeemed Preferred Stock. Shares of Preferred Stock may only be issued pursuant to
the Dealer-Manager Agreement. If any shares of Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such
shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series
B Convertible Preferred Stock.


 


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


 






    15 


    


    

 


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


 


IN WITNESS WHEREOF, the undersigned
have executed this Certificate this [●]th day of [●], 2018.


 


 


	
        

         
	 	
        

         

	Name:	Steven C. Quay	 	Name:	Kyle Guse
	 	 	 	 	 
	Title:	President	 	Title:	Secretary


 






     


    


    

 


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 B Convertible Preferred Stock indicated below into shares of common stock, par value $0.18 per share
(the “Common Stock”), of Atossa Genetics 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 by the Corporation in accordance with the Dealer-Manager Agreement. 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: