Document:

Exhibit
4.2

[PREFERRED]

 

	 	 	 	 	 
	B-[__]
    	 	INCORPORATED
    UNDER THE LAWS OF

    THE
    STATE OF DELAWARE
	 	**[        ]**

 

CLEARDAY,
INC.

 

THIS
CERTIFIES THAT _________________________________________________________is the registered holder of 

______________________________________________________________________________________________Shares

 

of
6.75% Series F Cumulative Convertible Preferred Stock of Clearday, Inc. (hereinafter designated the “Corporation”), transferrable
only on the share register of the Corporation, in person or by duly authorized Attorney, upon surrender of this Certificate properly
endorsed or assigned.

 

The
shares represented by this Certificate are, as provided in the certificate of designation filed by the Corporation with respect to the
securities represented by this certificate, as amended, convertible into shares of common stock of the Corporation at the election of
the holder thereof and shall so be converted upon the occurrence of certain events as set forth in the Certificate of Incorporation,
and any amendments and restatements thereof, of the Corporation.

 

This
Certificate and the shares represented hereby are issued and shall be held subject to all the provisions of the Certificate of Incorporation
and the Bylaws of the Corporation and any amendments and restatements thereof to all of which the holder of this Certificate, by acceptance
hereof, assents.

 

A
statement of the rights, preferences, privileges and restrictions granted to or imposed upon the respective classes of shares of stock
of the Corporation and upon the holders thereof may be obtained by any stockholder, upon request and without charge, at the principal
office of the Corporation.

 

SEE
REVERSE SIDE OF CERTIFICATE FOR ADDITIONAL STATEMENTS AND RESTRICTIVE LEGENDS.

 

In
Witness Whereof, the said Corporation has caused this certificate to be signed by its duly authorized officers.

 

Dated
as of [                    ]

 

	 
	 	 

	[                    ]	 	[                    ]

 

[6.75%
Series F Cumulative Convertible Preferred Stock]

 

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN LIMITATIONS ON CONVERSION AS SET FORTH IN THE CERTIFICATE OF DESIGNATION
OF PREFERENCES, RIGHTS AND LIMITATIONS OF SERIES F CONVERTIBLE PREFERRED STOCK, A COPY OF WHICH MAY BE INSPECTED AT THE PRINCIPAL OFFICE
OF THE CORPORATION, AND ALL OF THE PROVISIONS OF WHICH ARE INCORPORATED HEREIN.Exhibit 4.13

 

DESCRIPTION
OF CAPITAL STOCK OF CLEARDAY

 

The
following description of Clearday’s capital stock and provisions of its amended and restated certificate of incorporation and amended
and restated bylaws as in effect on December 31. 2021.

 

General

 

Clearday’s
authorized capital stock consists of 80,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of convertible
preferred stock, par value $0.01 per share of which 2,000,000 shares have been designated as Clearday Series A Convertible Preferred
Stock (“Series A Preferred”) and 5,000,000 shares have been designated as the 6.75% Series F Cumulative Convertible Preferred
Stock (“Series F Preferred”)

 

Common
Stock

 

Holders
of our common stock are entitled to such dividends as may be declared by our board of directors out of funds legally available for such
purpose, subject to any preferential dividend rights of any then outstanding preferred stock. The shares of common stock are neither
redeemable nor convertible. Holders of common stock have no preemptive or subscription rights to purchase any of our securities.

 

Each
holder of our common stock is entitled to one vote for each such share outstanding in the holder’s name. No holder of common stock
is entitled to cumulate votes in voting for directors.

 

In
the event of our liquidation, dissolution or winding up, the holders of our common stock are entitled to receive pro rata our assets
that are legally available for distribution, after payments of all debts and other liabilities and subject to the prior rights of any
holders of preferred stock then outstanding. All of the outstanding shares of our common stock are, and the shares of common stock issued
upon the conversion of any securities convertible into our common stock will be, fully paid and non-assessable.

 

Our
common stock is listed on the OTC Markets OTCQB under the symbol “CLRD.” Computershare is currently the transfer agent and
registrar for our common stock. Its address is 250 Royall Street, Canton, MA 02021.

 

Preferred
Stock

 

Clearday’s
amended and restated certificate of incorporation permits it to issue up to 10,000,000 shares of preferred stock in one or more series
and with rights and preferences that may be fixed or designated by Clearday’s board of directors without any further action by
Clearday’s stockholders.

