Document:

Exhibit 10.4

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of January 1, 2018, by and between Global GP LLC, a Delaware limited liability company (the “Company”), and Edward J. Faneuil (the “Executive”).

 

WHEREAS, the Company employs the Executive as the Executive Vice President and General Counsel of the Company and the Executive also serves as the Executive Vice President and General Counsel of Global Partners LP, a Delaware limited partnership of which the Company is the general partner (the “Partnership”), and of the Partnership’s subsidiaries (the Partnership together with its subsidiaries, hereinafter, the “Partnership Group”); and

 

WHEREAS, the Company and the Executive mutually desire to agree upon the terms of the Executive’s continued employment by the Company, and to agree as to certain benefits of such employment.

 

NOW, THEREFORE, in consideration of the mutual promises, covenants and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound, hereby agree as follows:

 

1.                                      Employment and Term of Employment.  Effective as of January 1, 2018 (the “Effective Date”) and continuing for the period of time set forth herein, the Executive’s employment by the Company shall be subject to the terms and conditions of this Agreement.  Unless sooner terminated pursuant to other provisions herein, the Company agrees to employ the Executive for the period beginning on the Effective Date and ending on December 31, 2018 (the “Initial Term”).  In the event that the Company and the Executive renew this Agreement for one or more additional periods, each of the Initial Term and any renewal periods shall be referred to as the “Term.”

 

2.                                      Position and Duties.  During the Term, the Company shall employ the Executive as the Executive Vice President and General Counsel of the Company, or in such other positions as the parties mutually agree.  The Executive shall have such powers and duties and responsibilities as are customary to such position and as are assigned to the Executive by the Board of Directors of the Company (the “Board”) or the President and Chief Executive Officer of the Company in connection with the Executive’s service as chief legal officer of the Company and of the Partnership Group.  The Executive’s employment shall also be subject to the policies maintained and established by the Company that are of general applicability to the Company’s employees, as such policies may be amended from time to time.

 

3.                                      Other Interests.  During the Term, the Executive shall devote such of his working time, attention, energies and business efforts to his duties and responsibilities as the Executive Vice President and General Counsel of the Company as are reasonably necessary to carry out the duties and responsibilities generally pertaining to that office.  During the Term, the Company and the Executive agree that with the prior approval of the Board, the Executive may engage in 

 

 

other business activities that do not conflict with the business and affairs of the Company or interfere with the Executive’s performance of his duties and responsibilities hereunder.

 

4.                                      Duty of Loyalty; Indemnification.

 

(a)                                 The Executive acknowledges and agrees that the Executive owes a fiduciary duty of loyalty to act in the best interests of the Company and of the Partnership Group. In keeping with such duty, the Executive shall, during the Term, make full disclosure to the Company of all business opportunities pertaining to the business of the Company or of the Partnership or any of its subsidiaries and, during the Term, shall not appropriate for the Executive’s own benefit business opportunities concerning the business of the Company, the Partnership or any of its subsidiaries, except as otherwise permitted by the non-competition covenants set forth in Section 10 below or as consented to in writing by the Board.

 

(b)                                 The Company shall indemnify the Executive to the extent permitted by the Company’s third amended and restated limited liability company agreement, as amended and/or restated from time to time, and by applicable law, against all reasonable costs, charges and expenses, including, without limitation, reasonable attorneys’ fees, incurred or sustained by the Executive in connection with any claim against Executive and in connection with any action, suit or proceeding to which the Executive may be made a party by reason of being an officer, director or employee of the Company or of the Partnership or any of its subsidiaries.  In connection with the foregoing, the Executive will be covered under any liability insurance policy that protects the other officers and directors of the Company, subject to the terms and conditions of such policies.

 

5.                                      Place of Performance.  Subject to such business travel from time to time as may be reasonably required in the discharge of his duties and responsibilities as the Executive Vice President and General Counsel of the Company, the Executive shall perform his obligations hereunder in, or within forty (40) miles of, Waltham, Massachusetts.

 

6.                                      Compensation.

 

(a)                                 Base Salary.  During the Term, the Executive shall be paid an annual base salary of Four Hundred Fifty Thousand and 00/100 ($450,000.00) Dollars, subject to increase for the renewal term (if any) as of January 1, 2019, if so determined by the Compensation Committee of the Board (the “Compensation Committee”).  The Executive’s base salary, as may be increased in accordance with this Section 6(a), is hereafter referred to as “Base Salary”.  The Base Salary shall be paid in equal installments pursuant to the Company’s customary payroll policies and procedures in force at the time of payment, but in no event less frequently than monthly.

 

(b)                                 Bonus.   From time to time during the Term, the Executive may be eligible to receive a cash bonus (a “Bonus”) in an amount to be determined at the discretion of the Compensation Committee.  Each Bonus hereunder, if any, shall be paid to the Executive no later than March 15 of the calendar year immediately following the calendar year in which such Bonus is earned.

