Document:

RIGHTS AGREEMENT

 

between

 

ATOSSA GENETICS INC.,

 

and

 

VStock
Transfer, LLC,

 

as Rights Agent,

 

Dated as of May 19, 2014

  

 

 

    	 

    	 

    

 

TABLE OF CONTENTS

 

	 	 	Page
	 	 	 
	Section 1.	Certain
    Definitions	1
	 	 	 
	Section 2.	Appointment
    of the Rights Agent	6
	 	 	 
	Section 3.	Issuance
    of Rights Certificates	7
	 	 	 
	Section 4.	Form
    of Rights Certificates	9
	 	 	 
	Section 5.	Countersignature
    and Registration	9
	 	 	 
	Section 6.	Transfer,
    Split-Up, Combination, and Exchange of Rights Certificates; Mutilated, Destroyed, Lost, or Stolen Rights Certificates	10
	 	 	 
	Section 7.	Exercise
    of Rights; Purchase Price; Expiration Date of Rights	10
	 	 	 
	Section 8.	Cancellation
    and Destruction of Rights Certificates	12
	 	 	 
	Section 9.	Reservation
    and Availability of Capital Stock	13
	 	 	 
	Section 10.	Preferred
    Shares Record Date	14
	 	 	 
	Section 11.	Adjustment
    of Purchase Price, Number and Kind of Shares, or Number of Rights	14
	 	 	 
	Section 12.	Certificate
    of Adjusted Purchase Price or Number of Shares	22
	 	 	 
	Section 13.	Consolidation,
    Merger, or Sale or Transfer of Assets or Earning Power	22
	 	 	 
	Section 14.	Fractional
    Rights and Fractional Shares	24
	 	 	 
	Section 15.	Rights
    of Action	26
	 	 	 
	Section 16.	Agreement
    of Rights Holders	26
	 	 	 
	Section 17.	Rights
    Certificate Holder Not Deemed a Stockholder	27
	 	 	 
	Section 18.	Concerning
    the Rights Agent	27
	 	 	 
	Section 19.	Merger
    or Consolidation or Change of Name of the Rights Agent	27
	 	 	 
	Section 20.	Duties
    of the Rights Agent	28

 

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	 	 	Page
	 	 	 
	Section 21.	Change of
    the Rights Agent	30
	 	 	 
	Section 22.	Issuance of
    New Rights Certificates	31
	 	 	 
	Section 23.	Redemption
    and Termination	31
	 	 	 
	Section 24.	Exchange of
    Rights	32
	 	 	 
	Section 25.	Notice of
    Certain Events	33
	 	 	 
	Section 26.	Notices	34
	 	 	 
	Section 27.	Supplements
    and Amendments	35
	 	 	 
	Section 28.	Successors	35
	 	 	 
	Section 29.	Determinations
    and Actions by the Board of Directors	35
	 	 	 
	Section 30.	Benefits of
    this Agreement	35
	 	 	 
	Section 31.	Severability	36
	 	 	 
	Section 32.	Governing
    Law	36
	 	 	 
	Section 33.	Counterparts;
    Facsimiles and PDFs	36
	 	 	 
	Section 34.	Descriptive
    Headings	36

 

	Exhibit A	Form of Certificate of Designation, Preferences, and Rights
	Exhibit B	Form of Rights Certificate
	Exhibit C	Form of Summary of Rights to Purchase Preferred Stock

 

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RIGHTS AGREEMENT

 

RIGHTS
AGREEMENT, dated as of May 19, 2014 (this “Agreement”), between Atossa Genetics Inc., a Delaware corporation
(the “Company”), and VStock Transfer LLC, a California limited liability company (the “Rights
Agent”).

 

RECITAL

 

WHEREAS,
on May 19, 2014 (the “Rights Dividend Declaration Date”), the Board of Directors of the Company authorized and
declared a dividend distribution of one right (each, a “Right”) for each Common Share (as hereinafter defined)
outstanding at the Close of Business (as hereinafter defined) on May 26, 2014 (the “Record Date”), and
further authorized and directed the issuance of one Right (as such number may hereinafter be adjusted pursuant hereto) with respect
to each Common Share issued between the Record Date (whether originally issued or delivered from the Company’s treasury)
and, except as otherwise provided in Section 22, the earlier of the Distribution Date and the Expiration Date (as such terms
are hereinafter defined), each Right initially representing the right to purchase one one-hundredth of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions hereinafter set forth.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:

 

Section 1. Certain Definitions.
For purposes of this Agreement, the following terms have the meanings indicated:

 

(a)          “Acquiring
Person” shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding, but shall not include an Exempt Person. Notwithstanding
the foregoing:

 

(i)          any
Person who becomes the Beneficial Owner of 15% or more of the Common Shares then outstanding as a result of a reduction in the
number of Common Shares outstanding due to the repurchase of Common Shares by the Company shall not be deemed an “Acquiring
Person” unless and until such Person acquires Beneficial Ownership of any additional Common Shares (other than as a result
of a stock dividend, stock split, or similar transaction effected by the Company in which all registered holders of Common Shares
are treated substantially equally) while the Beneficial Owner of 15% or more of the Common Shares then outstanding; and

 

(ii)         if
the Board of Directors of the Company determines in good faith that a Person who would otherwise be an Acquiring Person has become
such inadvertently (including, without limitation, because (A) such Person was unaware that it Beneficially Owned a percentage
of Common Shares that would otherwise cause such Person to be an Acquiring Person or (B) such Person was aware of the extent
of its Beneficial Ownership of Common Shares but had no actual knowledge of the consequences of such Beneficial Ownership under
this Agreement and had no intention of changing or influencing control of the Company), and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person is no longer the Beneficial Owner of 15% or more of the Common
Shares then outstanding, then such Person shall not be deemed to be or ever to have been an “Acquiring Person” for
any purposes of this Agreement as a result of such inadvertent acquisition; and

 

    	 

    	 

    

 

(iii)        if
a Person would otherwise be deemed an “Acquiring Person” upon the execution of this Agreement, such Person (herein
referred to as a “Grandfathered Stockholder”) shall not be deemed an “Acquiring Person” for purposes
of this Agreement unless and until, subject to Section 1(a)(i) and Section 1(a)(ii) above, such Grandfathered Stockholder
acquires Beneficial Ownership of additional Common Shares representing 2.0% of the Common Shares then outstanding (other than as
provided below or as a result of a stock dividend, stock split, or similar transaction effected by the Company in which all registered
holders of Common Shares are treated substantially equally) after execution of this Agreement and while the Beneficial Owner of
15% or more of the Common Shares then outstanding, in which case such Person shall no longer be deemed a Grandfathered Stockholder
and shall be deemed an “Acquiring Person”; provided, however, that any Common Shares or options, rights
or other securities convertible into Common Shares acquired by a Grandfathered Stockholder pursuant to any employee benefit plan
of the Company or of any Subsidiary of the Company shall not be included in the calculation of additional Common Shares acquired
by a Grandfathered Stockholder.

 

(b)          “Act”
shall mean the Securities Act of 1933, as amended.

 

(c)          “Adjustment
Shares” shall have the meaning set forth in Section 11(a)(ii) hereof.

 

(d)          “Affiliate”
and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act as in effect on the date of this Agreement.

 

(e)          “Agreement”
shall have the meaning set forth in the preamble hereto.

 

(f)            A
Person shall be deemed the “Beneficial Owner” of, shall be deemed to have “Beneficial Ownership”
of, and shall be deemed to “beneficially own,” any securities:

 

(i)          which
such Person or any of such Person’s Affiliates or Associates beneficially owns, directly or indirectly (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement);

 

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(ii)         which
such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement, or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants, or options, or otherwise; provided,
however, that a Person shall not be deemed the “Beneficial Owner” of, to have “Beneficial Ownership”
of, or to “beneficially own,” (A) securities tendered pursuant to a tender offer or exchange offer made by or
on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for
purchase or exchange, (B) securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering
Event (as hereinafter defined), or (C) securities issuable upon exercise of Rights from and after the occurrence of a Triggering
Event, which Rights were acquired by such Person or any of such Person’s Affiliates or Associates prior to the Distribution
Date or pursuant to Section 3(a) or Section 22 hereof (the “Original Rights”) or pursuant to
Section 11(i) or Section 11(p) hereof in connection with an adjustment made with respect to any Original Rights;

 

(iii)        which
such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to vote or dispose
of, including pursuant to any agreement, arrangement, or understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the “Beneficial Owner” of, to have “Beneficial Ownership” of, or to “beneficially
own,” any security as a result of an agreement, arrangement, or understanding (whether or not in writing) to vote such security
if such agreement, arrangement, or understanding: (A) arises solely from a revocable proxy (as such term is defined in Regulation 14A
under the Exchange Act) given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the Exchange Act, including the disclosure requirements of Schedule 14A
thereunder, and (B) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable
or successor report); or

 

(iv)        which
are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person’s Affiliates or Associates) has any agreement, arrangement, or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to Section 1(f)(iii)),
or disposing of any voting securities of the Company;

 

provided,
however, that nothing in this Section 1(f) shall cause a Person engaged in business as an underwriter of securities
to be the “Beneficial Owner” of, to have “Beneficial Ownership” of, or to “beneficially own,”
any securities acquired or which such Person has the right to acquire through such Person’s participation in good faith in
a firm commitment underwriting until the expiration of 40 days after the date of such acquisition, and then only if such securities
continue to be owned by such Person at such expiration of 40 days; and provided further, however, that any
stockholder of the Company, with Affiliate(s), Associate(s), or other Person(s) who may be deemed representatives of it serving
as director(s) of the Company, shall not be deemed to beneficially own securities held by such other Persons serving as director(s)
of the Company to the extent such securities were issued by the Company to such director(s) in the ordinary course of business
as compensation for their services as director(s) of the Company.

 

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(g)          “Business
Day” shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to close.

 

(h)          “Certificate
of Incorporation” shall mean the Company’s Amended and Restated Certificate of Incorporation, as such may be amended,
modified, or restated from time to time.

 

(i)          “Close
of Business” on any given date shall mean 5:00 p.m., New York, New York time, on such date; provided, however,
that, if such date is not a Business Day, it shall mean 5:00 p.m., New York, New York time, on the next succeeding
Business Day.

 

(j)          “Common
Shares” shall mean the shares of common stock, par value $0.001 per share, of the Company, except that “Common
Shares” when used with reference to any Person other than the Company shall mean the capital stock of such Person with
the greatest voting power, or the equity securities or other equity interests having power to control or direct the management
of such Person.

 

(k)          “Common
Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(l)          “Company”
shall have the meaning set forth in the preamble hereto, except as otherwise provided in Section 13(a) hereof.

 

(m)          “Current
Market Price” shall have the meaning set forth in Section 11(d) hereof.

 

(n)          “Current
Value” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(o)          “Distribution
Date” shall have the meaning set forth in Section 3(a) hereof.

 

(p)          “Equivalent
Preferred Shares” shall have the meaning set forth in Section 11(b) hereof.

 

(q)          “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(r)          “Exchange
Ratio” shall have the meaning set forth in Section 24(a) hereof.

 

(s)          “Exempt
Person” shall mean (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan
of the Company or of any Subsidiary of the Company, or (iv) any Person or entity organized, appointed, or established by the
Company or any Subsidiary of the Company for or pursuant to the terms of any such employee benefit plan.

 

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(t)          “Expiration
Date” shall have the meaning set forth in Section 7(a) hereof.

 

(u)          “Final
Expiration Date” shall have the meaning set forth in Section 7(a) hereof.

 

(v)         “Grandfathered
Stockholder” shall have the meaning set forth in Section 1(a)(iii) hereof.

 

(w)          “Original
Rights” shall have the meaning set forth in Section 1(f)(ii) hereof.

 

(x)          “Ownership
Statement” shall have the meaning set forth in Section 3(a) hereof.

 

(y)          “Person”
shall mean any individual, firm, corporation, partnership, limited liability company, limited liability partnership, trust, syndicate,
or other entity, and shall include any successor (by merger or otherwise) of such entity.

 

(z)          “Preferred
Shares” shall mean shares of Series A Junior Participating Preferred Stock, par value $0.001 per share, of
the Company having the rights and preferences set forth in the Certificate of Designation attached to this Agreement as Exhibit A,
and, to the extent that there are not a sufficient number of shares of Series A Junior Participating Preferred Stock authorized
to permit the full exercise of the Rights, any other series of preferred stock of the Company designated for such purpose containing
terms substantially similar to the terms of the Series A Junior Participating Preferred Stock.

 

(aa)         “Principal
Party” shall have the meaning set forth in Section 13(b) hereof.

 

(bb)         “Purchase
Price” shall have the meaning set forth in Section 7(b) hereof.

 

(cc)         “Record
Date” shall have the meaning set forth in the recital to this Agreement.

 

(dd)         “Redemption
Price” shall have the meaning set forth in Section 23(a) hereof.

 

(ee)         “Right”
shall have the meaning set forth in the recital to this Agreement.

 

(ff)         “Rights
Agent” shall have the meaning set forth in the preamble hereto, except as otherwise provided in Section 19 and Section 21
hereof.

 

(gg)         “Rights
Certificate” shall have the meaning set forth in Section 3(a) hereof.

 

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(hh)         “Rights
Dividend Declaration Date” shall have the meaning set forth in the recital to this Agreement.

 

(ii)         “Section 11(a)(ii)
Event” shall have the meaning set forth in Section 11(a)(ii) hereof.

 

(jj)         “Section 11(a)(ii)
Trigger Date” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(kk)         “Section 13
Event” shall mean any event described in Section 13(a)(i), Section 13(a)(ii), or Section 13(a)(iii) hereof.

 

(ll)         “Shares
Acquisition Date” shall mean the first date of public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed or amended pursuant to Section 13(d) under the Exchange Act) by the Company or
an Acquiring Person that an Acquiring Person has become such.

 

(mm)         “Spread”
shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(nn)         “Subsidiary”
shall mean, with reference to any Person, any corporation or other entity of which an amount of voting securities (or other
ownership interests having ordinary voting power) sufficient to elect or appoint at least a majority of the directors (or other
persons performing similar functions) of such corporation or other entity is beneficially owned, directly or indirectly, by such
Person, or otherwise controlled by such Person.

 

(oo)         “Substitution
Period” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(pp)         “Summary
of Rights” shall have the meaning set forth in Section 3(b) hereof.

 

(qq)         “Trading
Day” shall have the meaning set forth in Section 11(d)(i) hereof.

 

(rr)         “Triggering
Event” shall mean a Section 11(a)(ii) Event or any Section 13 Event.

 

(ss)         “Trust”
shall have the meaning set forth in Section 24(f) hereof.

 

(tt)         “Trust
Agreement” shall have the meaning set forth in Section 24(f) hereof.

 

Section 2. Appointment of the Rights
Agent. The Company hereby appoints the Rights Agent to act as agent
for the Company and the registered holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution
Date also be the registered holders of the Common Shares) in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Company may from time to time appoint such co-rights agents as it may deem necessary
or desirable.

 

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Section 3. Issuance of Rights Certificates.