 

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(c)                                  Incentive Compensation.  The Executive shall participate in (a) the annual short-term incentive compensation plan set forth in the attached Exhibit A (the “Short-Term Incentive Plan”), and (b) the long-term incentive compensation plan set forth in the attached Exhibit B (the “Long-Term Incentive Plan”) on the same general basis as the other executive officers of the Company, but the terms and the economic level of the Executive’s participation in the Long-Term Incentive Plan shall be determined by the Compensation Committee, in its discretion.

 

(d)                                 Reimbursements.  During the Term, the Company shall pay or reimburse the Executive for all reasonable expenses incurred by the Executive on business trips, and for all other business and entertainment expenses reasonably incurred or paid by him during the Term in the performance of his services under this Agreement, in accordance with past practice and with the Company’s expense reimbursement policy as in effect from time to time upon  presentation of expense statements or vouchers or such other supporting documentation as the Company may reasonably require.

 

(e)                                  Fringe Benefits.  During the Term, the Executive shall be entitled to participate in the Company’s health insurance, 401(k) and other benefit plans in accordance with Company policies and on the same general basis as other executives of the Company.  During the Term, the Company also will provide the Executive with additional fringe benefits consistent with benefits that have been provided to him under prior arrangements and in accordance with past practice, and with such other benefits as may be approved by the Compensation Committee. Nothing in this Agreement shall be construed as limiting the ability of the Company to amend or terminate any employee benefit plan or Company policy.

 

(f)                                   Vacation.  During the Term (including the renewal period, if any), the Executive shall be granted 30 days of paid vacation for each calendar year with any unused vacation days to be subject to the Company’s standard vacation policy with respect to the carryover or payment for any such unused vacation days.

 

7.                                      Separation from Service.

 

(a)                                 In General.  If the Executive’s employment is terminated for any reason, he (or his estate) shall be paid on the Date of Termination (i) all amounts of Base Salary due and owing up through the Date of Termination, (ii) any earned but unpaid Bonus, (iii) all reimbursements of expenses appropriately and timely submitted, and (iv) any and all other amounts, including vacation pay, that may be due to him as of the Date of Termination (the “Accrued Obligations”). Additionally, the Executive shall be entitled to retain the following items currently supplied to him by the Company: (i) iPad; and (ii) smartphone, including all information contained on the smartphone and the then current telephone number for such smartphone, it being acknowledged and agreed by the Executive that all information contained on the smartphone shall remain subject to the provisions of Section 9 below. Promptly following the Date of Termination, the Executive shall return to the Company all confidential and proprietary information of the Company in his possession.

 

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(b)                              Termination Due to the Death or Disability of Executive.  The Executive’s employment hereunder shall be terminated automatically upon the death or Disability of the Executive.  The Company shall pay or distribute to the Executive (or his estate) upon his termination under this Section 7(b) on the Date of Termination or as soon as reasonably practical (but no more than ten days) thereafter;

 

(i)                                     the Accrued Obligations, plus

 

(ii)                                  a lump sum payment of an amount equal to his Base Salary (determined as of the Date of Termination) multiplied by 200%, plus

 

(iii)                               an amount equal to the target incentive amount under the then applicable Short-Term Incentive Plan as set forth on attached Exhibit A for the fiscal year including the Date of Termination, multiplied by 200%, plus

 

(iv)                              the Executive’s interests in the Company’s long-term incentive plans, including, but not limited to, the amounts of cash and/or securities due as a result of the automatic vesting of the Executive’s interests in grants that have been awarded to the Executive under the Global Partners LP Long-Term Incentive Plan, to the extent accelerated vesting is not prohibited under the vesting provisions of the then awarded and unvested grants, plus

 

(v)                                 the Company shall pay the monthly amounts due for all group health, dental, life, disability, vision and similar insurance premiums on behalf of the Executive and his spouse and dependents, if any, for 18 months following the Date of Termination.

 

(c)                                  Termination by the Company Without Cause or by the Executive for Reasons Constituting Constructive Termination.  The Executive’s employment hereunder may be terminated by the Company without Cause or by the Executive for reasons constituting Constructive Termination.  The Company shall pay or distribute to the Executive (or his estate) upon his termination under this Section 7(c) on the Date of Termination or as soon as reasonably practical (but no more than ten days) thereafter:

 

(i)                                     the Accrued Obligations, plus

 

(ii)                                  a lump sum payment of an amount equal to his Base Salary determined as of the Date of Termination multiplied by 200%, plus

 

(iii)                               an amount equal to the target incentive amount under the then applicable Short-Term Incentive Plan as set forth on attached Exhibit A for the fiscal year including the Date of Termination, multiplied by 200%, plus

 