 

(a)          Until
the earlier of (i) the Close of Business on the 10th day after the Shares Acquisition Date (or, if the 10th day after the
Shares Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) and (ii) the Close of Business
on the 10th Business Day (or such later date as the Board of Directors of the Company may determine prior to the occurrence of
a Section 11(a)(ii) Event) after the date of commencement by or on behalf of any Person (other than an Exempt Person) of
a tender offer or exchange offer, if upon consummation thereof, such Person would become an Acquiring Person (the earlier of (i)
and (ii) being herein referred to as the “Distribution Date”), (A) the Rights will be evidenced (subject
to Section 3(b) and Section 3(c) hereof) by the certificates for the Common Shares registered in the names of the holders
of the Common Shares (which certificates for Common Shares shall be deemed also to be certificates for Rights) or by the current
ownership statements issued with respect to uncertificated Common Shares in lieu of such certificates (“Ownership Statements”)
(which Ownership Statements shall be deemed also to be certificates for Rights) and not by separate certificates, and the registered
holders of the Common Shares shall also be the registered holders of the associated Rights, and (B) the Rights will be transferable
only in connection with the transfer of the underlying Common Shares (including a transfer to the Company); provided, however,
that, if a tender offer or exchange offer is terminated prior to the occurrence of a Distribution Date, then no Distribution Date
shall occur as a result of such tender offer or exchange offer. As soon as practicable after the Distribution Date, the Rights
Agent will send, in accordance with Section 26 hereof, to each record holder of the Common Shares as of the Close of Business
on the Distribution Date (other than an Acquiring Person or any Associate or Affiliate of an Acquiring Person), one or more rights
certificates, in substantially the form of Exhibit B hereto (the “Rights Certificates”),
evidencing one Right for each Common Share so held, subject to adjustment as provided herein. In the event that an adjustment
in the number of Rights per Common Share has been made pursuant to Section 11(i) or Section 11(p) hereof, at the time
of distribution of the Rights Certificates, the Company shall not be required to issue Rights Certificates evidencing fractional
Rights but may, in lieu thereof, make the necessary and appropriate rounding adjustments (in accordance with Section 14(a)
hereof) so that Rights Certificates evidencing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates.

 

(b)          As
promptly as practicable following the Record Date, the Company shall send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit C (the “Summary of Rights”), to each record holder of Common Shares
as of the Close of Business on the Record Date in accordance with Section 26 hereof. With respect to Common Shares outstanding
as of the Record Date, until the earlier of the Distribution Date and the Expiration Date, the Rights associated with such Common
Shares will be evidenced by the certificate or Ownership Statement for such Common Shares registered in the names of the holders
thereof, in each case together with the Summary of Rights. Until the earlier of the Distribution Date and the Expiration Date,
the surrender for transfer of any certificate or Ownership Statement for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights, shall also constitute the transfer of the Rights associated with the Common Shares evidenced
by such certificate or Ownership Statement.

 

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(c)          Rights
shall be issued in respect of all Common Shares that are issued (whether originally issued or from the Company’s treasury)
after the Record Date but prior to the earlier of the Distribution Date and the Expiration Date and, to the extent provided in
Section 22 hereof, in respect of Common Shares issued after the Distribution Date. Certificates and Ownership Statements evidencing
such Common Shares shall have printed or otherwise affixed to them the following legend:

 

This
[certificate/statement] also evidences and entitles the registered holder hereof to certain Rights as set forth in the Rights
Agreement between Atossa Genetics Inc. (the “Company”) and the Rights Agent thereunder dated as of May 19, 2014 (the
“Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file
at the principal offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this [certificate/statement]. The Company will mail to the
registered holder of this [certificate/statement] a copy of the Rights Agreement, as in effect on the date of mailing, without
charge, promptly after receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights
beneficially owned by any Person who is, was, or becomes an Acquiring Person or any Affiliate or Associate thereof (as such terms
are defined in the Rights Agreement), whether currently beneficially owned by or on behalf of such Person or by any subsequent
beneficial owner, may become null and void.

 

With
respect to such certificates or Ownership Statements containing the foregoing legend, until the earlier of the Distribution
Date and the Expiration Date, the Rights associated with the Common Shares evidenced by such certificates or Ownership Statements
shall be evidenced by such certificates or Ownership Statements alone and the surrender for transfer of any certificate or Ownership
Statement for Common Shares shall also constitute the transfer of the Rights associated with the Common Shares evidenced by such
certificate or Ownership Statement. In the event the Company purchases or otherwise acquires any Common Shares after the Record
Date but prior to the Distribution Date, any Rights associated with such Common Shares shall be deemed cancelled and retired so
that the Company shall not be entitled to exercise any Rights associated with such Common Shares that are no longer outstanding.

 

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Section 4. Form of Rights
Certificates. The Rights Certificates (and the forms of election
to purchase and of assignment and the certificates contained therein to be printed on the reverse thereof) shall each be
substantially in the form attached hereto as Exhibit B and may have such marks of identification or
designation and such legends, summaries, or endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule
or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date and on their face shall entitle the registered
holders thereof to purchase such number of one one-hundredths of a Preferred Share as shall be set forth therein at the
Purchase Price, but the amount and type of securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.

 

Section 5. Countersignature and Registration.

 

(a)          The
Rights Certificates shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President,
or any Vice President, either manually or by facsimile signature, and shall have affixed thereto the Company’s seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be countersigned by an authorized signatory of the Rights Agent, either manually or by
facsimile signature, and shall not be valid for any purpose unless so countersigned. In case any officer of the Company
who shall have signed any of the Rights Certificates shall cease to be such officer of the Company before countersignature by an
authorized signatory of the Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may
be countersigned by an authorized signatory of the Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights Certificate, although at the date of the execution of this Agreement
any such person was not such an officer.

 

(b)          Following
the Distribution Date, the Rights Agent will keep, or cause to be kept, at its principal office or offices designated as the appropriate
place for surrender of Rights Certificates upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Rights Certificates,
the number of Rights evidenced on its face by each of the Rights Certificates, and the date of each of the Rights Certificates.

 

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Section
6. Transfer, Split-Up, Combination, and Exchange of Rights Certificates; Mutilated, Destroyed, Lost, or Stolen
Rights Certificates.

 

(a)          Subject
to the provisions of Section 7(e) and Section 14 hereof, at any time after the Close of Business on the Distribution
Date, and at or prior to the Close of Business on the Expiration Date, any Rights Certificate or Certificates (other than
Rights Certificates evidencing Rights that have been redeemed or exchanged pursuant to Section 23 or Section 24 hereof)
may be transferred, split-up, combined, or exchanged for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of one one-hundredths of a Preferred Share (or, following the occurrence of a Triggering Event, Common
Shares, other securities, cash, or other assets, as the case may be) as the Rights Certificate or Certificates surrendered then
entitles such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split-up,
combine, or exchange any Rights Certificate or Certificates shall make such request in writing delivered to the Rights Agent, and
shall surrender the Rights Certificate or Certificates to be transferred, split-up, combined, or exchanged, with the form of assignment
and certificate contained therein duly executed, at the principal office or offices of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed and signed the certificate contained in the form
of assignment on the reverse side of such Rights Certificate and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 7(e), Section 14, and Section 24 hereof, countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company may
require payment from a registered holder of a Rights Certificate of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split-up, combination, or exchange of Rights Certificates.

 

(b)          Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction, or mutilation
of a Rights Certificate, and, in case of loss, theft, or destruction, of indemnity or security reasonably satisfactory to
them, and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to
the Rights Agent and cancellation of the Rights Certificate, if mutilated, the Company will execute and deliver a new Rights Certificate
of like tenor to the Rights Agent for countersignature and delivery to the registered holder in lieu of the Rights Certificate
so lost, stolen, destroyed, or mutilated.

 

Section 7. Exercise of Rights; Purchase
Price; Expiration Date of Rights.

 

(a)          Subject
to Section 7(e) hereof, at any time after the Distribution Date the registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein including, without limitation, the restrictions on exercisability
set forth in Section 9(c) and Section 11(a)(iii) hereof) in whole or in part upon surrender of the Rights Certificate,
with the form of election to purchase and the certificate contained therein duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price with respect
to the total number of one one-hundredths of a Preferred Share (or, following the occurrence of a Triggering Event, Common Shares,
other securities, cash, or other assets, as the case may be) as to which such surrendered Rights are then exercisable, at or prior
to the earliest of (i) the Close of Business on May 26, 2024, (“Final Expiration Date”), (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof, and (iii) the time at which the Rights are exchanged
in full as provided in Section 24 hereof (the earliest of (i), (ii), and (iii) being herein referred to as the “Expiration
Date”).

 

    	10

    	 

    

 

(b)          The
purchase price for each one one-hundredth of a Preferred Share pursuant to the exercise of a Right initially shall be $15.00,
shall be subject to adjustment from time to time as provided in Section 11 and Section 13(a) hereof, and shall be payable
in accordance with Section 7(c) hereof (such purchase price, as so adjusted, the “Purchase Price”).

 

(c)          Upon
receipt of a Rights Certificate evidencing exercisable Rights, with the form of election to purchase and the certificate contained
therein duly executed, accompanied by payment, with respect to each Right so exercised, of the Purchase Price per one one-hundredth
of a Preferred Share (or, following the occurrence of a Triggering Event, Common Shares, other securities, cash, or other assets,
as the case may be) to be purchased as set forth below and an amount equal to any applicable transfer tax, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares (or make available, if the Rights Agent is the transfer agent for such shares) certificates for the total number of one
one-hundredths of a Preferred Share to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply
with all such requests, or (B) if the Company shall have elected to deposit the total number of Preferred Shares issuable
upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts evidencing
such number of one one-hundredths of a Preferred Share as are to be purchased (in which case certificates for the Preferred Shares
evidenced by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition from the Company the amount of cash, if any, to be paid in
lieu of fractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate. The payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) shall be made in cash or by certified bank check or bank draft payable to the order
of the Company. In the event that the Company is obligated to issue other securities (including Common Shares) of the Company,
pay cash, or distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary
so that such other securities, cash, or other property are available for distribution by the Rights Agent, if and when appropriate.
The Company reserves the right to require prior to the occurrence of a Triggering Event that, upon any exercise of Rights, a number
of Rights be exercised so that only whole Preferred Shares would be issued.

 

(d)          In
case the registered holder of any Rights Certificate shall exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing the Rights remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be designated by such holder, subject to the provisions
of Section 14 hereof.

 

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(e)          Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person (or any such Associate of Affiliate) to holders of equity interests in such Acquiring Person (or any
such Associate or Affiliate) or to any Person with whom the Acquiring Person (or any such Associate of Affiliate) has any continuing
agreement, arrangement, or understanding (whether or not in writing) regarding the transferred Rights or (B) a transfer that
the Board of Directors of the Company, in its sole discretion, has determined is part of a plan, arrangement, or understanding
(whether or not in writing) that has as a primary purpose or effect the avoidance of the provisions of this Section 7(e),
shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever with respect
to such Rights, whether under any provision of this Agreement or otherwise. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) are complied with, but shall have no liability to any holder of Rights Certificates
or any other Person as a result of its failure to make any determinations with respect to an Acquiring Person or any of its Affiliates,
Associates, or transferees hereunder.

 

(f)          Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action
with respect to a registered holder of a Rights Certificate upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise, and (ii) provided
such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof
as the Company shall reasonably request.

 

Section 8. Cancellation and Destruction
of Rights Certificates. All Rights Certificates surrendered for
the purpose of exercise, transfer, split-up, combination, or exchange shall, if surrendered to the Company or any of its agents,
be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be
cancelled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions
of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Rights Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.

 

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Section 9. Reservation and Availability
of Capital Stock.

 

(a)          The
Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued Preferred
Shares, the number of Preferred Shares that will be sufficient to permit the exercise in full of all outstanding Rights
in accordance with Section 7 hereof.

 

(b)          So
long as the Preferred Shares (and, following the occurrence of a Triggering Event, Common Shares or other securities, as the case
may be) issuable and deliverable upon the exercise of the Rights may be listed on any national securities exchange or quoted on
a quotation system, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable,
all shares reserved for such issuance to be listed on such exchange or quoted on such quotation system, as the case may be, upon
official notice of issuance upon such exercise.

 

(c)          The
Company shall use its best efforts to (i) file, as soon as practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which the consideration to be delivered by the Company upon exercise of the Rights
has been determined in accordance with Section 11(a) hereof, a registration statement on an appropriate form under the Act,
with respect to the securities purchasable upon exercise of the Rights, (ii) cause such registration statement to become effective
as soon as practicable after such filing, and (iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the date of the expiration of the Rights. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or “blue sky” laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period of time not to exceed 90 days after the date set
forth in clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order to prepare
and file such registration statement and permit it to become effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. In addition, if the Company shall determine that a registration statement is
required following the Distribution Date, the Company similarly may temporarily suspend the exercisability of the Rights until
such time as a registration statement has been declared effective. Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction if the requisite qualification in such jurisdiction shall not have been
obtained, or the exercise thereof shall not be permitted under applicable law, or a registration statement shall not have been
declared effective.

 

(d)          The
Company covenants and agrees that it will take all such action as may be necessary to ensure that all one one-hundredths of a Preferred
Share (and, following the occurrence of a Triggering Event, Common Shares or other securities, as the case may be) delivered
upon exercise of the Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and nonassessable.

 

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(e)          The
Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges
that may be payable in respect of the issuance or delivery of the Rights Certificates and of any certificates for a number of one
one-hundredths of a Preferred Share (or, following the occurrence of a Triggering Event, Common Shares or other securities, as
the case may be) upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax that may be payable
in respect of any transfer or delivery of Rights Certificates to a Person other than, or the issuance or delivery of a number of
one one-hundredths of a Preferred Share (or, following the occurrence of a Triggering Event, Common Shares or other securities,
as the case may be) in a name other than that of the registered holder of the Rights Certificates evidencing Rights surrendered
for exercise or to issue or deliver any certificates for a number of one one-hundredths of a Preferred Share (or, following the
occurrence of a Triggering Event, Common Shares or other securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any such tax being payable by the registered holder
of such Rights Certificates at the time of surrender) or until it has been established to the Company’s satisfaction that
no such tax is due.

 

Section 10. Preferred Shares Record
Date. Each person in whose name any certificate for a number of one
one-hundredths of a Preferred Share (or, following the occurrence of a Triggering Event, Common Shares or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of
such fractional Preferred Shares (or, following the occurrence of a Triggering Event, Common Shares or other securities, as the
case may be) evidenced thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and all applicable transfer taxes) was made; provided,
however, that, if the date of such surrender and payment is a date upon which the Preferred Shares (or, following the occurrence
of a Triggering Event, Common Shares or other securities, as the case may be) transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares (fractional or otherwise) on, and such certificate shall be dated,
the next succeeding Business Day on which the Preferred Shares (or, following the occurrence of a Triggering Event, Common Shares
or other securities, as the case may be) transfer books of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the registered holder of a Rights Certificate shall not be entitled to any rights of a stockholder of the Company with
respect to shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends
or other distributions, or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings
of the Company, except as provided herein.

 

Section 11. Adjustment of Purchase Price,
Number and Kind of Shares, or Number of Rights. The Purchase Price, the number and kind of shares, or fractions thereof, purchasable
upon exercise of each Right, and the number of Rights outstanding are subject to adjustment from time to time as provided in this
Section 11.

 

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(a)          (i)  In
the event the Company shall at any time after the date of this Agreement (A) declare or pay a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide or split the outstanding Preferred Shares, (C) combine or consolidate
the outstanding Preferred Shares into a smaller number of shares, or (D) issue any shares of its capital stock in a reclassification
of the Preferred Shares (including any such reclassification in connection with a consolidation or merger in which the Company
is the continuing or surviving corporation), except as otherwise provided in this Section 11(a) and Section 7(e) hereof,
the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, split,
combination, consolidation, or reclassification, and the number and kind of Preferred Shares (or other capital stock, as the case
may be), issuable on such date, shall be proportionately adjusted so that the registered holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number and kind of Preferred
Shares (or other capital stock, as the case may be), which, if such Right had been exercised immediately prior to such date (whether
or not such Right was then exercisable) and at a time when the Preferred Share (or other capital stock, as the case may be) transfer
books of the Company were open, such holder would have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, split, combination, consolidation, or reclassification. If an event occurs that would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.