(iv)                              the Executive’s interests in the Company’s long-term incentive plans, including, but not limited to, the amounts of cash and/or securities due as a result of the automatic vesting of the Executive’s interests in grants that have been awarded to the Executive under the Global Partners LP Long-Term Incentive 

 

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Plan, to the extent accelerated vesting is not prohibited under the vesting provisions of the then awarded and unvested grants, plus

 

(v)                                 the Company shall pay the monthly amounts due for all group health, dental, life, disability, vision and similar insurance premiums on behalf of the Executive and his spouse and dependents, if any, for 18 months following the Date of Termination, plus

 

(vi)                              Notwithstanding any other provision of this Agreement or any other plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to the Executive or for the Executive’s benefit pursuant to this Section 7(c) (“Covered Payments”) constitute parachute payments (“Parachute Payments”) within the meaning of Section 280G of the Code (as defined below), are not eligible for exemption pursuant to Q/A-6(a)(2) of Treas. Reg. § 1.280G-1, and will be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any interest or penalties with respect to such excise tax (collectively, the “Excise Tax”), then the Company shall pay to the Executive, no later than the time the Excise Tax is required to be paid by the Executive or withheld by the Company, an additional amount (the “Gross-up Payment”) equal to the sum of the Excise Tax payable by the Executive, plus the amount necessary to put the Executive in the same after-tax position (taking into account any and all applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax and any income and employment taxes imposed on the Gross-up Payment)) that he would have been in if the Executive had not incurred any tax liability under Section 4999 of the Code.  Any determination required under this Section 7(c)(vi), including whether any payments or benefits are Parachute Payments, shall be made by the Company in good faith. The Executive shall provide the Company with such information and documents as the Company may reasonably request in order to make a determination under this Section 7(c)(vi). The Company’s determinations shall be final and binding on the Company and the Executive; provided, however, that in the event of a dispute with the Internal Revenue Service, the parties will revise the determinations as necessary to comply with regulatory requirements in accordance with the Internal Revenue Service’s interpretations.

 

In the event that the Executive’s employment is terminated by the Company without Cause or by the Executive for Constructive Termination at any time within three (3) months before a Change in Control and twelve months following a Change in Control, then, in addition to the foregoing severance compensation and benefits, the Executive shall receive 100% accelerated vesting on any and all outstanding Company options, restricted units, phantom units, unit appreciation rights and other similar rights (under the LTIP or otherwise) held by the Executive as in effect on the Date of Termination, such accelerated vesting to occur on the later of (i) the Date of Termination, or (ii) the date of the Change of Control.

 

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(d)                                 Termination by the Company for Cause.  The Company may terminate the Executive’s employment hereunder for Cause following (i) reasonable notice to the Executive setting forth in detail the nature of such Cause and the date and time established for a hearing before the Board of Directors of the Company, (ii) an opportunity to be heard before the Board of Directors of the Company at the conclusion of such notice period, at which the Executive shall be entitled to representation by counsel and (iii) a determination by a majority vote of the Board that the Company has Cause to terminate the Executive’s employment.

 

(e)                                  Definitions.

 

(i)                                     For the purposes of this Agreement, “Cause” shall mean the Executive (A) has engaged in gross negligence or willful misconduct in the performance of his duties, (B) has committed an act of fraud, embezzlement or willful breach of a fiduciary duty to the Company or any of its subsidiaries (including the unauthorized disclosure of any material secret, confidential and/or proprietary information, knowledge or data of the Company or any of its subsidiaries); (C) has been convicted of a crime involving fraud or moral turpitude or any felony or (D) has breached any material provision of this Agreement, including without limitation, any of the restrictions and covenants set forth in Section 10 below, other than as a result of the Executive’s inability to perform his obligations hereunder solely due to his poor physical or mental health.  The Executive must be provided a written notice from the Company, giving him at least 30 days to affect a cure of any claimed occurrence under (A), (B) or (D) above that is capable of being cured, prior to the delivery of any notice described under Section 7(d)(i) hereof.

 

(ii)                                  “Change in Control” shall occur upon: (A) the date that any one person, entity or group (other than the successors to the interests of Alfred Slifka, and other than Richard Slifka or Eric Slifka or their respective family members or entities they control, individually or in the aggregate, directly or indirectly (collectively referred to hereinafter as the “Slifkas”)) acquires beneficial ownership of the membership interests of the Company that, together with the membership interests of the Company already owned beneficially by such person, entity or group, constitutes more than 50% of the total voting power of the membership interests of the Company; provided, however, if any one person, entity or group is considered to control, directly or indirectly, more than 50% of the total voting power of the membership interests of the Company, the acquisition of additional membership interests by the same person, entity or group shall not be deemed to be a Change in Control; (B) a consolidation or merger (in one transaction or a series of related transactions) of the Company pursuant to which the holders of the Company’s equity securities immediately prior to such transaction or series of related transactions would not be the beneficial owners immediately after such transaction or series of related transactions of at least 50% of the voting power of the entity surviving such transaction or series of related transactions; or (C) the sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the 

 

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Company to a person other than the Slifkas or any of them. In all respects, the definition of “Change in Control” shall be interpreted to comply with Section 409A(a)(2)(A)(v) of the Internal Revenue Code of 1986 (the “Code”) and any successor statute, and/or guidance thereunder, and the provisions of Treasury Regulation Section 1.409A and any successor regulation and guidance thereto; provided, however, an interpretation in compliance with Section 409A of the Code shall not expand the definition of Change in Control in any way or cause an acquisition by the Slifkas to result in a Change in Control.