 

(ii)          In
the event any Person shall become an Acquiring Person (a “Section 11(a)(ii) Event”), then, promptly
following the occurrence of such Section 11(a)(ii) Event, proper provision shall be made so that each registered holder of
a Right (except as provided below and in Section 7(e) hereof) shall thereafter have the right to receive, upon exercise thereof
at the then current Purchase Price in accordance with the terms of this Agreement, in lieu of a number of one one-hundredths of
a Preferred Share, such number of Common Shares of the Company as shall equal the result obtained by (A) multiplying the then
current Purchase Price by the then number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event, and (B) dividing that product (which, following such first
occurrence, shall thereafter be referred to as the “Purchase Price” for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price per Common Share on the date of such first occurrence (such number of shares, the
“Adjustment Shares”).

 

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(iii)         In
the event that (A) the number of Common Shares authorized by the Company’s Certificate of Incorporation, but
which are not outstanding or reserved for issuance for purposes other than upon exercise of the Rights, are not sufficient to permit
the exercise in full of the Rights in accordance with Section 11(a)(ii) hereof or (B) the Board of Directors of the Company
otherwise shall determine to do so in its sole discretion, the Company, acting by resolution of the Board of Directors of the Company,
shall (1) determine the value of the Adjustment Shares issuable upon the exercise of a Right (the “Current Value”),
and (2) with respect to each Right (subject to Section 7(e) hereof), make adequate provision to substitute for the Adjustment
Shares, upon the exercise of such Right and payment of the applicable Purchase Price, (u) cash, (v) a reduction in the
Purchase Price, (w) Common Shares or other equity securities of the Company (including, without limitation, shares, or units
of shares, of preferred stock, such as the Preferred Shares, which the Board of Directors of the Company has deemed to have essentially
the same value or economic rights as Common Shares (such shares of preferred stock being referred to as “Common Stock
Equivalents”)), (x) debt securities of the Company, (y) other assets, or (z) any combination of the foregoing,
having an aggregate value equal to the Current Value, where such aggregate value has been determined by the Board of Directors
of the Company based upon the advice of a nationally recognized investment banking firm selected by the Board of Directors of the
Company; provided, however, that, if, under the circumstances set forth in clause (A) above, the Company shall
not have made adequate provision to deliver value pursuant to clause (2) above within 30 days following the later of (I) the
first occurrence of a Section 11(a)(ii) Event and (II) the date on which the Company’s right of redemption pursuant
to Section 23(a) hereof expires (the later of (I) and (II) being referred to herein as the “Section 11(a)(ii)
Trigger Date”), then the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, Common Shares (to the extent available) and then, if necessary, cash, which shares and
cash have an aggregate value equal to the Spread. For purposes of the preceding sentence, the term “Spread”
shall mean the excess of the Current Value over the Purchase Price. If the Board of Directors of the Company determines in good
faith that it is likely that sufficient additional Common Shares could be authorized for issuance upon exercise in full of the
Rights, the 30-day period set forth above may be extended to the extent necessary, but not more than 90 days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for the authorization of such additional shares (such 30-day
period, as it may be extended, is herein called the “Substitution Period”). To the extent that action is to
be taken pursuant to the first or third sentences of this Section 11(a)(iii), the Company shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding Rights, and the Company may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek such stockholder approval for such authorization of additional
shares or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect.
For purposes of this Section 11(a)(iii), the value of each Adjustment Share shall be the Current Market Price per Common Share
on the Section 11(a)(ii) Trigger Date and the per share or per unit value of any Common Stock Equivalent shall be deemed to
equal the Current Market Price per Common Share on such date.

 

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(b)          In
case the Company shall fix a record date for the issuance of rights, options, or warrants to all registered holders of Preferred
Shares entitling them to subscribe for or purchase (for a period expiring within 45 calendar days after such record date) Preferred
Shares (or shares having the same rights, privileges, and preferences as the Preferred Shares (“Equivalent Preferred Shares”))
or securities convertible into Preferred Shares or Equivalent Preferred Shares at a price per Preferred Share or Equivalent Preferred
Share (or having a conversion price per share, if a security convertible into Preferred Shares or Equivalent Preferred Shares)
less than the Current Market Price per Preferred Share on such record date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator
of which shall be the number of Preferred Shares outstanding on such record date plus the number of Preferred Shares that the aggregate
subscription or offering price of the total number of Preferred Shares or Equivalent Preferred Shares so to be offered (or the
aggregate initial conversion price of the convertible securities so to be offered) would purchase at such Current Market Price,
and the denominator of which shall be the number of Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares or Equivalent Preferred Shares to be offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may be paid by delivery of consideration, part or
all of which may be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes. Preferred Shares owned by or held for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustments shall be made successively whenever such a record date is fixed, and in the event that
such rights, options, or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price that would then
be in effect if such record date had not been fixed.

 

(c)          In
case the Company shall fix a record date for a distribution to all registered holders of Preferred Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of cash
(other than a regular periodic cash dividend out of the earnings or retained earnings of the Company), assets (other than a dividend
payable in Preferred Shares, but including any dividend payable in stock other than Preferred Shares) or evidences of indebtedness,
or of subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by
a fraction, the numerator of which shall be the Current Market Price per Preferred Share on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes) of the portion of the cash, assets or evidences of indebtedness
so to be distributed, or of such subscription rights or warrants applicable to a Preferred Share, and the denominator of which
shall be such Current Market Price per Preferred Share. Such adjustments shall be made successively whenever such a record date
is fixed, and in the event that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price
that would then be in effect if such record date had not been fixed.

 

    	17

    	 

    

 

(d)          (i)
For the purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii) hereof, the “Current
Market Price” per Common Share on any date shall be deemed to be the average of the daily closing prices per Common Share
for the 30 consecutive Trading Days immediately prior to such date, and for purposes of computations made pursuant to Section 11(a)(iii)
hereof, the “Current Market Price” per Common Share on any date shall be deemed to be the average of the daily
closing prices per Common Share for the 10 consecutive Trading Days immediately following such date; provided, however,
that in the event that the Current Market Price per Common Share is determined during a period following the announcement
by the issuer of such Common Share of (A) a dividend or distribution on such Common Shares payable in Common Shares or securities
convertible into such Common Shares (other than the Rights), or (B) any subdivision, combination, or reclassification of such
Common Shares, and the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination,
or reclassification shall not have occurred prior to the commencement of the requisite 30-Trading Day or 10-Trading Day period,
as set forth above, then, and in each such case, the Current Market Price shall be properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the NASDAQ Stock Market or, if the Common Shares are
not listed or admitted to trading on the NASDAQ Stock Market, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange on which the Common Shares are listed or admitted
to trading or, if the Common Shares are not listed or admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported on a quotation
system then in use, or, if on any such date the Common Shares are not so quoted, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Common Shares selected by the Board of Directors of the Company.
If on any such date the Common Shares are not publicly held and are not so listed, admitted to trading, or quoted, and no market
maker is making a market in the Common Shares, the “Current Market Price” per Common Share shall mean the fair
value per share on such date as determined in good faith by the Board of Directors of the Company, which determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for all purposes. The term “Trading Day”
shall mean a day on which the principal national securities exchange on which the Common Shares are listed or admitted to trading
is open for the transaction of business or, if the Common Shares are not listed or admitted to trading on any national securities
exchange, a Business Day.

 

(ii)         For
the purpose of any computation hereunder, the “Current Market Price” per Preferred Share shall be determined
in the same manner as set forth above for the Common Shares in Section 11(d)(i) hereof (other than the penultimate sentence
thereof). If the Current Market Price per Preferred Share cannot be determined in the manner provided above or if the Preferred
Shares are not publicly held or listed, admitted to trading, or quoted in a manner described in Section 11(d)(i) hereof, the
Current Market Price per Preferred Share shall be conclusively deemed to be an amount equal to 100 (as such number may be appropriately
adjusted for such events as stock splits, stock dividends, and recapitalizations with respect to the Common Shares occurring after
the date of this Agreement) multiplied by the Current Market Price per Common Share. If neither the Common Shares nor the Preferred
Shares are publicly held or listed, admitted to trading, or quoted, the “Current Market Price” per Preferred
Share shall mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. For all purposes of this
Agreement, the Current Market Price of one one-hundredth of a Preferred Share shall be equal to the Current Market Price of one
Preferred Share divided by 100.

 

    	18

    	 

    

 

(e)          Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least 1% in the Purchase Price; provided, however, that any adjustments which
by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a
Common Share or other share or one-millionth of a Preferred Share, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three years
from the date of the transaction that mandates such adjustment and (ii) the Expiration Date.

 

(f)          If
as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a) hereof, the registered holder of any
Right thereafter exercised shall become entitled to receive any shares of capital stock other than Preferred Shares, thereafter
the number of such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to
the Preferred Shares contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k), and (m), and the provisions of Sections 7,
9, 10, 13, and 14 hereof with respect to the Preferred Shares shall apply on like terms to any such other shares.

 

(g)          All
Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right
to purchase, at the adjusted Purchase Price, the number of one one-hundredths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.

 

(h)          Unless
the Company shall have exercised its election as provided in Section 11(i) hereof, upon each adjustment of the Purchase Price
as a result of the calculations made in Section 11(b) and Section 11(c) hereof, each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the nearest one-millionth) obtained by (i) multiplying (A) the
number of one one-hundredths of a share covered by a Right immediately prior to this adjustment, by (B) the Purchase Price
in effect immediately prior to such adjustment of the Purchase Price, and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.

 

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(i)          The
Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in lieu of any adjustment
in the number of one one-hundredths of a Preferred Share purchasable upon the exercise of a Right pursuant to Section 11(h)
hereof. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to
be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates
have been issued, shall be at least 10 days later than the date of the public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed, and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Rights Certificates
on the record date specified in the public announcement.

 

(j)          Irrespective
of any adjustment or change in the Purchase Price or the number of one one-hundredths of a Preferred Share issuable upon the exercise
of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price per one one-hundredth
of a share and the number of one one-hundredths of a share that were expressed in the initial Rights Certificates issued hereunder.

 

(k)          Before
taking any action that would cause an adjustment reducing the Purchase Price below the then stated value, if any, of the number
of one one-hundredths of a Preferred Share issuable upon exercise of the Rights, the Company shall take any corporate action that
may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue, fully paid and
nonassessable, such number of one one-hundredths of a Preferred Share at such adjusted Purchase Price.

 

(l)          In
any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the registered
holder of any Right exercised after such record date of the number of one one-hundredths of a Preferred Share and other capital
stock or securities of the Company, if any, issuable upon such exercise over and above the number of one one-hundredths of a Preferred
Share and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder’s right to receive such additional shares (fractional or otherwise) or
securities upon the occurrence of the event requiring such adjustment.

 

    	20

    	 

    

 

(m)          Anything
in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that in its good
faith judgment the Board of Directors of the Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Shares, (ii) issuance wholly for cash of any Preferred Shares at less than the Current Market
Price, (iii) issuance wholly for cash of Preferred Shares or securities that by their terms are convertible into or exchangeable
for Preferred Shares, (iv) stock dividends, or (v) issuance of rights, options, or warrants referred to in this Section 11,
hereafter made by the Company to registered holders of its Preferred Shares shall not be taxable to such stockholders.

 

(n)          The
Company covenants and agrees that in the event that a Section 11(a)(ii) Event occurs and the Rights shall then be outstanding,
it shall not, (i) consolidate with any other Person, (ii) merge with or into any other Person, or (iii) sell
or otherwise transfer (or permit any Subsidiary to sell or otherwise transfer), in one transaction, or a series of related transactions,
assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a
whole and calculated on the basis of the Company’s most recent regularly prepared financial statements) to any other Person
or Persons, if (A) at the time of or immediately after such consolidation, merger, sale, or transfer there are any charter
or bylaw provisions, rights, warrants, or other instruments or securities outstanding or agreements in effect that would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (B) prior to, simultaneously with, or
immediately after such consolidation, merger, sale, or transfer the stockholders of the Person who constitutes, or would constitute,
the “Principal Party” for purposes of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.

 

(o)          The
Company covenants and agrees that in the event that a Section 11(a)(ii) Event occurs and the Rights shall then be outstanding,
it will not, except as permitted by Section 23, Section 24, or Section 27 hereof, take (or permit any Subsidiary
to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the Rights.

 

(p)          Anything
in this Agreement to the contrary notwithstanding, in the event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare or pay a dividend on the outstanding Common Shares payable in Common
Shares, (ii) subdivide or split the outstanding Common Shares, or (iii) combine or consolidate the outstanding Common
Shares into a smaller number of shares, the number of Rights associated with each Common Share then outstanding, or issued or delivered
thereafter but prior to the Distribution Date (or issued or delivered on or after the Distribution Date pursuant to Section 22
hereof), shall be proportionately adjusted so that the number of Rights thereafter associated with each Common Share following
any such event shall equal the result obtained by multiplying the number of Rights associated with each Common Share immediately
prior to such event by a fraction, the numerator of which shall be the total number of Common Shares outstanding immediately prior
to the occurrence of the event and the denominator of which shall be the total number of Common Shares outstanding immediately
following the occurrence of such event.

 

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Section 12. Certificate of Adjusted
Purchase Price or Number of Shares. Whenever an adjustment is made
as provided in Section 11 or Section 13 hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such adjustment, (b) promptly file with the Rights Agent,
and with each transfer agent for the Preferred Shares and the Common Shares, a copy of such certificate, and (c) if a Distribution
Date has occurred, mail a brief summary thereof to each registered holder of a Rights Certificate in accordance with Section 26
hereof. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained.

 

Section 13. Consolidation, Merger, or
Sale or Transfer of Assets or Earning Power.

 

(a)          In
the event that, at any time after a Person has become an Acquiring Person, directly or indirectly,

 

(i)          the
Company shall consolidate with, or merge with and into, any other Person, and the Company shall not be the continuing or surviving
corporation or other entity of such consolidation or merger;

 

(ii)         any
Person shall consolidate with, or merge with or into, the Company, and the Company shall be the continuing or surviving corporation
of such consolidation or merger and, in connection with such consolidation or merger, all or part of the outstanding Common Shares
shall be changed into or exchanged for stock or other securities of any other Person (or the Company) or cash or any other property;
or

 

(iii)        the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one transaction
or a series of related transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole and calculated on the basis of the Company’s most recent regularly prepared financial
statements) to any Person or Persons;

 

    	22

    	 

    

 

then, and in each such case, proper provision shall be made
so that: (A) each registered holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement,
such number of validly authorized and issued, fully paid, non-assessable and freely tradeable Common Shares of the Principal Party,
not subject to any liens, encumbrances, rights of first refusal, or other adverse claims, as shall be equal to the result obtained
by (1) multiplying the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to such first occurrence
of a Section 11(a)(ii) Event, and (2) dividing that product (which, following the first occurrence of a Section 13
Event, shall be referred to as the “Purchase Price” for each Right and for all purposes of this Agreement) by
50% of the Current Market Price per Common Share of such Principal Party on the date of consummation of such Section 13 Event;
(B) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this Agreement; (C) the term “Company” shall thereafter
be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a Section 13 Event; (D) such Principal Party shall
take such steps (including, but not limited to, the reservation of a sufficient number of Common Shares) in connection with the
consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to its Common Shares thereafter deliverable upon the exercise of the Rights; and (E) the
provisions of Section 11(a)(ii) hereof shall be of no effect with respect to events occurring at any time following the first
occurrence of any Section 13 Event.

 

(b)          “Principal
Party” shall mean:

 

(i)          in
the case of any transaction described in Section 13(a)(i) or Section 13(a)(ii) hereof, the Person that is the
issuer of any securities into which Common Shares of the Company are converted, changed, or exchanged in such merger or consolidation,
or if no securities are so issued, the Person that is the other party to such merger or consolidation; and

 

(ii)         in
the case of any transaction described in Section 13(a)(iii) hereof, the Person that is the party receiving the greatest portion
of the assets or earning power transferred pursuant to such transaction or transactions or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning power transferred pursuant to such transaction or
transactions or if the Person receiving the largest portion of the assets or earning power cannot be determined, whichever of such
Persons is the issuer of Common Shares having the greatest aggregate value of shares outstanding; provided, however,
that, in any such case, (A) if the Common Shares of such Person are not at such time and have not been continuously
over the preceding 12-month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so registered, “Principal Party” shall refer
to such other Person; and (B) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common
Shares of two or more of which are and have been so registered, “Principal Party” shall refer to whichever of such
Persons is the issuer of the Common Shares having the greatest aggregate market value.

 

    	23

    	 

    

 

(c)          The
Company shall not consummate a Section 13 Event unless the Principal Party shall have a sufficient number of authorized
Common Shares that have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement confirming that the requirements of Section 13(a) and Section 13(b) hereof shall promptly
be performed in accordance with their terms and further providing that, as soon as practicable after the date of any such Section 13
Event, the Principal Party will:

 

(i)          prepare
and file a registration statement under the Act, with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, and will use its best efforts to cause such registration statement to (A) become effective
as soon as practicable after such filing and (B) remain effective (with a prospectus at all times meeting the requirements
of the Act) until the Expiration Date;

 

(ii)         take
all such other action as may be necessary to enable the Principal Party to issue the securities purchasable upon exercise of the
Rights, including but not limited to the registration or qualification of such securities under all requisite securities
laws of jurisdictions of the various states and the listing of such securities on such exchanges and trading markets as may be
necessary or appropriate; and

 

(iii)        deliver
to registered holders of the Rights historical financial statements for the Principal Party and each of its Affiliates that
comply in all respects with the requirements for registration on Form 10 (or any successor form) under the Exchange Act.

 

The provisions
of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights that have
not theretofore been exercised shall thereafter become exercisable in the manner described in Section 13(a) hereof.

 

Section 14. Fractional Rights and Fractional
Shares.

 

(a)          The
Company shall not be required to issue fractions of Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates that evidence fractional Rights. In lieu of such fractional Rights, the Company
shall pay to the registered holders of the Rights Certificates with regard to which such fractional Rights would otherwise be issuable,
an amount in cash equal to the same fraction of the current market value of a whole Right. For purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The closing price of the Rights for any Trading Day shall
be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the NASDAQ Stock Market or, if the Rights are not listed or admitted to trading on the NASDAQ
Stock Market, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to trading, or if the Rights are not listed or admitted
to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by a quotation system then in use or, if on any such date the Rights are
not so quoted, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the
Rights, selected by the Board of Directors of the Company. If on any such date the Rights are not publicly held and are not so
listed, admitted to trading, or quoted, and no market maker is making a market in the Rights, the current market value of a Right
shall mean the fair value of a Right on such date as determined in good faith by the Board of Directors of the Company, which determination
shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.

 

    	24

    	 

    

 

(b)          The
Company shall not be required to issue fractions of Preferred Shares (other than fractions that are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates that evidence fractional Preferred Shares
(other than fractions that are integral multiples of one one-hundredth of a Preferred Share). In lieu of fractional Preferred Shares
that are not integral multiples of one one-hundredth of a Preferred Share, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current
market value of one one-hundredth of a Preferred Share. For purposes of this Section 14(b), the current market value of one
one-hundredth of a Preferred Share shall be one one-hundredth of the closing price of a Preferred Share or, if unavailable, the
appropriate alternative price (in each case, as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately
prior to the date of such exercise.

 

(c)          Following
the occurrence of a Triggering Event, the Company shall not be required to issue fractions of Common Shares upon exercise
of the Rights or to distribute certificates or Ownership Statements that evidence fractional Common Shares. In lieu of fractional
Common Shares, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market value of one Common Share. For purposes of this Section 14(c),
the current market value of one Common Share shall be the closing price of one Common Share or, if unavailable, the appropriate
alternative price (in each case, as determined pursuant to Section 11(d)(i) hereof) on the Trading Day immediately prior to
the date of such exercise.

 

(d)          The
registered holder of a Right by the acceptance of that Right expressly waives such holder’s right to receive any fractional
Rights or any fractional shares upon exercise of a Right, except as permitted by this Section 14.

 

    	25

    	 

    

 

Section 15. Rights of Action.
All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under Section 18
hereof, are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, of the
Common Shares); and any registered holder of any Rights Certificate (and, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the registered holder of any other Rights Certificate (or, prior to the Distribution
Date, of the Common Shares), may, on such first holder’s own behalf and for such first holder’s own benefit, enforce,
and may institute and maintain any suit, action, or proceeding against the Company to enforce, or otherwise act in respect of,
such first holder’s right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the registered holders of Rights,
it is specifically acknowledged that the registered holders of Rights would not have an adequate remedy at law for any breach
of this Agreement and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual
or threatened violations of the obligations hereunder of any Person subject to this Agreement.

 

Section 16. Agreement of Rights Holders.
Every registered holder of a Right, by accepting the same, consents and agrees with the Company and the Rights Agent and with
every other registered holder of a Right that:

 

(a)          prior
to the Distribution Date, the Rights will be transferable only in connection with the transfer of Common Shares;

 

(b)          after
the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument
of transfer and with the appropriate forms and certificates contained therein duly executed;

 

(c)          subject
to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may deem and treat the Person in whose name
a Rights Certificate (or, prior to the Distribution Date, a Common Share certificate or Ownership Statement) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the Common Share certificate or Ownership Statement made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the contrary; and

 

(d)          notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any registered
holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason
of any preliminary or permanent injunction or other order, decree, or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory, or administrative agency or commission, or any statute, rule, regulation, or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided,
however, that the Company must use its best efforts to have any such order, decree, or ruling lifted or otherwise overturned
as soon as possible.

 

    	26

    	 

    

 

Section 17. Rights Certificate Holder
Not Deemed a Stockholder. No registered holder, as such, of any Rights
Certificate shall be entitled to vote, receive dividends, or be deemed for any purpose the registered holder of the number of
one one-hundredths of a Preferred Share or any other securities of the Company that may at any time be issuable on the exercise
of the Rights evidenced thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon
the registered holder of any Rights Certificate, as such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided
in Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced
by such Rights Certificate shall have been exercised in accordance with the provisions hereof.

 

Section 18. Concerning the Rights Agent.

 

(a)          The
Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, reimbursement for its reasonable expenses and counsel fees and disbursements and other disbursements
incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith, or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against
any claim of liability in the premises.

 

(b)          The
Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered, or omitted by it
in connection with its administration of this Agreement in reliance upon any Rights Certificate or certificate for Common Shares
or for other securities of the Company or an Ownership Statement, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine
and to have been signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons.

 

Section 19. Merger or Consolidation
or Change of Name of the Rights Agent.

 

(a)          Any
Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or
any Person succeeding to the corporate trust, stock transfer, or other shareholder services business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto; but only if such Person would be eligible for appointment as
a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Rights Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of an authorized signatory of a predecessor Rights Agent and deliver
such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned,
an authorized signatory of any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor
or in the name of the successor Rights Agent; and in all such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.

 

    	27

    	 

    

  

(b)          In
case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature of an authorized signatory under the Rights Agent’s
prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, an authorized signatory of the Rights Agent may countersign such Rights Certificates either in the
prior name of the Rights Agent or in the changed name of the Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.

 

Section
20. Duties of the Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the registered holders of Rights Certificates, by their
acceptance thereof, shall be bound:

 

(a)          The
Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith
and in accordance with such opinion.

 

(b)          Whenever
in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the determination of Current Market Price) be proved
or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed
by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Secretary, any Assistant Secretary,
the Treasurer, or any Assistant Treasurer of the Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.

 

(c)          The
Rights Agent shall be liable hereunder only for its own negligence, bad faith, or willful misconduct.

 

(d)          The
Rights Agent shall not be liable for or by reason of any of the statements of fact or recital contained in this Agreement or in
the Rights Certificates and it shall not be required to verify the same (except as to a countersignature by one of its authorized
signatories on such Rights Certificates), but all such statements and recital are and shall be deemed to have been made by the
Company only.

 

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(e)          The
Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution and delivery hereof by the Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except a countersignature by one of its authorized signatories on any such Rights Certificate); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this Agreement or in any Rights Certificate; nor shall
it be responsible for any adjustment required under the provisions of Section 11, Section 13, or Section 24 hereof
or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after actual notice
of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization
or reservation of any Common Shares or Preferred Shares to be issued pursuant to this Agreement or any Rights Certificate or as
to whether any Common Shares or Preferred Shares will, when so issued, be validly authorized and issued, fully paid, and nonassessable.

 

(f)          The
Company agrees that it will perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered
all such further and other acts, instruments, and assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.

 

(g)          The
Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Secretary, any Assistant Secretary,
the Treasurer, or any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.

 

(h)          The
Rights Agent and any stockholder, director, officer, or employee of the Rights Agent may buy, sell, or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as fully and freely as though it were not the Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.

 

(i)          The
Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect,
or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect, or
misconduct; provided, however, that reasonable care was exercised in the selection and continued employment thereof.

 

    	29

    	 

    

 

(j)          No
provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing
that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.

 

(k)          If,
with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate contained in the
form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative
response to clause 1 or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise
or transfer without first consulting with the Company.

 

Section
21. Change of the Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days’ notice given to the Company in accordance with Section 26 hereof, and
to each transfer agent of the Common Shares and Preferred Shares by registered or certified mail, and, if such resignation occurs
after the Distribution Date, to the registered holders of the Rights Certificates in accordance with Section 26 hereof. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days’ notice given to the Rights Agent or successor
Rights Agent, as the case may be, in accordance with Section 26 hereof, and to each transfer agent of the Common Shares and
Preferred Shares by registered or certified mail, and, if such removal occurs after the Distribution Date, to the registered holders
of the Rights Certificates in accordance with Section 26 hereof. If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving proper notice of such removal or after it has been properly notified of such resignation
or incapacity by the resigning or incapacitated Rights Agent or by the registered holder of a Rights Certificate (who shall, with
such notice, submit such holder’s Rights Certificate for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be (a) a legal business entity organized and doing business under
the laws of the United States or of any state of the United States, in good standing, which is authorized under such laws to exercise
corporate trust, stock transfer, or shareholder services powers and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million or (b) an affiliate of a legal business entity described in clause (a)
of this sentence. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties, and responsibilities
as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver
and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act, or deed necessary for that purpose. Not later than the effective date of any such appointment, the Company shall
file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Shares and the Preferred
Shares, and, if such appointment occurs after the Distribution Date, give notice thereof to the registered holders of the Rights
Certificates in accordance with Section 26 hereof. Failure to give any notice provided for in this Section 21, however,
or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.

 

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Section
22. Issuance of New Rights Certificates. Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be
approved by the Board of Directors of the Company to reflect any adjustment or change in the Purchase Price and the number or kind
or class of shares or other securities or property purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of Common Shares following the Distribution Date and prior
to the Expiration Date, the Company (a) shall, with respect to Common Shares so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement, granted or awarded as of the Distribution Date, or upon the exercise,
conversion, or exchange of securities hereinafter issued by the Company, and (b) may, in any other case, if deemed necessary
or appropriate by the Board of Directors of the Company, issue Rights Certificates evidencing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no such Rights Certificate shall be issued if, and to
the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificate would be issued, and (ii) no such Rights Certificate
shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.

 

Section
23. Redemption and Termination.

 

(a)          The
Board of Directors of the Company may, at its option, at any time prior to the earlier of (i) the occurrence of a Section 11(a)(ii)
Event and (ii) the Final Expiration Date, direct the Company to, and if directed the Company shall, redeem all but
not less than all of the then outstanding Rights at a redemption price of $0.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend, or similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the “Redemption Price”). The Company may, at its option, pay the Redemption
Price in cash, Common Shares (based on the Current Market Price of the Common Shares at the time of redemption) or any other form
of consideration deemed appropriate by the Board of Directors of the Company.

 

(b)          Immediately
upon the action of the Board of Directors of the Company directing the Company to redeem the Rights, evidence of which shall have
been filed with the Rights Agent and without any further action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the registered holders of Rights shall be to receive the Redemption Price for each Right so held.
Promptly after the action of the Board of Directors of the Company directing the Company to make the redemption of the Rights,
the Company shall give notice of such redemption to the Rights Agent and the registered holders of the then outstanding Rights
in accordance with Section 26 hereof. Any notice given in accordance with Section 26 hereof shall be deemed given whether
or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption
Price will be made.

 

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Section
24. Exchange of Rights.

 

(a)          The
Board of Directors of the Company may, at its option, at any time after the occurrence of a Section 11(a)(ii) Event, direct
the Company to, and if directed the Company shall, exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section 7(e) hereof) for Common Shares at an exchange
ratio of one Common Share per Right, appropriately adjusted to reflect any stock split, stock dividend, or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred to as the “Exchange Ratio”).
The exchange of the Rights by the Board of Directors of the Company may be made effective at such time, on such basis, and with
such conditions as the Board of Directors of the Company in its sole discretion may establish. Notwithstanding the foregoing, the
Board of Directors of the Company shall not be empowered to direct the Company to effect such exchange at any time after any Person
(other than an Exempt Person), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding.

 

(b)          Immediately
upon the action of the Board of Directors of the Company directing the Company to exchange any Rights pursuant to Section 24(a)
hereof and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right
thereafter of a registered holder of such Rights shall be to receive that number of Common Shares equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company
promptly shall give notice of any such exchange to all of the registered holders of such Rights in accordance with Section 26
hereof. Any notice given in accordance with Section 26 hereof shall be deemed given whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights that will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights that have become void pursuant to the provisions of Section 7(e)
hereof) held by each registered holder of Rights.

 

(c)          In
any exchange pursuant to this Section 24, the Company, at its option, may substitute Preferred Shares (or Equivalent Preferred
Shares, as such term is defined in Section 11(b) hereof) for Common Shares exchangeable for Rights, at the initial rate of
one one-hundredth of a Preferred Share (or Equivalent Preferred Shares) for each Common Share, as appropriately adjusted
to reflect stock splits, stock dividends, and other similar transactions after the date hereof.

 

(d)          In
the event the number of Common Shares authorized by the Company’s Certificate of Incorporation, but which are not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights, is not sufficient to permit any exchange of Rights
as contemplated in accordance with this Section 24, the Company may take all such action as may be necessary to authorize
additional Common Shares for issuance upon exchange of the Rights.

 

    	32

    	 

    

 

(e)          The
Company shall not be required to issue fractions of Common Shares or to distribute certificates or Ownership Statements that evidence
fractional Common Shares. In lieu of such fractional Common Shares, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Common Shares would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Common Share. For the purposes of this Section 24(e), the current
market value of a whole Common Share shall be the closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange pursuant to this Section 24.

 

(f)          Prior
to effecting an exchange pursuant to this Section 24, the Board of Directors of the Company may direct the Company to enter
into a trust agreement in such form and with such terms as the Board of Directors of the Company shall then approve (the “Trust
Agreement”). If the Board of Directors of the Company so directs, the Company shall enter into the Trust Agreement and
shall issue to the trust created by such agreement (the “Trust”) all of the Common Shares, fractional Preferred
Shares, or other securities, if any, issuable pursuant to the exchange, and all Persons entitled to receive such shares or other
securities (and any dividends or distributions made thereon after the date on which such shares or other securities are deposited
in the Trust) shall be entitled to receive such only from the Trust and solely upon compliance with the relevant terms and provisions
of the Trust Agreement.

 

Section
25. Notice of Certain Events.