 

(iii)                               “Constructive Termination” means termination of this Agreement by the Executive as a result of any (A) substantial diminution, without the Executive’s written consent, in the Executive’s working conditions consisting of (1) a material reduction in the Executive’s duties and responsibilities, (2) any change in the reporting structure so that the Executive no longer reports solely to the President and Chief Executive Officer of the Company, or (3) a relocation of the Executive’s place of work further than forty (40) miles from Waltham, Massachusetts, or (B) a material breach of this Agreement by the Company.  To be able to terminate his employment with the Company for Constructive Termination, the Executive must provide notice to the Company of the existence of any of the conditions set forth in the immediately preceding sentence within 90 days of his becoming aware of the initial existence of such condition(s), and the Company must fail to remedy such condition(s) within 30 days of such notice.  In no event shall the Date of Termination in connection with a Constructive Termination occur any later than one year following the notice of the existence of the condition(s) constituting a Constructive Termination hereunder. For purposes of clarification, Constructive Termination shall not include a change in reporting structure as a result of the Company becoming a subsidiary of an unrelated entity, including, without limitation, a change whereby the Executive is not the chief legal officer or general counsel of the acquiring or parent entity or must report to the chief legal officer or general counsel of a currently unaffiliated parent corporation or entity.

 

(iv)                              “Disability” shall mean a physical or mental disability or impairment which renders the Executive unable, with or without reasonable accommodation, to perform the essential functions of the Executive’s duties to the Company for a period of at least ninety (90) consecutive days and, following the expiration of the initial 90-day period, the Company has received the opinion of a medical doctor or other appropriate health care provider, in either case selected solely by the Company, that such physical or mental disability or impairment is expected to continue for at least an additional ninety (90) consecutive days

 

(f)                                   Notice of Termination.  Any termination (except due to the death of Executive) by the Company or the Executive shall be communicated by written Notice of Termination to the other party hereto.   For purposes of this Agreement, a “Notice of Termination” shall mean a notice which (i) shall state the effective date of such termination, (ii) shall indicate the specific termination provision in this Agreement relied upon and (iii) shall set forth in reasonable detail the facts and circumstances claimed to 

 

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provide a basis for termination of the Executive’s employment under the provision so indicated.  Any such notice shall be provided in accordance with the requirements of Section 22 hereof. Any notice of voluntary termination by the Executive or of termination without Cause by the Company shall be given 60 days in advance of such termination.  Any notice of Constructive Termination by the Executive shall be given by the Executive within 90 days of his becoming aware of the existence of the condition upon which the Constructive Termination is based.

 

(g)                                  Deemed Resignation.  If the Executive’s employment is terminated for any reason, then such termination shall constitute an automatic resignation of the Executive as an officer of the Company and each affiliate of the Company, and, if applicable, an automatic resignation of the Executive from the Board of Directors of the Company and from the board of directors of any affiliate of the Company and from the board of directors or similar governing body of any corporation, limited liability company or other entity in which the Company or any of its affiliates holds an equity interest and with respect to which board or similar governing body the Executive serves as the Company’s or such affiliate’s designee or other representative.

 

(h)                                 Date of Termination.  The “Date of Termination” shall mean (i) the date of death, if the Executive’s employment is terminated because of death, (ii) the date the Executive is determined to have a Disability, if the Executive’s termination is based on his Disability, and (iii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination, which date shall be in accordance with the timing rules set out in (d) or (f) of this Section 7, as applicable. With respect to any compensation payable under this Agreement that is subject to Section 409A of the Code, references to the Executive’s Date of Termination or termination of employment (and variations thereof) shall be deemed to refer only to the Executive’s “separation from service” within the meaning of Section 1.409A-1(h) of the U.S. Treasury Regulations, applying the default terms thereof.