 

(a)          In
case the Company shall propose, at any time after the Distribution Date, (i) to pay any dividend payable in stock of any class
to the registered holders of Preferred Shares or to make any other distribution to the registered holders of Preferred Shares
(other than a regular periodic cash dividend out of earnings or retained earnings of the Company), or (ii) to offer to the
registered holders of Preferred Shares rights or warrants to subscribe for or to purchase any additional Preferred Shares or shares
of stock of any class or any other securities, rights, or options, or (iii) to effect any reclassification of its Preferred
Shares (other than a reclassification involving only the subdivision of outstanding Preferred Shares), or (iv) to effect any
consolidation or merger into or with any other Person, or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one transaction or a series of related transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole and calculated on the basis of the Company’s
most recent regularly prepared financial statements) to any other Person or Persons, or (v) to effect the liquidation, dissolution,
or winding up of the Company, then, in each such case, the Company shall give to each registered holder of a Rights Certificate,
to the extent feasible and in accordance with Section 26 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein
by the registered holders of the Preferred Shares, if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least 20 days prior to the record date for determining registered holders
of the Preferred Shares for purposes of such action, and in the case of any such other action, at least 20 days prior to the date
of the taking of such proposed action or the date of participation therein by the registered holders of the Preferred Shares, whichever
shall be the earlier.

 

    	33

    	 

    

 

(b)          In
case a Section 11(a)(ii) Event shall occur, then, in any such case, (i) the Company shall as soon as practicable thereafter
give to each registered holder of a Rights Certificate, to the extent feasible and in accordance with Section 26 hereof,
a notice of the occurrence of such event, which shall specify the event and the consequences of the event to registered holders
of Rights under Section 11(a)(ii) hereof, and (ii) all references in Section 25(a) to Preferred Shares shall be
deemed thereafter to refer to Common Shares or, if appropriate, other securities.

 

Section
26. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the registered
holder of any Rights Certificate to or on the Company shall be sufficiently given or made if sent by (a) first-class mail,
postage prepaid, (b) overnight delivery, or (c) courier or messenger service, in each case addressed (until another address
is filed in writing by the Company with the Rights Agent) as follows:

 

Atossa Genetics Inc.

1616 Eastlake Ave. East, Suite 510

Seattle, WA 98102

Attention: Corporate Secretary

Telephone: 800 351-3902

 

Subject
to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Company
or by the registered holder of any Rights Certificate to or on the Rights Agent shall be sufficiently given or made if sent by
(i) first-class mail, postage prepaid, (ii) overnight delivery, or (iii) courier or messenger service, in each case
addressed (until another address is filed in writing by the Rights Agent with the Company) as follows:

 

VStock Transfer, LLC

77 Spruce Street, Suite 201

Cedarhurst, NY 11516

Attention: Yoel Goldfeder 

Telephone: (212) 828-8436

 

Notices
or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the registered holder of any
Rights Certificate (or, if prior to the Distribution Date, of the Common Shares) shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books
of the Rights Agent (or, if prior to the Distribution Date, of the transfer agent for the Common Shares).

 

    	34

    	 

    

 

Section
27. Supplements and Amendments. The Company may from time to time and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval of any registered holders of the Rights to (a) cure
any ambiguity, (b) correct or supplement any provision contained herein that may be defective or inconsistent with any other
provisions herein, (c) shorten or lengthen any time period hereunder, or (d) make any other provisions with respect to
the Rights that the Company may deem necessary or desirable; provided, however, that, from and after the occurrence of a Section 11(a)(ii)
Event, no such supplement or amendment shall adversely affect the interests of the registered holders of Rights Certificates (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person or certain of their transferees). Upon the delivery
of a certificate from an appropriate officer of the Company that states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, an authorized signatory of the Rights Agent shall execute such supplement or amendment;
provided, that any supplement or amendment that does not amend Section 18, Section 19, Section 20, or Section 21
hereof in a manner adverse to the Rights Agent shall become effective immediately upon execution by the Company, whether or not
also executed by the Rights Agent.

 

Section
28. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

 

Section
29. Determinations and Actions by the Board of Directors. For all purposes of this Agreement, any calculation of
the number of Common Shares or any other class of capital stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding Common Shares of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in effect on
the date hereof. The Board of Directors of the Company shall have the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the Board of Directors of the Company or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (a) interpret
the provisions of this Agreement and (b) make all determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to amend this Agreement). All such actions, calculations,
interpretations, and determinations that are done or made by the Board of Directors of the Company in good faith, shall be
final, conclusive, and binding on the Company, the Rights Agent, the registered holders of the Rights, and all other parties.

 

Section
30. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any Person other than the
Company, the Rights Agent, and the registered holders of the Rights Certificates (and, prior to the Distribution Date, of the Common
Shares) any legal or equitable right, remedy, or claim under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent, and the registered holders of the Rights Certificates (and, prior to the Distribution
Date, of the Common Shares).

 

    	35

    	 

    

 

Section
31. Severability. If any term, provision, covenant, or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, or unenforceable, the remainder of the terms, provisions, covenants, and restrictions
of this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated; provided, however,
that notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant, or restriction is held
by such court or authority to be invalid, void, or unenforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and shall not expire until the Close of Business
on the 10th day following the date of such determination by the Board of Directors of the Company.

 

Section
32. Governing Law. This Agreement, each Right, and each Rights Certificate issued hereunder shall be deemed to be
a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts made and to be performed entirely within such State.

 

Section
33. Counterparts; Facsimiles and PDFs. This Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and
the same instrument. A facsimile or .pdf signature delivered electronically shall constitute an original signature for all purposes.

 

Section
34. Descriptive Headings. Descriptive headings of the several sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the provisions hereof.

 

[The remainder of this page is intentionally
left blank.]

 

    	36

    	 

    

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the day and year first above written.

 

	 	Atossa Genetics Inc.
	 	 	 
	 	By:	/s/ Kyle Guse
	 	 	Name: Kyle Guse
	 	 	Title: Chief Financial Officer, General
	 	 	          Counsel and Secretary

 

	 	VStock Transfer, LLC
	 	 	 
	 	By:	/s/ Yoel Goldfeder
	 	 	Name: Yoel Goldfeder
	 	 	Title:   Chief Executive Officer

 

Signature
Page to Rights Agreement

 

    	 

    	 

    

 

EXHIBIT A

 

FORM OF

CERTIFICATE OF DESIGNATION, PREFERENCES, AND

RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

 

of

 

Atossa Genetics Inc.

 

Pursuant to Section 151 of
the General Corporation Law of the State of Delaware

 

Atossa Genetics Inc., a corporation organized
and existing under the General Corporation Law of the State of Delaware (the “Corporation”), in accordance with
the provisions of Section 103 thereof, DOES HEREBY CERTIFY:

 

That
pursuant to the authority conferred upon the Board of Directors by the Amended and Restated Certificate of Incorporation of the
Corporation, the said Board of Directors on May 19, 2014, adopted the following resolution creating a series of Preferred
Stock designated as Series A Junior Participating Preferred Stock (as hereinafter defined):

 

RESOLVED,
that pursuant to the authority vested in the Board of Directors of the Corporation in accordance with the provisions of
its Certificate of Incorporation, a series of Preferred Stock of the Corporation be and it hereby is created, and that 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, and restrictions thereof are as follows:

 

Section 1. Designation and Amount.
The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” and the number
of shares constituting such series shall be 750,000.

 

Section 2. Dividends and Distributions.

 

(a)          Subject
to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Junior Participating Preferred Stock with respect to dividends, the holders of shares of Series A
Junior Participating Preferred Stock, in preference to the holders of shares of Common Stock, par value $0.001 per share, of the
Corporation (the “Common Stock”), and of any other junior stock, shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash
on the last day of March, June, September, and December in each year (each such date being referred to herein as a “Quarterly
Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share
or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (i) $1.00 or (ii) subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction
of a share of Series A Junior Participating Preferred Stock. In the event the Corporation shall at any time after May 19,
2014 (the “Rights Dividend Declaration Date”) (A) declare any dividend on Common Stock payable in shares
of Common Stock, (B) subdivide the outstanding Common Stock, or (C) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event under clause (ii) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

 

    	A-1

    	 

    

 

(b)          The
Corporation shall declare a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in Section 2(a)
above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares
of Common Stock); provided, that, in the event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $1.00 per share on the Series A Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.

 

(c)          Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Participating Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events
such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares of Series A Junior Participating Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders
of shares of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof.

 

Section 3. Voting Rights. The holders
of shares of Series A Junior Participating Preferred Stock shall have the following voting rights:

 

    	A-2

    	 

    

 

(a)          Subject
to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Preferred Stock shall entitle
the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation
shall at any time after the Rights Dividend Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into
a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately prior to such event.

 

(b)          Except
as otherwise provided herein or by law, the holders of shares of Series A Junior Participating Preferred Stock and
the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the
Corporation.

 

(c)          (i)          If
at any time dividends on any Series A Junior Participating Preferred Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a “default
period”) that shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series A Junior Participating Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock
(including holders of the Series A Junior Participating Preferred Stock) with dividends in arrears in an amount equal to six
quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two directors.

 

(ii)          During
any default period, such voting right of the holders of Series A Junior Participating Preferred Stock may be exercised initially
at a special meeting called pursuant to Section 3(c)(iii) or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided, that such voting right shall not be exercised unless the holders of 10% in number
of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders
of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting
as a class, to elect directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two directors
or, if such right is exercised at an annual meeting, to elect two directors. If the number that may be so elected at any special
meeting does not amount to the required number, the holders of Preferred Stock shall have the right to make such increase in the
number of directors as shall be necessary to permit the election by them of the required number. After the holders of Preferred
Stock shall have exercised their right to elect directors in any default period and during the continuance of such period, the
number of directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or
pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Junior Participating
Preferred Stock.

 

    	A-3

    	 

    

 

(iii)          Unless
the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect
directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than 10% of the
total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of a special meeting of
the holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice President, or the Secretary of
the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant
to this Section 3(c)(iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to such
holder at such holder’s last address as the same appears on the books of the Corporation. Such meeting shall be called for
a time not earlier than 20 days and not later than 60 days after such order or request or in default of the calling of such meeting
within 60 days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning
in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions
of this Section 3(c)(iii), no such special meeting shall be called during the period within 60 days immediately preceding
the date fixed for the next annual meeting of the stockholders.

 

(iv)          In
any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to
be entitled to elect the whole number of directors until the holders of Preferred Stock shall have exercised their right
to elect two directors voting as a class, after the exercise of which right (A) the directors so elected by the holders of
Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration
of the default period, and (B) any vacancy in the Board of Directors may (except as provided in Section 3(c)(ii)) be
filled by vote of a majority of the remaining directors theretofore elected by the holders of the class of stock that elected the
director whose office shall have become vacant. References in this Section 3(c) to directors elected by the holders of a particular
class of stock shall include directors elected by such directors to fill vacancies as provided in clause (B) of the foregoing
sentence.

 

(v)          Immediately
upon the expiration of a default period, (A) the right of the holders of Preferred Stock as a class to elect directors
shall cease, (B) the term of any directors elected by the holders of Preferred Stock as a class shall terminate, and (C) the
number of directors shall be such number as may be provided for in the Certificate of Incorporation or Bylaws irrespective of any
increase made pursuant to the provisions of Section 3(c)(ii) (such number being subject, however, to change thereafter in
any manner provided by law or in the Certificate of Incorporation or Bylaws). Any vacancies in the Board of Directors effected
by the provisions of clauses (B) and (C) in the preceding sentence may be filled by a majority of the remaining directors.

 

    	A-4

    	 

    

 

(d)          Except
as set forth herein, holders of Series A Junior Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein)
for taking any corporate action.

 

Section 4. Certain Restrictions.

 

(a)          Whenever
quarterly dividends or other dividends or distributions payable on the Series A Junior Participating Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Junior Participating Preferred Stock outstanding shall have been paid in full, the Corporation
shall not:

 

(i)          declare
or pay dividends on, or make any other distributions on, any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution, or winding up) to the Series A Junior Participating Preferred Stock;

 

(ii)          declare
or pay dividends on, or make any other distributions on, any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution, or winding up) with the Series A Junior Participating Preferred Stock, except dividends paid ratably
on the Series A Junior Participating Preferred Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

 

(iii)          redeem
or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution, or winding up) to the Series A Junior Participating Preferred Stock, provided, that the Corporation
may at any time redeem, purchase, or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution, liquidation, or winding up) to the Series A Junior
Participating Preferred Stock; or

 

(iv)          redeem
or purchase or otherwise acquire for consideration any shares of Series A Junior Participating Preferred Stock, or any shares
of stock ranking on a parity with the Series A Junior Participating Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences
of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the
respective series or classes.

 

(b)          The
Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under Section 4(a), purchase or otherwise acquire such shares at such
time and in such manner.

 

    	A-5

    	 

    

 

Section 5. Reacquired Shares. Any
shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized
but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein, in the Certificate
of Incorporation, or in any other Certificate of Designation creating a series of Preferred Stock or any similar stock, or as otherwise
required by law.

 

Section 6. Liquidation, Dissolution,
or Winding Up.

 

(a)          Upon
any liquidation (voluntary or otherwise), dissolution, or winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution, or winding up) to the Series A
Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received an amount equal to $100 per share of Series A Participating Preferred Stock, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the “Series A
Liquidation Preference”). Following the payment of the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Junior Participating Preferred Stock unless, prior thereto,
the holders of shares of Common Stock shall have received an amount per share (the “Common Adjustment”) equal
to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 100 (as appropriately adjusted
as set forth in Section 4(c) below to reflect such events as stock splits, stock dividends, and recapitalizations with respect
to the Common Stock) (such number in clause (ii), the “Adjustment Number”). Following the payment of the
full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively, holders of Series A Junior Participating Preferred Stock
and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to one with respect to such Preferred Stock and Common Stock, on a per share basis, respectively.

 

(b)          In
the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference
and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series A Junior
Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available
to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common
Stock.

 

(c)          In
the event the Corporation shall at any time after the Rights Dividend Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to
such event shall be adjusted by multiplying such Adjustment Number by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.

 

    	A-6

    	 

    

 

Section
7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination, or other
transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash, or any other
property, then in any such case the shares of Series A Junior Participating Preferred Stock shall at the same time
be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal
to 100 times the aggregate amount of stock, securities, cash, or any other property (payable in kind), as the case may be, into
which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the
Rights Dividend Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each
such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior
Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.

 

Section 8. No Redemption. The shares
of Series A Junior Participating Preferred Stock shall not be redeemable.

 

Section
9. Ranking. The Series A Junior Participating Preferred Stock shall rank junior to all other series of the Corporation’s
Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide
otherwise.

 

Section 10. Amendment. At any time
when any shares of Series A Junior Participating Preferred Stock are outstanding, neither the Certificate of Incorporation
of the Corporation nor this Certificate of Designation shall be amended in any manner that would materially alter or change the
powers, preferences, or special rights of the Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds or more of the outstanding shares of Series A Junior Participating
Preferred Stock, voting separately as a class.

 

Section 11. Fractional Shares. The
Series A Junior Participating Preferred Stock may be issued in fractions of a share that shall entitle the holder, in proportion
to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions, and to have
the benefit of all other rights of holders of Series A Junior Participating Preferred Stock.

 

[The remainder of this page is intentionally
left blank.]

 

    	A-7

    	 

    

 

IN
WITNESS WHEREOF, Atossa Genetics Inc. has caused this Certificate of Designation to be signed by the undersigned this ___
day of May, 2014.

 

	 	Atossa Genetics Inc.
	 	 	 
	 	By:	 
	 	 	Name: Steven C. Quay
	 	 	Title: Chief Executive Officer and President

 

    	A-8

    	 

    

 

EXHIBIT B

 

FORM OF RIGHTS CERTIFICATE

 

	Certificate No. R-	____________ Rights

 

NOT
EXERCISABLE AFTER MAY 26, 2024 OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET
FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ANY PERSON WHO IS, WAS, OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE
OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY BENEFICIALLY OWNED BY OR ON BEHALF
OF SUCH PERSON OR BY ANY SUBSEQUENT BENEFICIAL OWNER, MAY BECOME NULL AND VOID.

 

Rights Certificate

 

Atossa Genetics Inc.

 

This
certifies that ________________________, or registered assigns, is the registered owner of the number of Rights set forth above,
each of which entitles the owner thereof, subject to the terms, provisions, and conditions of the Rights Agreement, dated
as of May 19, 2014 (the “Rights Agreement”), between Atossa Genetics Inc., a Delaware corporation (the “Company”),
and VStock Transfer, LLC, a limited liability company (the “Rights Agent”), to purchase from the Company at
any time prior to 5:00 p.m., New York, New York time, on May 26, 2024 at the office or offices of the Rights Agent designated for
such purpose, or its successors as Rights Agent, one one-hundredth of a fully paid, non-assessable share of Series A Junior
Participating Preferred Stock of the Company (a “Preferred Share”), at a purchase price of $15.00 per one one-hundredth
of a share (such purchase price, as may be adjusted, the “Purchase Price”), upon presentation and surrender
of this Rights Certificate with the Form of Election to Purchase and related Certificate duly executed. The number of Rights evidenced
by this Rights Certificate (and the number of shares that may be purchased upon exercise thereof) set forth above, and the Purchase
Price per share set forth above, are the number and Purchase Price as of May 19, 2014, based on the Preferred Shares as constituted
at such date. The Company reserves the right to require prior to the occurrence of a Triggering Event (as such term is defined
in the Rights Agreement) that a number of Rights be exercised so that only whole Preferred Shares will be issued.

 

Upon the occurrence of a Section 11(a)(ii)
Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned
by (i) an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate), or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of a person who, after such transfer, became an Acquiring Person, or an Affiliate
or Associate of an Acquiring Person, such Rights shall become null and void and no holder hereof shall have any right with respect
to such Rights from and after the occurrence of such Section 11(a)(ii) Event.

 

    	B-1

    	 

    

 

As
provided in the Rights Agreement, the Purchase Price, the number and kind of Preferred Shares or other securities issuable upon
exercise of a Right, and the number of Rights outstanding are subject to modification and adjustment upon the happening of certain
events, including Triggering Events.

 

This
Rights Certificate is subject to all of the terms, provisions, and conditions of the Rights Agreement, which terms, provisions,
and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby
made for a full description of the rights, limitations of rights, obligations, duties, and immunities hereunder of the Rights Agent,
the Company, and the holders of the Rights Certificates, which limitations of rights include the temporary suspension of the exercisability
of such Rights under the specific circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at
the above-mentioned office of the Rights Agent and are also available upon written request to the Rights Agent.

 

This Rights Certificate, with or without
other Rights Certificates, upon surrender at the principal office or offices of the Rights Agent designated for such purpose, may
be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number of one one-hundredths of a Preferred Share as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the number
of whole Rights not exercised.

 

Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Rights Certificate may be redeemed by the Company at its
option at a redemption price of $0.001 per Right at any time prior to the earlier of (i) the Close of Business on the 10th
day following the Shares Acquisition Date, and (ii) the occurrence of a Section 11(a)(ii) Event. In addition, under certain
circumstances following the occurrence of a Section 11(a)(ii) Event but before any person acquires beneficial ownership of
50% or more of the Common Shares (as such term is defined in the Rights Agreement), the Rights may be exchanged, in whole or in
part, for Common Shares, Preferred Shares, or shares of other preferred stock of the Company having essentially the same
value or economic rights as such shares. Immediately upon the action of the Board of Directors of the Company authorizing any such
redemption or exchange, and without any further action or any notice, the Rights (other than Rights that are not subject to such
redemption or exchange) will terminate and the Rights will only enable holders to receive the redemption price or the shares issuable
upon such exchange, as applicable.

 

    	B-2

    	 

    

 

No fractional Preferred Shares will be issued
upon the exercise of any Right or Rights evidenced hereby (other than fractions that are integral multiples of one one-hundredth
of a Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment may be made, as provided in the Rights Agreement.

 

No
holder of this Rights Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of Preferred
Shares or of any other securities of the Company that may at any time be issuable on the exercise hereof, nor shall anything contained
in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof,
or to give consent to or withhold consent from any corporate action, or, to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement.

 

This Rights Certificate shall not be valid
or obligatory for any purpose until it shall have been countersigned by an authorized signatory of the Rights Agent.

 

    	B-3

    	 

    

 

WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal.

 

Dated as of __________ _____, 20___.

 

	 	Atossa Genetics Inc.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title: 

 

	Countersigned:	 
	 	 
	VStock Transfer, LLC	 
	 	 
	By:	 	 
	 	Authorized Signature	 

 

    	B-4

    	 

    

 

[Form of Reverse Side of Rights Certificate]

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder
if such

holder desires to transfer the Rights Certificate.)

 

FOR VALUE RECEIVED ____________________________
hereby sells, assigns and transfers unto ___________

__________________________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________________________

(Please print name and address of transferee)

 

__________________________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________________________

(Please spell out and include in numerals
the

number of Rights being transferred by this Assignment)

 

of the Rights evidenced by this Rights Certificate, together
with all right, title and interest therein, and does hereby irrevocably constitute and appoint _________________________ Attorney,
to transfer the number of Rights indicated above on the books of the within named Company, with full power of substitution.

 

Dated: ________________, ______

 

	 	 	 
	 	 	Signature

 

Medallion Signature Guaranteed:

 

    	B-5

    	 

    

 

Certificate

 

The undersigned hereby certifies by checking
the appropriate boxes that:

 

(1)          the
Rights evidenced by this Rights Certificate [   ] are [   ] are not being sold, assigned,
and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined pursuant to the Rights Agreement); and

 

(2)          after
due inquiry and to the best knowledge of the undersigned, he, she, or it [   ] did [   ] did
not acquire the Rights evidenced by this Rights Certificate from any Person who is, was, or subsequently became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person.

 

	Dated:  ________________, ______	 	 
	 	 	Signature

 

Medallion Signature Guaranteed:

  

NOTICE

 

The signature to the foregoing Assignment
and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration
or enlargement or any change whatsoever.

 

    	B-6

    	 

    

 

[Form of Reverse Side of Rights Certificate—continued]

FORM OF ELECTION TO PURCHASE

 

(To be executed by the registered holder
if such holder desires to

exercise any or all Rights evidenced by the Rights Certificate.)

 

To:          [INSERT
NAME OF COMPANY]:

 

The undersigned hereby irrevocably elects
to exercise _______________________ (____________) Rights evidenced by this Rights Certificate to purchase the Preferred Shares
issuable upon the exercise of the Rights (or such other securities of the Company or of any other person that may be issuable upon
the exercise of the Rights) and requests that certificates for such shares be issued in the name of and delivered to or that such
shares be credited to the book-entry account of:

 

	 
	(Please print social security or other identifying number)
	 
	 
	 
	(Please print name and address)

 

If
such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the
balance of such Rights shall be registered in the name of and delivered to:

 

	 
	(Please print social security or other identifying number)
	 
	 
	 
	(Please print name and address)

 

Dated: ________________, ______

 

	 	 	 
	 	 	Signature

 

Medallion Signature Guaranteed:

 

    	B-7

    	 

    

 

Certificate

 

The undersigned hereby certifies by checking
the appropriate boxes that:

 

(1)          the
Rights evidenced by this Rights Certificate [   ] are [   ] are not being exercised by
or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement); and

 

(2)          after
due inquiry and to the best knowledge of the undersigned, he, she, or it [   ] did [   ] did
not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.

 

	Dated:  ________________, ______	 	 
	 	 	Signature

 

Medallion Signature Guaranteed:

 

NOTICE

 

The signature to the foregoing Election
to Purchase and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.

 

    	B-8

    	 

    

 

EXHIBIT C

 

UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ANY PERSON WHO IS, WAS, OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY BENEFICIALLY OWNED BY OR ON BEHALF OF SUCH PERSON OR BY
ANY SUBSEQUENT BENEFICIAL OWNER, MAY BECOME NULL AND VOID.

 

FORM OF SUMMARY OF RIGHTS

TO PURCHASE PREFERRED STOCK

 

On
May 19, 2014, the Board of Directors of Atossa Genetics Inc., a Delaware corporation (the “Company”), declared
a dividend distribution of one right (each, a “Right”) for each outstanding share of common stock, par value
$0.001, of the Company (the “Common Shares”). The dividend is payable to holders of record as of the close
of business on May 26, 2014 (the “Record Date”).

 

The following is a summary description of
the Rights. This summary is intended to provide a general description only and is subject to the detailed terms and conditions
of the Rights Agreement (the “Rights Agreement”), dated as of May 19, 2014, by and between the Company and VStock
Transfer, LLC, as rights agent (the “Rights Agent”).

 

1.          Issuance
of Rights

 

Each holder of Common Shares as of the Record
Date will receive a dividend of one Right per Common Share. One Right will also be issued together with each Common Share issued
by the Company after the Record Date and prior to the Distribution Date (as defined in Section 2 below), and in certain circumstances,
after the Distribution Date. New certificates (or, if uncertificated, ownership statements in lieu thereof) for Common Shares issued
after the Record Date will contain a notation incorporating the Rights Agreement by reference.

 

Until the Distribution Date:

 

		·	the Rights will not be exercisable;

 

		·	the Rights will be evidenced by the certificates for Common Shares (or by the ownership statements issued with respect to uncertificated
Common Shares) and not by separate rights certificates; and

 

		·	the Rights will be transferable by, and only in connection with, the transfer of Common Shares.

 

    	C-1

    	 

    

 

2.          Distribution
Date; Beneficial Ownership

 

The Rights are not exercisable until the
Distribution Date. As of and after the Distribution Date, the Rights will separate from the Common Shares and each Right will become
exercisable to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock, par value $0.001 per
share, of the Company (each whole share, a “Preferred Share”) at a purchase price of $15.00 (such purchase price,
as may be adjusted, the “Purchase Price”). This portion of a Preferred Share would give the holder thereof approximately
the same dividend, voting, and liquidation rights as would one Common Share.

 

The “Distribution Date”
is the earlier of:

 

		·	ten days following a public announcement that a person has become an “Acquiring Person” by acquiring
                                                                                                            beneficial ownership of 15% or more of the outstanding Common Shares then outstanding (or, in the case of a person that had
                                                                                                            beneficial ownership of 15% or more of the outstanding Common Shares on the date the Rights Agreement was executed, by
                                                                                                            obtaining beneficial ownership of additional Common Shares representing 2.0% of the Common Shares then outstanding other
                                                                                                            than                                                                                                             as a result
                                                                                                            of repurchases of Common Shares by the Company or certain inadvertent acquisitions, and provided that Common
                                                                                                            Shares acquired pursuant to employee benefit plans shall not be included in the calculation of such additional Common Shares;                                                                                                             and

 

		·	ten business days (or such later date as the Board of Directors of the Company shall determine prior to the time a person becomes
an Acquiring Person) after the commencement of a tender offer or exchange offer by or on behalf of any person (other than the Company
or certain related entities) that, if completed, would result in such person becoming an Acquiring Person.

 

A person will be deemed to “beneficially
own” any Common Shares if such person or any affiliated or associated person of such person:

 

		·	is considered a “beneficial owner” of the Common Shares under Rule 13d-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended and as in effect on the date of the Rights Agreement;

 

		·	has the right to acquire the Common Shares, either immediately or in the future, pursuant to any agreement, arrangement, or
understanding (other than a customary underwriting agreement relating to a bona fide public offering of the Common Shares) or upon
the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise, except that a person will not be
deemed to be a beneficial owner of (a) Common Shares tendered pursuant to a tender offer or exchange offer by or on behalf
of such person or any affiliated or associated persons of such person until the tendered Common Shares are accepted for purchase
or exchange, (b) securities issuable upon exercise of a Right before the occurrence of a Triggering Event (as defined in Section 5
below), or (c) securities issuable upon exercise of a Right after the occurrence of a Triggering Event if the Rights are originally
issued Rights or were issued in connection with an adjustment to originally issued Rights;

 

    	C-2

    	 

    

 

		·	has the right to vote or dispose of the Common Shares pursuant to any agreement, arrangement, or understanding (other than
a right to vote arising from the granting of a revocable proxy or consent that is not also then reportable on a Schedule 13D);
or

 

		·	has an agreement, arrangement, or understanding with another person who beneficially owns Common Shares and the agreement,
arrangement, or understanding is for the purpose of acquiring, holding, voting, or disposing of any securities of the Company (other
than customary underwriting agreements relating to a bona fide public offering of Common Shares or a right to vote arising from
the granting of a revocable proxy or consent that is not also then reportable on a Schedule 13D).

 

3.          Issuance
of Rights Certificates

 

As soon as practicable after the Distribution
Date, the Rights Agent will mail rights certificates to holders of record of the Common Shares as of the close of business on the
Distribution Date and, thereafter, the separate rights certificates alone will evidence the Rights.

 

4.          Expiration
of Rights

 

The Rights will expire on the earliest of
(a) 5:00 p.m., Eastern time, on May 26, 2024, (b) the time at which the Rights are redeemed (as described in Section 6
below), and (c) the time at which the Rights are exchanged in full (as described in Section 7 below).

 

5.          Change
of Exercise of Rights Following Certain Events

 

The following described events are referred
to as “Triggering Events.”

 

(a)          Flip-In
Event. In the event that a person becomes an Acquiring Person, each holder of a Right will thereafter have the right
to receive, upon exercise, Common Shares (or, in certain circumstances, other securities, cash, or other assets of the Company)
having a value equal to two times the Purchase Price. Notwithstanding any of the foregoing, following the occurrence of a person
becoming an Acquiring Person, all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person (or by certain related parties) will be null and void. However, Rights are not exercisable following
the occurrence of a person becoming an Acquiring Person until such time as the Rights are no longer redeemable by the Company as
set forth below.

 

For
example, at a purchase price of $15.00 per Right, following the occurrence of a person becoming an Acquiring Person, each
Right not owned by the Acquiring Person (or by certain related parties) would entitle its holder to purchase $30.00 worth of Common
Shares (or other consideration, as noted above) for $15.00. Assuming that the Common Shares have a per share value of $2.00 at
such time, the holder of each valid Right would be entitled to purchase 15 Common Shares for $15.00.

 

    	C-3

    	 

    

 

(b)          Flip-Over
Events. In the event that, at any time after a person has become an Acquiring Person, (i) the Company engages in a merger
or other business combination transaction in which the Company is not the continuing or surviving corporation or other entity,
(ii) the Company engages in a merger or other business combination transaction in which the Company is the continuing or surviving
corporation and the Common Shares of the Company are changed or exchanged, or (iii) 50% or more of the Company’s assets
or earning power is sold or transferred, each holder of a Right (except Rights that have previously been voided as set forth above)
shall thereafter have the right to receive, upon exercise, common shares of the acquiring company having a value equal to two times
the Purchase Price.

 

6.          Redemption

 

At
any time a person becomes an Acquiring Person (as defined in the Rights Agreement)], the Board of Directors of the Company may
direct the Company to redeem the Rights in whole, but not in part, at a price of $0.001 per Right (payable in cash, Common Shares,
or other consideration deemed appropriate by the Board of Directors of the Company). Immediately upon the action of the
Board of Directors of the Company directing the Company to redeem the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $0.001 redemption price.

 

7.          Exchange
of Rights

 

At
any time after a person becomes an Acquiring Person but before any person acquires beneficial ownership of 50% or more of the outstanding
Common Shares, the Board of Directors of the Company may direct the Company to exchange the Rights (other than Rights owned by
such person or certain related parties, which will have become void), in whole or in part, at an exchange ratio of one Common Share
per Right (subject to adjustment). The Company may substitute Preferred Shares (or shares of a class or series of the Company’s
preferred stock having equivalent rights, preferences, and privileges) for Common Shares at an initial rate of one one-hundredth
of a Preferred Share (or of a share of a class or series of the Company’s preferred stock having equivalent rights, preferences,
and privileges) per Common Share. Immediately upon the action of the Board of Directors of the Company directing the Company to
exchange the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the number
of Common Shares (or one one-hundredth of a Preferred Share or of a share of a class or series of the Company’s preferred
stock having equivalent rights, preferences, and privileges) equal to the number of Rights held by such holder multiplied by the
exchange ratio.