 

(i)                                     Delayed Payments. Notwithstanding any other provision with respect to the timing of payments under this Section 7, if, at the time of the Executive’s termination, the Executive is deemed to be a “specified employee”  (within the meaning of Section 409A of the Code, and any successor statute, regulation and guidance thereto) of the Company, then only to the extent necessary to comply with the requirements of Section 409A of the Code, any payments to which the Executive may become entitled under Section 7 as a result of his “separation from service” (within the meaning of Section 409A of the Code, and any successor statute, regulation and guidance thereto) which are subject to Section 409A of the Code (and not otherwise exempt from its application) will be withheld until the first business day of the seventh month following the termination of the Executive’s employment, at which time the Executive shall be paid an aggregate amount equal to six months of payments otherwise due to the Executive under the terms of this Section 7, as applicable, plus (to the extent not prohibited by Section 409A of the Code) interest on such amounts at the then applicable prime rate of interest as established from time to time by Bank of America Corporation or its successor.  After the first business day of the seventh month following the termination of the Executive’s employment and continuing each month thereafter, the Executive shall 

 

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be paid the regular payments otherwise due to the Executive in accordance with the terms of this Section 7, as applicable.

 

(j)                                    Nondisparagement.  Each of the Company and the Executive agree not to make any disparaging comments or remarks, orally or in writing, about the other party following the termination or expiration of this Agreement.

 

8.                                      Section 409A.  The parties hereto intend that this Agreement comply with the requirements of Section 409A of the Code and the regulatory guidance thereunder.  If any provision provided herein may result in the imposition of an additional tax or penalty under the provisions of Section 409A of the Code, the Executive and the Company agree to amend any such provision to avoid imposition of any such additional tax, to the extent possible, in the manner that the Executive and the Company mutually agree is appropriate to comply with Section 409A of the Code; provided that, to the extent possible, any such amendment shall minimize any decrease in the payments or benefits to the Executive contemplated herein.

 

9.                                      Confidential Information; Unauthorized Disclosure.

 

(a)                                 During the Term and for the period ending two years following the Date of Termination, the Executive shall not, without the written consent of the Board or a person authorized thereby, disclose to any person, other than an employee of the Company, the Partnership or its subsidiaries or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of his duties as Executive Vice President and General Counsel of the Company and the Partnership, any secret, confidential and/or proprietary information, knowledge or data obtained by him while in the employ of the Company or any of its affiliates with respect to the Company, the Partnership or any of its subsidiaries and their respective businesses, the disclosure of which he knows or should know will be damaging to the Company, the Partnership or any of its subsidiaries; provided however, that such information, knowledge or data shall not include (i) any information, knowledge or data known generally to the public (other than as a result of unauthorized disclosure by the Executive) or (ii) any information, knowledge or data which the Executive may be required to disclose by any applicable law, order, or judicial or administrative proceeding.

 

(b)                                 The Executive acknowledges that money damages would not be a sufficient remedy for any breach of this Section 9 by the Executive, and the Company, the Partnership or its subsidiaries shall be entitled to enforce the provisions of this Section 9 by seeking specific performance and injunctive relief as remedies for such breach or any threatened breach.  Such remedies shall not be deemed the exclusive remedies for a breach of this Section 9 but shall be in addition to all remedies available at law or in equity, including the recovery of damages from the Executive and his agents.

 

10.                               Non-competition; Non-solicitation.

 

(a)                                 During the Term and, in the event that the Executive’s employment is terminated for any reason, then for a period of one (1) year following the Date of Termination, the Executive shall be prohibited from working (as an employee, consultant, 

 

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advisor, director or otherwise) for, engaging in or acquiring or investing in any business having assets engaged in the following businesses in New England and the other jurisdictions in which the Company is conducting business as of the Date of Termination  (the “Restricted Businesses”), unless the Chief Executive Officer of the Company and the Board approve such activity:  (i) wholesale or retail marketing, sale, distribution and transportation of refined petroleum products, crude oil, renewable fuels (including ethanol and biofuels), and natural gas liquids (including ethane, butane, propane and condensates); (ii) the storage of refined petroleum products and/or any of the other products identified in clause (i) of this paragraph in connection with any of the activities described in said clause (i); (iii) the retail sale of convenience store items and sundries and related food service, whether or not related to the retail sale of refined petroleum products including, without limitation, gasoline; (iv) bunkering; and (v) any other business in which the Company or its Affiliates (a) becomes engaged during the period Executive is employed by the Company or any of its Affiliates, or (b) is preparing to become engaged as of the time that Executive’s employment with the Company or any of its Affiliates ends and, with respect to parts (a) and (b) of this clause (v), the Executive has participated in or obtained Confidential Information about such business or anticipated business. Notwithstanding any provision of this Section 10 to the contrary, the Executive may (x) own up to 3% of a publicly traded entity that is engaged in one or more of the Restricted Businesses and (y) with the prior consent of the Company, may serve as a director of an entity that is engaged in one or more of the Restricted Businesses.  If any court determines that any of the provisions of this Section 10 are invalid or unenforceable, the remainder of such provisions shall not thereby be affected and shall be given full effect without regard to the invalid provisions.  If any court construes any of the provisions of this Section 10, or any part thereof, to be unreasonable because of the duration of such provision or the geographic scope thereof, such court shall have the power to reduce the duration or restrict the geographic scope of such provision and to enforce such provision as so reduced or restricted.

 

(b)                                 During the Term and, in the event that the Executive’s employment is terminated pursuant for any reason, then for a period of one year following the Date of Termination, the Executive shall not, without the prior written consent of the Company:

 

(i)                                     Either individually or on behalf of or through any third party, solicit, divert or appropriate or attempt to solicit, divert or appropriate, for the purpose of engaging in any Restricted Business, any customers of the Company, or any prospective customers with respect to which the Company has made a sales presentation (or similar offering of services).

 

(ii)                                  Either individually or on behalf of or through any third party, directly or indirectly, solicit, entice or persuade or attempt to solicit, entice or persuade any other employees of or consultants to the Company within the immediately preceding 12-month period or any parent or affiliate of the Company to leave the services of the Company or any parent or affiliate for any reason.

 

The Executive, for himself and his Affiliates, hereby agrees and acknowledges that the non-competition restrictions and covenants set forth in this Section 10 are fair and reasonable 

 

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provisions for the protection of the Company’s and the Partnership Group’s legitimate business interests including, without limitation, the Company’s and the Partnership Group’s confidential  information, trade secrets, goodwill and the business contacts which the Executive will establish and develop in the course of performing his duties under this Agreement.

 

11.                               Payment Obligations Absolute.  Except as specifically provided in this Agreement, the Company’s obligation to pay the Executive the amounts and to make the arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company or the Partnership (including its affiliates) may have against him or anyone else.   All amounts payable by the Company shall be paid without notice or demand.  The Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and except as provided in Section 7(c) above, the obtaining of any such other employment shall in no event effect any reduction of the Company’s obligations to make the payments and arrangements required to be made under this Agreement.

 

12.                               Successors.  This Agreement shall inure to the benefit of and be binding upon the Company and its successors and permitted assigns and any such successor or permitted assignee shall be deemed substituted for the Company under the terms of this Agreement for all purposes. As used herein, “successor” and “assignee” shall be limited to any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires control of the Company or to which the Company assigns this Agreement by operation of law or otherwise in connection with any sale of all or substantially all of the assets of the Company, provided that any successor or permitted assignee promptly assumes in a writing delivered to the Executive this Agreement and, in no event, shall any such succession or assignment release the Company from its obligations hereunder. The Company will require any successor (whether direct or indirect, by purchase, merger or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as herein before defined and any successor to all or substantially all of its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

 

13.                               Assignment.  The Executive shall not have any right to pledge, hypothecate, anticipate or assign this Agreement or the rights hereunder, except by will or the laws of descent and distribution, or delegate his duties or obligations hereunder.

 

14.                               Governing Law.  The provisions of this Agreement shall be construed in accordance with, and governed by, the laws of the Commonwealth of Massachusetts without regard to principles of conflict of laws.

 

15.                               Entire Agreement.  This Agreement together with Exhibits A and B hereto and (i) that certain Amended and Restated Deferred Compensation Agreement between the Partnership and the Executive dated as of December 31, 2008, (ii) that certain Deferred Compensation Agreement between Alliance Energy LLC and the Executive dated as of September 23, 2009, 

 

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(iii) that certain Supplemental Executive Retirement Plan for Edward J. Faneuil made effective December 31, 2009 (the “SERP”), and (iv) those certain Global Partners LP Long-Term Incentive Plan Grants of Phantom Units to the Executive dated June 27, 2013 and August 16, 2017, constitute  the entire agreement of the parties with regard to the subject matter hereof, and contain all the covenants, promises, representations, warranties and agreements between the parties with respect to such subject matter.  Without limiting the scope of the preceding sentence, all understandings and agreements other than this Agreement and the deferred compensation agreements and the SERP referenced in the preceding sentence and relating to the subject matter hereof are hereby null and void and of no further force and effect, including, without limitation, all prior employment and severance agreements, if any, by and between the Company and the Executive.

 

16.                               Modification.  Any modification of this Agreement will be effective only if it is in writing and signed by the parties hereto.

 

17.                               No Waiver.  No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

18.                               Severability.  Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction by reason of applicable law shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

19.                               Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

 

20.                               Withholding of Taxes and Other Employee Deductions.  The Company may withhold from any benefits and payments made pursuant to this Agreement all federal, state, city and other taxes as may be required pursuant to any law or governmental regulation or ruling and all other normal employee deductions made with respect to the Company’s employees generally.

 

21.                               Headings.  The paragraph headings have been inserted for purposes of convenience and shall not be used for interpretive purposes.

 

22.                               Notice.  For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by U.S. registered mail, return receipt requested, postage prepaid, addressed to the parties at their addresses set forth below, or to such other addresses as either 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.