 

    	C-4

    	 

    

 

8.          Adjustments
to Prevent Dilution; Fractional Shares

 

The
Board of Directors of the Company may adjust the Purchase Price, the number of Preferred Shares or other securities or assets issuable
upon exercise of a Right, and the number of Rights outstanding to prevent dilution that may occur (a) in the event of a stock
dividend on, or a subdivision, combination, or reclassification of, the Preferred Shares, (b) in the event of a stock dividend
on, or a subdivision or combination of, the Common Shares, (c) if holders of the Preferred Shares are granted certain rights,
options, or warrants to subscribe for Preferred Shares or convertible securities at less than the current market price of the Preferred
Shares, or (d) upon the distribution to holders of the Preferred Shares of evidences of indebtedness or assets (excluding
regular periodic cash dividends) or of subscription rights or warrants (other than those referred to above).

 

With
certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments amount to at least
1% of the Purchase Price. No fractional Preferred Shares will be issued (other than fractions that are integral multiples of one
one-hundredth of a Preferred Share), and in lieu thereof, an adjustment in cash may be made based on the market price of the Preferred
Shares on the last trading date prior to the date of exercise.

 

9.          No
Stockholder Rights Prior to Exercise; Tax Considerations

 

Until
a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights will not be taxable to stockholders or to the Company,
stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable
for Common Shares (or other consideration) of the Company or for common shares of the acquiring company or in the event of the
redemption of the Rights as set forth in Section 6 above.

 

10.          Amendment
of Rights Agreement

 

The
Company may supplement or amend any provision of the Rights Agreement in order to (a) cure any ambiguity, (b) correct
or supplement any provision contained in the Rights Agreement that may be defective or inconsistent with other provisions of the
Rights Agreement, (c) shorten or lengthen any time period under the Rights Agreement, or (d) make any other provisions
with respect to the Rights that the Company deems necessary or desirable; provided, however, that no supplement or
amendment made after a person becomes an Acquiring Person may adversely affect the interests of the registered holders of rights
certificates (other than an Acquiring Person or any affiliated or associated person of an Acquiring Person or certain of their
transferees).

 

The Company has filed a copy of the Rights
Agreement with the Securities and Exchange Commission as an exhibit to a Form 8-K filed on May 22, 2014. In addition, a copy
of the Rights Agreement is available free of charge from the Company. This summary description of the Rights does not purport to
be complete and is qualified in its entirety by reference to the Rights Agreement.

 

    	C-5Exhibit 10.1

  

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is entered into as of the dates
set forth below, by and between VILLAGE BANK, a Virginia chartered bank corporation (the “Corporation”) and James E. Hendricks,
Jr. (the “Executive”) and is made effective May 16, 2014.

 

W I T N E S S E T H:

 

WHEREAS, the Corporation desires to retain the
services of the Executive on the terms and conditions set forth herein and, for purpose of effecting the same, the Board of Directors
of the Corporation has approved this Employment Agreement and authorized its execution and delivery on the Corporation’s
behalf to the Executive; and

 

WHEREAS, the Executive has significant experience
serving in senior bank management positions, and the Corporation desires to employ the Executive as a key executive officer of
the Corporation whose dedication, availability, advice and counsel to the Corporation is deemed important to the Board of Directors
of the Corporation, the Corporation and its stockholders;

 

WHEREAS, the services of the Executive, his experience
and knowledge of the affairs of the Corporation, and his reputation and contacts in the industry are valuable to the Corporation;
and

 

WHEREAS, the Corporation wishes to attract and
retain such well-qualified executives and it is in the best interests of the Corporation and of the Executive to secure the services
of the Executive; and

 

WHEREAS, the Corporation considers the establishment
and maintenance of a sound management to be part of its overall corporate strategy and to be essential to protecting and enhancing
the best interests of the Corporation and its stockholders;

 

WHEREAS, the Corporation desires to safeguard
its proprietary confidential information, retain its employees and protect itself against unfair competition;

 

NOW, THEREFORE, to assure the Corporation of
the Executive’s dedication, the availability of his advice and counsel to the Corporation, and to induce the Executive
to remain and continue in the employ of the Corporation and for other good and valuable consideration, the receipt and adequacy
whereof each party hereby acknowledges, the Corporation and the Executive hereby agree as follows:

 

		1.	EMPLOYMENT: The Corporation agrees to, and does hereby employ, the Executive, and the Executive agrees to, and
does hereby accept such employment, for the period beginning on or before May 16, 2014, and ending on May 15, 2016, which period
of employment may be extended or terminated only upon the terms and conditions hereinafter set forth.

 

    	 

    	 

    

 

		2.	ANNUAL REVIEWS, EXTENSIONS OF TERM AND CONTINUING OBLIGATIONS: Beginning in 2016, no later than ninety (90) days
prior to the expiration of the term of the Agreement, the Compensation Committee of the Board of Directors of the Corporation shall
review or cause to be reviewed, the Executive’s performance for the immediately preceding year. Any decision by the Corporation
to extend this Agreement shall not bind the Corporation unless such decision is reviewed and approved by the Board of Directors
of the Corporation. If this Agreement is not extended in writing before the end of its term (as such term may have been extended)
or expressly terminated, it shall automatically terminate at the end of its term (as such term may have been extended). The parties
intend that the covenants and restrictions in Sections 11 and 18 be enforceable against Executive regardless of the reason that
his employment by the Corporation may terminate and that such covenants and restrictions shall be enforceable against Executive
even if this Agreement expires after a notice of nonrenewal is given by the Executive or the Corporation. The existence of any
claim or cause of action by the Executive against the Corporation, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Corporation of the restrictive covenants and confidentiality requirements set forth
in sections 11 and 18 of this Agreement. If the Corporation terminates the Executive’s employment at the end of the term,
the Executive shall be entitled to twelve (12) months severance pay at the then current base rate of pay being received by the
Executive immediately prior to such termination.

 

		3.	EXECUTIVE DUTIES: The Executive agrees that, during the term of his employment under this Agreement and in his
capacity of Executive Vice President, Chief Credit Officer, he will devote his full business time and energy to the business, affairs
and interests of the Corporation and serve it diligently, to the best of his ability and in accordance with general business standards.
The Executive, however, may devote reasonable time and energy to charitable and civic activities that enhance the reputation and
good standing of the Executive and the Corporation in the community. Executive shall comply with all policies, standards and regulations
of the Corporation now or hereafter promulgated. The services and duties to be performed by the Executive shall be those appropriate
to his office and title as currently and from time to time hereafter specified in the Corporation’s By-laws or otherwise
specified by the President of the Corporation.

 

		4.	COMPENSATION: The Corporation agrees to pay the Executive, and the Executive agrees to accept, as compensation
for all services rendered by him to the Corporation during the period of his employment under this Agreement, base salary at the
annual rate of $180,000, which shall be payable in monthly, semi-monthly or bi-weekly installments in conformity with Corporation’s
policy relating to salaried employees. Such salary may be increased in the sole and absolute discretion of the Corporation’s
Board of Directors or Committee thereof duly authorized by the Board to so act. The Board of Directors, in its discretion, may
cause the Corporation to pay bonuses to the Executive from time to time. In addition, upon any necessary regulatory approval, the
Board of Directors shall implement the incentive compensation arrangement described in the Executive’s offer letter dated
August 5, 2013. The Board of Directors shall review the Executive’s base salary at least annually during his employment and
make such adjustments as determined in its discretion.

 

    	2

    	 

    

 

		5.	PARTICIPATION IN BENEFIT PLANS, REIMBURSEMENT
OF BUSINESS EXPENSES AND OTHER BENEFITS:

 

		(i)	During the term of employment under this Agreement, the Executive shall be entitled to participate, in accordance with plan
terms, in any pension, group insurance, hospitalization, deferred compensation or other benefit, bonus or incentive plans of the
Corporation presently in effect (including, without limitation, stock option plans) or hereafter adopted by the Corporation and
generally available to any employees of senior executive status, and, additionally, the Executive shall be entitled to have the
use of the Corporation’s facilities and executive benefits as are customarily made available by the Corporation to its executive
officers. Such additional benefits that the Executive shall receive are described in Schedule A attached hereto and incorporated
by this reference.

 

		(ii)	During the term of this Agreement, to the extent that such expenditures are substantiated by the Executive as required by the
Internal Revenue Service and policies of the Corporation, the Corporation shall reimburse the Executive promptly for all expenditures
(including business related travel, business entertainment and business meetings) made in accordance with written rules and policies
established from time to time by the Board of Directors of the Corporation in pursuance and furtherance of the Corporation’s
business and good will, provided any permitted expenditures are objectively determinable and nondiscretionary under such rules
and policies. Any reimbursements hereunder shall be made by the end of the calendar year following the calendar year in which the
related expense is incurred, or on such earlier date as provided in the Corporation’s rules and policies regarding such reimbursements.

 

		6.	ILLNESS: In the event the Executive is unable to perform the essential functions of his job on a consistent basis,
with or without reasonable accommodations, for a period of four (4) consecutive months by reason of illness or other physical or
mental disability, the Corporation may terminate this Agreement without further or additional compensation payment being due the
Executive from the Corporation pursuant to this Agreement, except benefits accrued through the date of such termination under employee
benefit plans of the Corporation. These benefits shall include long-term disability and other insurance or other benefits then
regularly provided by the Corporation to disabled employees of senior executive status, as well as any other insurance benefits
so provided, for which Executive qualifies. Notwithstanding any other provision in this Agreement, the Corporation will comply
with the Americans with Disabilities Act.

 

		7.	DEATH: In the event of the Executive’s death during the term of this Agreement, this Agreement shall terminate
as of the end of the month in which the Executive dies. This Section 7 shall not affect the rights of any person under other contracts
between the Executive and the Corporation or under any life insurance policy.

 

    	3

    	 

    

 

		8.	TERMINATION WITHOUT CAUSE/RESIGNATION FOR GOOD
REASON:

 

		(a)	Notwithstanding the provisions of Section 1 hereof, the Board of Directors of the Corporation may terminate the Executive’s
employment under this Agreement at any time by giving not less than thirty (30) days written notice to the Executive. The Executive
may resign for Good Reason (as hereafter defined) at any time by giving not less than thirty (30) days written notice to the Corporation.
It shall not constitute a breach of this Agreement for the Corporation to suspend Executive’s duties and to place the Executive
on a paid leave during the thirty (30) day notice period. If the Corporation terminates the Executive’s employment without
Cause (as hereafter defined) or the Executive resigns for Good Reason, then in either event the Executive shall receive the following,
provided that the Executive signs a release and waiver of claims reasonably satisfactory to the Corporation that
is executed and has become irrevocable within sixty (60) days following the date of Executive’s termination:

 

		(i)	The Executive shall be paid for twelve (12) months following the Executive’s termination, at such times as payment was
theretofore made, the salary required under Section 4 that the Executive would have been entitled to receive during such twelve
(12) month period had such termination not occurred.

 

		(ii)	Payments under (i) above shall be made or commence upon the Executive’s termination of employment, subject to the satisfaction
of the release and waiver condition set forth above.

 

		(iii)	The Executive shall thereon have no further recourse, and the Corporation shall have no further obligation, under the Agreement.

 

		(b)	For purposes of this Agreement, “Good Reason”
shall mean:

 

		(i)	The assignment of duties to the Executive by the Corporation which (A) are materially different from the Executive’s
duties on the date hereof, or (B) result in the Executive having significantly less authority and/or responsibility than he has
on the date hereof, without his express written consent;

 

		(ii)	The removal of the Executive from, or any failure to re-elect him to, the position of Executive Vice President of the Corporation,
except in connection with a termination of his employment by the Corporation for Cause or by reason of the Executive’s death
or disability;

 

		(iii)	A reduction by the Corporation of the Executive’s base salary to less than $180,000;

 

    	4

    	 

    

 

		(iv)	A material reduction by the Corporation of the fringe benefits (including paid vacations) that were provided to the Executive
immediately prior to the date thereof, provided that a material reduction of fringe benefits does not occur in connection with
the elimination or reduction of a fringe benefit for which the Corporation substitutes a fringe benefit or payment of substantially
equal value; or

 

		(v)	The failure of the Corporation to obtain the assumption of, and agreement to perform, this Agreement by any successor.

 

		(c)	Resignation by the Executive for Good Reason shall be communicated by a written Notice of Resignation to the Corporation. A
“Notice of Resignation” shall mean a notice which shall indicate the specific provision(s) in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for a resignation for Good
Reason.

 

		(d)	If within thirty (30) days after any Notice of Resignation is given the Corporation notifies the Executive that a dispute exists
concerning the resignation for Good Reason and that it is requesting arbitration pursuant to Section 17, the Corporation shall
continue to pay the Executive his full salary as described in Section 4, when due and payable under the Corporation’s payroll
procedures, at least until such time as a final decision is reached by the panel of arbitrators, but subject to the limitation
in Section 8(a)(i) on the duration of such payments. If Good Reason for resignation by the Executive is ultimately determined not
to exist, then all sums paid by the Corporation to the Executive, from the date of such resignation to the date of the resolution
of such dispute shall be promptly repaid by the Executive to the Corporation with interest at the rate charged from time to time
by the Corporation to its most substantial customers for unsecured extensions of credit. Should it ultimately be determined that
Good Reason for resignation by the Executive exists, then the Executive shall be entitled to retain all sums paid to him, pending
the resolution of such dispute and he shall be entitled to receive the payments and other benefits provided for in Section 8(a).

 

A failure by the Corporation to notify the Executive
that a dispute exists concerning the resignation for Good Reason within thirty (30) days after any Notice of Resignation is given
shall constitute a final waiver by the Corporation of its right to contest either that such resignation was for Good Reason or
its obligations to the Executive under Section 8(a) hereof.

 

		(e)	If the Executive’s employment terminates after a Change of Control (as defined in Section 10 hereof), the payments to
which he is entitled pursuant to Section 10 shall be in lieu of any payment to which he might otherwise be entitled under the terms
of Section 8(a)(i).

 

		(f)	The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement under Section 8(a)
by seeking other employment or otherwise; provided, if the Executive secures other full-time employment after a termination without
Cause or a resignation for Good Reason (other than self-employment or employment by an entity he owns or controls), the obligations
of the Corporation under Section 8(a)(i) shall be reduced dollar-for-dollar by the cash compensation received by the Executive
from such other employment. This Section 8 (f) shall not be interpreted to require or permit any reduction of benefits to which
the Executive may be entitled under this Agreement.

 

    	5

    	 

    

 

		9.	RESIGNATION, TERMINATION FOR CAUSE,_REGULATORY TERMINATION: The Corporation or the Executive may terminate this
Agreement, with or without Cause, subject to the following conditions:

 

		(a)	Notwithstanding the provision of Section 1 of this Agreement, the Board of Directors of the Corporation may, in its sole discretion,
terminate the Executive’s employment for Cause. For the purpose of this Agreement, “Cause” shall mean material
failure of the Executive to perform his duties under this Agreement, unlawful or unethical business conduct, dishonesty, willful
violation of any law, rule, or regulation (other than traffic violations or similar offenses), a material violation of the Corporation’s
work rules, Code of Ethics or policies, or a material breach of this Agreement. The Board of Directors shall not, however, terminate
the Executive’s employment based on the Executive’s material failure to perform his duties under this Agreement, his
material violation of the Corporation’s work rules, Code of Ethics or policies, or his material breach of this Agreement,
without first providing him written notice of any such failure or breach and a reasonable period of time, not less than ten (10)
days, in which to remedy such failure or breach.

 

		(b)	In the event the Executive resigns from or otherwise voluntarily terminates his employment with the Corporation at any time
(other than for Good Reason), or if the Corporation terminates the Executive’s employment for Cause, the Corporation thereafter
shall have no obligation to make any further payments under this Agreement.