 

12

 

If to the Company:

 

Global GP LLC
 P.O. Box 9161
 800 South St., Suite 500
 Waltham, Massachusetts 02454-9161
 Attention: President and Chief Executive Officer and the Chairman of the Board

 

with a copy to:

 

Brenda K. Lenahan
 Vinson & Elkins L.L.P.
 666 Fifth Avenue
 25th Floor
 New York, New York 10103

 

If to the Executive:

 

At the Executive’s last known home address listed in the Company’s personnel records from time to time

 

with a copy to:

 

Michael A. Hickey

Goulston & Storrs, P.C.
 400 Atlantic Ave.
 Boston, Massachusetts 02110

 

[Signature page follows]

 

13

 

IN WITNESS WHEREOF, the parties have executed this Agreement to become effective as of January 1, 2018.

 

	
 
    	
GLOBAL GP LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Eric Slifka
    
	
 
    	
 
    	
Eric   Slifka 
   President & CEO
    
	
 
    	
 
    
	
 
    	
Date:
    	
4/23/18
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Edward J. Faneuil
    
	
 
    	
 
    	
EDWARD J. FANEUIL
    
	
 
    	
 
    
	
 
    	
Date:
    	
4/23/18
    
				

 

[Signature page to Employment Agreement]

 

14

 

EXHIBIT A

 

SHORT-TERM ANNUAL CASH INCENTIVE PLAN

 

The Executive shall participate in the 2018 short-term cash incentive plan (the “2018 STIP”) described below and, in the event of one or more renewal term(s) under this Employment Agreement, the Executive also shall participate in a STIP for each such renewal term to be determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) in consultation with its compensation consultant.

 

During the first calendar quarter of 2018, the Compensation Committee established (a) threshold financial metrics required to be met for any cash incentive amount to be awarded under the 2018 STIP in respect of fiscal year 2018 (the “financial metrics”), and (b) a discretionary cash component for the amount of the cash incentive (if any) to be awarded under the 2018 STIP regardless of whether the financial metrics threshold are or are not met or exceeded.  The targets, metrics (including any thresholds) and discretionary component established by the Compensation Committee are set forth in a payout grid maintained by the Compensation Committee.  The 2018 STIP design provides that 50% of the cash incentive amounts (if any) earned for 2018 will be determined by the Compensation Committee based upon the Partnership’s achievement of the financial metrics, and 50% of the cash incentive amounts (if any) for 2018 will be determined at the discretion of the Compensation Committee.  Under the 2018 STIP, the Executive’s “award target” cash incentive amount is 100% of his Base Salary, and his 2018 maximum cash incentive amount is 200% of his Base Salary.

 

Awards under the 2018 STIP and any STIP for future renewal term(s), if applicable, shall be paid within 21⁄2 months of the end of the fiscal year to which the STIP applies; provided, however, that if the Partnership has not completed its audited consolidated financial statements within 21⁄2 months of the end of that fiscal year, the award shall be paid within 5 business days following completion of the Partnership’s audited consolidated financial statements for such fiscal year, but in no event later than September 30 of the year following the end of the applicable fiscal year; and further provided, that any such payment shall be made in a manner that is either exempt from, or in compliance with, Section 409A of the Internal Revenue Code of 1986 (the “Code”) and any successor statute, and/or guidance thereunder, and the provisions of Treasury Regulation Section 1.409A and any successor regulation and guidance thereto (collectively, “Section 409A”).

 

 

EXHIBIT B

 

LONG-TERM INCENTIVE PLAN GRANTS

 

The Executive shall be eligible to participate in the Company’s long-term incentive plan grants throughout the Term of the Employment Agreement.  The Company’s Compensation Committee shall determine whether and in what amounts to grant the Executive cash awards, performance-restricted units, phantom units or some functional equivalent of Global Partners LP, and shall establish the terms and conditions of such grants, including the timing of the grants, the vesting periods, if any, and any applicable milestones, all in accordance with the Company’s then applicable long-term incentive plan and in compliance with Section 409A of the Code and any successor statute, regulation or guidance thereunder.Exhibit 4.1

 

ATOSSA GENETICS INC.

 

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES B CONVERTIBLE PREFERRED STOCK

 

PURSUANT TO SECTION 151 OF THE

DELAWARE GENERAL CORPORATION LAW

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

     

    

    

 

TERMS OF PREFERRED STOCK

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    2 

    

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    3 

    

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    4 

    

    

 

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

 

SECTION
6      CONVERSION.

 

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

 

(b)          Conversion Price. The conversion price for the Preferred Stock shall equal $3.52, subject to adjustment
herein (the “Conversion Price”).

 

(c)          Mechanics of Conversion

 

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

 

    5 

    

    

 

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

 

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

 

    6 

    

    

 

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

 

    7 

    

    

 

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

 

(vi)        Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion
of the Preferred Stock. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion,
the Corporation shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such
fraction multiplied by the Conversion Price or round up to the next whole share.

 

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

 

    8 

    

    

 

(d)          Beneficial Ownership Limitation. The Corporation shall not effect any conversion of the Preferred Stock, and
a Holder shall not have the right to convert any portion of the Preferred Stock, to the extent that, after giving effect to the
conversion set forth on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any
Persons acting as a group together with such Holder or any of such Holder’s Affiliates (such persons, “Attribution
Parties”)) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates and Attribution Parties
shall include the number of shares of Common Stock issuable upon conversion of the Preferred Stock with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining,
unconverted Stated Value of Preferred Stock beneficially owned by such Holder or any of its Affiliates or Attribution Parties and
(ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation subject to a limitation
on conversion or exercise analogous to the limitation contained herein (including, without limitation, the Preferred Stock or the
Warrants) beneficially owned by such Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding
sentence, for purposes of this Section 6(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 6(d) applies,
the determination of whether the Preferred Stock is convertible (in relation to other securities owned by such Holder together
with any Affiliates and Attribution Parties) and of how many shares of Preferred Stock are convertible shall be in the sole discretion
of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder’s determination of whether
the shares of Preferred Stock may be converted (in relation to other securities owned by such Holder together with any Affiliates
and Attribution Parties) and how many shares of the Preferred Stock are convertible, in each case subject to the Beneficial Ownership
Limitation. To ensure compliance with this restriction, each Holder will be deemed to represent to the Corporation each time it
delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and
the Corporation shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination
as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. For purposes of this Section 6(d), in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i)
the Corporation’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent
public announcement by the Corporation or (iii) a more recent written notice by the Corporation or the Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the written or oral request (which may be via email) of a Holder, the Corporation
shall within two Trading Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise
of securities of the Corporation, including the Preferred Stock, by such Holder or its Affiliates or Attribution Parties since
the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock issuable upon conversion of Preferred Stock held by the applicable Holder. A Holder, upon not less than 61 days’
prior notice to the Corporation, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 6(d) applicable
to its Preferred Stock provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Preferred
Stock held by the Holder and the provisions of this Section 6(d) shall continue to apply. Any such increase or decrease will not
be effective until the 61st day after such notice is delivered to the Corporation and shall only apply to such Holder
and no other Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 6(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with
the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly
give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of Preferred Stock.

 

    9 

    

    

 

SECTION
7      CERTAIN
ADJUSTMENTS.

 

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

 

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

 

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

 

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

 

(e)          Notice to the Holders.

 

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

 

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

 

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SECTION
8      MISCELLANEOUS.

 

(a)          Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder
including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile or email, or
sent by a nationally recognized overnight courier service, addressed to the Corporation, at the address set forth above Attention:
Chief Financial Officer, facsimile number (206) 430-1228, or e-mail to kyle.guse@atossagenetics.com, or such other facsimile number,
e-mail or address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section
8. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and
delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the
facsimile number or address of such Holder appearing on the books of the Corporation, or if no such facsimile number or address
appears on the books of the Corporation, at the principal place of business of such Holder, as set forth in such Holder’s
Subscription Rights Certificate. Any notice or other communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number
or e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading
Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or e-mail
at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time)
on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

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

 

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

 

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

 

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

 

    14 

    

    

 

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

 

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

 

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

 

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

 

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

 

    15 

    

    

 

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

 

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

 

 

	
        

         
	 	
        

         

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

 

     

    

    

 

ANNEX A

 

NOTICE OF CONVERSION

 

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

 

The undersigned hereby elects to convert
the number of shares of Series B Convertible Preferred Stock indicated below into shares of common stock, par value $0.18 per share
(the “Common Stock”), of Atossa Genetics Inc., a Delaware corporation (the “Corporation”),
according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a Person
other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates and opinions as may be required by the Corporation in accordance with the Dealer-Manager Agreement. No fee will
be charged to the Holders for any conversion, except for any such transfer taxes.

 

Conversion calculations:

 

	Date to Effect Conversion:	 	 
	 	 	 
	Number of shares of Preferred Stock owned prior to Conversion:	 	 
	 	 	 
	Number of shares of Preferred Stock to be Converted:	 	 
	 	 	 
	Stated Value of shares of Preferred Stock to be Converted:	 	 
	 	 	 
	Number of shares of Common Stock to be Issued:	 	 
	 	 	 
	Applicable Conversion Price:	 	 
	 	 	 
	Number of shares of Preferred Stock subsequent to Conversion:	 	 

 

     

    

    

 

	Address for Delivery:	 	 
	 	 	 
	or	 	 
	DWAC Instructions:	 	 
	Broker no:	 	 
	 	 	 
	Account no:	 	 

 

	 	[HOLDER]
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

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