 

		(c)	If the Executive is suspended and/or prohibited from participating in the conduct of the Corporation’s affairs by a notice
served under the Federal Deposit Insurance Act or any other regulatory authority, the Corporation’s obligations under this
Agreement shall be terminated and the Corporation thereafter shall have no obligation to make any further payments under this Agreement.

 

		10.	CHANGE OF CONTROL:

 

		(a)	If the Executive’s employment is terminated without Cause or the Employee resigns for Good Reason following a Change
of Control, the Corporation shall pay to the Executive a cash amount (subject to any applicable payroll or other taxes required
to be withheld) equal to the Executive’s monthly base salary, in equal monthly installments for a period of twelve (12) months
succeeding the date of termination, payable on the first day of each such month.

 

    	6

    	 

    
 

		(b)	For purposes of this Agreement, a “Change of Control” shall mean (i) the acquisition by any “person”
or “group” (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (“Exchange Act”)),
other than the Corporation, any subsidiary of the Corporation or any Corporation’s or subsidiary’s employee benefit
plan, directly or indirectly, as “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of securities
of the Corporation representing fifty percent (50%) or more of either the then outstanding shares or the combined voting power
of the then outstanding securities of the Corporation; (ii) either majority of the directors of the Corporation elected at the
Corporation’s annual stockholders meeting shall have been nominated for election other than by or at the direction of the
“incumbent directors” of the Corporation, or the “incumbent directors” shall cease to constitute a majority
of the directors of the Corporation. The term “incumbent director” shall mean any director who was a director of the
Corporation on November 1, 2011 and any individual who becomes a director of the Corporation subsequent to November 1, 2011 and
who is elected or nominated by or at the direction of at least two-thirds of the then incumbent directors; (iii) the shareholders
of the Corporation approve a merger, share exchange, or other business combination of the Corporation with any other “person”
or “group” (as defined in Sections 13(d) and 14(d) of the Exchange Act) or affiliate thereof, other than a merger or
consolidation that would result in the outstanding common stock of the Corporation immediately prior thereto continuing to represent
either by remaining outstanding or by being converted into common stock of the surviving entity or a parent or affiliate thereof,
at least fifty percent (50%) of the outstanding common stock of the Corporation or such surviving entity or a parent or affiliate
thereof outstanding immediately after such merger, consolidation or other business combination, or (iv) a plan of complete liquidation
of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation’s
assets; (v) the resignation or removal of six (6) directors within any sixty (60) consecutive day period; or (vi) any other event
or circumstance which is not covered by the foregoing subsections but which the Board of Directors of the Corporation determines
to affect control of the Corporation and with respect to which the Board of Directors adopts a resolution that the event or circumstance
constitutes a Change of Control for purposes of the Agreement. Notwithstanding the foregoing, an acquisition by the Corporation
of another corporation, a financial or structural reorganization of the Corporation, or the creation by the Corporation of a bank
holding company of which it is a subsidiary shall not be considered to result in a Change of Control.

 

		11.	COVENANTS:

 

		(a)	During the term of this Agreement and throughout any further period that he is an employee of the Corporation, and for the
longer of:

 

(x)twelve (12) months from and
after the date that Executive is (for any reason) no longer employed by the Corporation; or

 

    	7

    	 

    

 

(y)for a period of twelve (12)
months from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event of
a breach by the Executive,

 

the Executive covenants and agrees that he will not,
directly or indirectly, compete with the Corporation by performing job functions similar to those he is performing under this Agreement,
including the supervision of employees engaged in banking operations similar to those in which the Corporation is engaged, for
any bank or bank holding company within thirty-five (35) miles of headquarters of the Corporation or within five (5) miles of any
bank branch that was in operation at the time the Executive’s employment with the Corporation ceased.

 

		(b)	During the term of this Agreement and throughout any further period that he is an employee of the Corporation, and for the
longer of:

 

(x)twelve (12) months from and
after the date that the Executive is (for any reason) no longer employed by the Corporation; or

 

(y)for a period of twelve (12)
months from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event of
a breach by the Executive,

 

the Executive will not, directly or indirectly, on behalf
of the Executive or any other person or entity, solicit or induce, or attempt to solicit or induce, any person currently employed
by the Corporation to terminate the employee’s employment with the Corporation.

 

		(c)	During the term of this Agreement and throughout any further period that he is an employee of the Corporation, and for the
longer of:

 

(x)twelve (12) months from and
after the date that the Executive is (for any reason) no longer employed by the Corporation; or

 

(y)for a period of twelve (12)
months from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event of
a breach by the Executive,

 

the Executive will not, except to the extent necessary
to carry out his duties as an employee of the Corporation, directly or indirectly provide Competitive Services (as defined below)
to any Customer (as defined below), and shall not, directly or indirectly, on behalf of the Executive or any other person or entity,
solicit or divert away or attempt to solicit or divert away any Customer of the Corporation for the purpose of selling or providing
Competitive Services, provided the Corporation is then still engaged in the sale or provision of Competitive Services.

 

    	8

    	 

    

 

		(d)	It is agreed that notwithstanding the above to the contrary, Executive may engage in business ventures as long as they are
not competitive with the Corporation.

 

		(e)	For purposes of this Agreement, the term “Customer” means any individual or entity to whom or to which the Corporation
provided Competitive Services, and with whom or with which the Executive had contact in connection with the delivery of such Competitive
Services, within two years of the date on which the Executive’s employment terminates.

 

		(f)	For purposes of this Agreement, “Competitive Services” means providing commercial and consumer financial products
and services that, as of the date of this Agreement, are provided to Customers of the Corporation, whether such services are provided
directly by the Corporation or by others under a contractual arrangement with the Corporation.

 

		(g)	The Executive agrees that the covenants in this Section 11 are reasonably necessary to protect the legitimate interests of
the Corporation, are reasonable with respect to the time and territory and do not interfere with the interests of the public. The
Executive further agrees that the descriptions of the covenants contained in this Section 11 are sufficiently accurate and definite
to inform the Executive of the scope of the covenants. Finally, the Executive agrees that the consideration set forth in this Agreement
is full, fair and adequate to support the Executive’s obligations hereunder and the Corporation’s rights hereunder.
The Executive acknowledges that in the event the Executive’s employment with the Corporation is terminated for any reason,
the Executive will be able to earn a livelihood without violating such covenants.

 

		(h)	The parties have attempted to limit the Executive’s right to compete only to the extent necessary to protect the Corporation
from unfair competition. The parties recognize, however, that reasonable people may differ in making such a determination. Accordingly,
the parties intend that the covenants contained in this Section 11 to be completely severable and independent, and any invalidity
or unenforceability of any one or more such covenants will not render invalid or unenforceable any one or more of the other covenants.
The parties further agree that, if the scope or enforceability of a covenant contained in this Section 11 is in any way disputed
at any time, and if permitted by applicable law and public policy, a court or other trier of fact may modify and reform such provision
to substitute such other terms as are reasonable to protect the Corporation’s legitimate business interests.

 

		(i)	The Executive agrees that, given the nature of the positions held by the Executive with the Corporation, each and every one
of the covenants and restrictions set forth in this Agreement above are reasonable in scope, length of time and geographic area
and are necessary for the protection of the significant investment of the Corporation in developing, maintaining and expanding
its business. Accordingly, the parties hereto agree that in the event of any breach by the Executive of any of the provisions of
Sections 11 and/or 18 of this Agreement that monetary damages alone will not adequately compensate the Corporation for its losses
and, therefore, that it shall be entitled to any and all legal or equitable relief available to it, specifically including, but
not limited to, injunctive relief, and the Executive shall be liable for all damages, including actual and consequential damages,
costs and expenses, and legal costs and actual attorneys fees incurred by the Corporation as a result of taking action to enforce,
or recover for any breach of Section 11 or 18.

 

    	9

    	 

    

 

		(j)	The Executive covenants that he is not the subject of any contract that prevents him from executing this Agreement and performing
the duties of Executive Vice President. The Executive further covenants that he is not subject to any covenants or obligations
not to compete and is not subject to any other restrictions or obligations which would prevent him from fulfilling the duties specified
in this Agreement.

 

		(k)	If the Corporation terminates the employment of the Executive without Cause, the Executive terminates this Agreement for Good
Reason, the Agreement terminates at the end of a term, or this Agreement terminates pursuant to Section 9(c), the covenant set
forth in Sections 11(a) and 11(c) shall not apply.

 

		12.	NOTICES: For the purposes of this Agreement, notices and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

 

		If to the Executive: 	James E. Hendricks, Jr.

8429 Sleepy Duck Place

Richmond, Virginia 23229

 

		If to the Corporation:	William G. Foster, President

Village Bank

P. O. Box 330

Midlothian, Virginia
23112

 

		With a copy to:	Craig D. Bell, Esquire

Chairman of the Board of Directors

McGuireWoods LLP

901 East Cary Street

Richmond,
Virginia 23219-4030

 

or at such other address as any party may have furnished
to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

		13.	MODIFICATION, WAIVERS, APPLICABLE LAW: No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing, signed by the Executive and on behalf of the Corporation
by such officer as may be specifically designated by the Board of Directors of the Corporation. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar provision or conditions at the same or at any prior
or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party, which are not set forth expressly in this Agreement. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the Commonwealth of Virginia.

 

    	10

    	 

    

 

		14.	INVALIDITY, ENFORCEABILITY: The invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

		15.	SUCCESSOR RIGHTS: This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal
or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to his executor or, if there is no such executor, to his estate.

 

		16.	HEADINGS: Descriptive headings contained in this Agreement are for convenience only and shall not control or
affect the meaning or construction of any provision hereof.

 

		17.	ARBITRATION: With the exception of Sections 11 and 18 and the enforcement of these sections in accordance with
Section 11(i), all other claims under this Agreement will be resolved by binding arbitration. Any dispute, controversy or claim
arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three
arbitrators, in Richmond, Virginia in accordance with the Employment Arbitration Rules and Mediation Procedures Rules of the American
Arbitration Association then in effect. The Corporation shall pay all administrative fees associated with such arbitration. Judgment
may be entered on the arbitrator’s award in any court having jurisdiction. Unless otherwise provided in the rules of the
American Arbitration Association, the arbitrators shall, in their award, allocate between the parties the costs of arbitration,
which shall include reasonable attorneys’ fees and expenses of the parties, as well as the arbitrator’s fees and expenses,
in such proportions as the arbitrators deem just.

 

		18.	CONFIDENTIALITY, NONSOLICITATION: Executive covenants and agrees that any and all proprietary information maintained
as confidential by the Corporation and concerning the customers or businesses and services of the Corporation of which he has knowledge
as a result of his association with the Corporation in any capacity, shall be deemed confidential in nature and shall not, without
the proper written consent of the Corporation, be directly or indirectly used, disseminated, disclosed or published by the Executive
to third parties other than in connection with the usual conduct of the business of the Corporation, or as required by law or the
Corporation’s Code of Ethics. Such information shall expressly include, but shall not be limited to, confidential and proprietary
information concerning the Corporation’s trade secrets within the meaning of the Virginia Trade Secrets Act, business operations,
business records, documented customer lists or other confidential customer information. Upon termination of employment, the Executive
shall deliver to the Corporation all property in his possession which belongs to the Corporation including all originals and copies
of documents, forms, records or other information, in whatever form it may exist, concerning the Corporation or its business, customers,
products or services. This Section 18(a) shall not be applicable to any information which, through no misconduct or negligence
of Executive, has been disclosed to the public by anyone other than Executive.

 

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		19.	409A COMPLIANCE:

 

		(a)	The intent of the parties is that payments and benefits under this Agreement comply with Code Section 409A. Accordingly, to
the maximum extent permitted under Code Section 409A, the terms of this Agreement, including, without limitation, “termination”
and “termination of employment,” and similar terms, shall be interpreted to be in compliance with Code Section 409A.
In no event whatsoever shall the Corporation be liable for any additional tax, interest or penalty that may be imposed on the Executive
by Code Section 409A or damages for failing to comply with Code Section 409A.

 

		(b)	Notwithstanding any other payment schedule provided herein to the contrary, if the Executive is deemed on the date of termination
to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then each of the following
shall apply:

 

		(i)	With regard to any payment that is considered deferred compensation under Code Section 409A payable on account of a “separation
from service,” such payment shall be made on the date which is the earlier of (x) the expiration of the six (6)-month period
measured from the date of such ‘separation from service’ of the Executive, and (y) the date of the Executive’s
death (the “Delay Period”) to the extent required under Code Section 409A. Upon the expiration of the Delay Period,
all payments delayed pursuant to this Section 19 (whether they would have otherwise been payable in a single sum or in installments
in the absence of such delay) shall be paid to the Executive in a lump sum, and all remaining payments due under this Agreement
shall be paid or provided in accordance with the normal payment dates specified for them herein; and

 

		(ii)	To the extent that any benefits to be provided during the Delay Period is considered deferred compensation under Code Section
409A provided on account of a “separation from service,” and such benefits are not otherwise exempt from Code Section
409A, the Executive shall pay the cost of such benefits during the Delay Period, and the Corporation shall reimburse the Executive,
to the extent that such costs would otherwise have been paid by the Corporation or to the extent that such benefits would otherwise
have been provided by the Corporation at no cost to the Executive, the Corporation’s share of the cost of such benefits upon
expiration of the Delay Period, and any remaining benefits shall be reimbursed or provided by the Corporation in accordance with
the procedures specified herein.

 

    	12

    	 

    

 

		(c)	All expenses or other reimbursements under this Agreement shall be made promptly and in any event on or prior to the last day
of the taxable year following the taxable year in which such expenses were incurred by the Executive (provided that if any such
reimbursements constitute taxable income to the Executive, such reimbursements shall be paid no later than March 15th
of the calendar year following the calendar year in which the expenses to be reimbursed were incurred), no such reimbursement or
expenses eligible for reimbursement in any taxable year shall in any way affect the expenses eligible for reimbursement in any
other taxable year and the Executive’s right to reimbursement shall not be subject to liquidation in exchange for any other
benefit.

 

		(d)	For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement
shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies
a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days”), the actual
date of payment within the specified period shall be within the sole discretion of the Corporation.

 

		(e)	In no event shall any payment under this Agreement that constitutes “deferred compensation” for purposes of Code
Section 409A be offset by any other payment pursuant to this Agreement or otherwise.

 

		20.	REGULATORY REQUIREMENTS: Notwithstanding anything contained in this Agreement to the contrary, it is understood
and agreed that the Corporation (or any of its successors in interest) shall not be required to make any payment or take any action
under this Agreement if:

 

		(a)	such payment or action is prohibited by any governmental agency having jurisdiction over the Corporation or any of its subsidiaries
(hereinafter referred to as “Regulatory Authority”) because the Corporation or any of its subsidiaries is declared
by such Regulatory Authority to be insolvent, in default or operating in an unsafe or unsound manner; or

 

		(b)	such payment or action (i) would be prohibited by or would violate any provision of state or federal law applicable to the
Corporation, including, without limitation, the Emergency Economic Stabilization Act of 2008 and the Federal Deposit Insurance
Act, each as now in effect or hereafter amended, (ii) would be prohibited by or would violate any applicable rules, regulations,
orders or statements of policy, whether now existing or hereafter promulgated, of any Regulatory Authority, or (iii) otherwise
would be prohibited by any Regulatory Authority.

 

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IN
WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first above written.

 

	 	EXECUTIVE	 
	 	 	 	 
	ATTEST: /s/ Deborah M. Golding	By:  	/s/ James E. Hendricks, Jr.	 
	 	 	James E. Hendricks, Jr. 	 
	 	 	 	 
	 	Date:	May 16, 2014	 
	 	 	 	 
	 	 	 	 
	 	VILLAGE BANK 	 
	 	 	 	 
	 	 	 	 
	ATTEST: /s/ Deborah M. Golding	By:  	/s/ William G. Foster	 
	 	 	William G. Foster	 
	 	 	President 	 
	 	 	 	 
	 	Date:	May 16, 2014	 

 

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