 

Subject
to the limitations prescribed in Clearday’s amended and restated certificate of incorporation and under Delaware law, Clearday’s
amended and restated certificate of incorporation authorizes the board of directors, from time to time by resolution and without further
stockholder action, to provide for the issuance of shares of preferred stock, in one or more series, and to fix the designation, powers,
preferences and other rights of the shares and to fix the qualifications, limitations and restrictions thereof. The issuance of additional
shares of preferred stock could adversely affect the rights of holders of Clearday’s common stock, including with respect to voting,
dividends and liquidation, by issuing shares of preferred stock with certain voting, conversion and/or redemption rights. Such issuance
of preferred stock may have the effect of delaying, deferring or preventing a change of control.

 

Preferred
stock could thus be issued quickly with terms calculated to delay or prevent a change in control of us or to make removal of Clearday’s
management more difficult. Additionally, the issuance of preferred stock may decrease the market price of Clearday’s common stock.
The number of authorized shares of preferred stock may be increased or decreased, but not decreased below the number of shares then outstanding,
by the affirmative vote of the holders of a majority of Clearday’s common stock without a vote of the holders of preferred stock,
or any series of preferred stock, unless a vote of any such holder is required pursuant to the terms of such series of preferred stock.

 

    	 

     

    

 

The
following description sets forth certain general terms and provisions of the preferred stock that Clearday may issue. If Clearday offers
convertible preferred stock, such stock will be convertible into shares of Clearday’s common stock. With respect to any convertible
preferred stock or preferred stock (each referred to herein as preferred stock) Clearday may choose to offer, the specific designations
and rights will be described in the prospectus or other appropriate documentation relating to the preferred stock offered, including
the following terms. Each time that Clearday issues a new series of preferred stock, Clearday will file with the SEC a definitive certificate
of designations that will state the designation, powers, preferences, rights and qualifications, limitations and restrictions of that
series of preferred stock. In addition, the prospectus or other appropriate document relating to that new series of preferred stock will
specify the particular amount, price and other terms of that new series. These terms will include:

 

	 	●	the
    designation of the series, which may be by distinguishing number, letter or title;
	 	●	the
    number of shares of the series, which number the board of directors may thereafter (except where otherwise provided in the preferred
    stock designation) increase or decrease (but not below the number of shares thereof then outstanding);
	 	●	the
    price at which the preferred stock will be issued;
	 	●	the
    dividend rate, the dates on which the dividends will be payable, if any, whether dividends shall be cumulative or noncumulative and
    other terms relating to the payment of dividends on the preferred stock;
	 	●	whether
    the preferred stock is redeemable or subject to a sinking fund, and the terms and amount of such sinking fund provided for the purchase
    or redemption of shares of the series;
	 	●	the
    amounts payable on shares of the series, and the special or relative rights of such shares, in the event of any voluntary or involuntary
    liquidation, dissolution or winding up of the affairs of Clearday;
	 	●	whether
    the shares of the series shall be convertible into shares of any other class or series, or any other security, of Clearday or any
    other corporation, and, if so, the specification of such other class or series or such other security, the conversion price or prices
    or rate or rates, any adjustments thereof, the date or dates as of which such shares shall be convertible and all other terms and
    conditions upon which such conversion may be made;
	 	●	any
    listing of the preferred stock on any securities exchange;
	 	●	the
    relative ranking and preferences of the preferred stock as to dividend rights and rights upon liquidation and dissolution or winding
    up;
	 	●	restrictions
    on the issuance of shares of the same series or of any other class or series;
	 	●	the
    voting rights, if any, of the holders of shares of the series, provided that no share of preferred stock of any series will be entitled
    to more than one vote per share of preferred stock; and
	 	●	any
    additional rights, preferences, qualifications, limitations and restrictions of the preferred stock.

 

Series
A Convertible Preferred Stock

 

The
Series A Convertible Preferred Stock may be converted into shares of common stock at the option of the holder, subject to limitation
of such holder not having beneficial ownership of our common stock that is more than 9.9%. Except for a preference on liquidation of
$0.01 per share, each share of Series A Preferred Stock is the economic equivalent of that number of shares of common stock into which
it is convertible. Except as required by law, the Series A Preferred Stock will not have any voting rights.

 

The
conversion of a share of Series A Preferred stock is determined by a formula: the numerator is equal to the stated value of $16.21 and
the denominator is an amount (the “Series A Conversion Price”) initially equal to $1.6275, which amount is subject to proportionate
adjustment for stock splits, stock dividends, combinations, reclassifications or other similar events. As of December 31, 2021, the Conversion
price is equal to $2,930.08. The number of shares of Series A Preferred Stock outstanding as of the date of the financial statements
that are included in this Report are as set forth in such financial statements.

 

For
a complete description of the terms of the Series A Preferred Stock, please see the certificate of designations, filed with or incorporated
by reference into, this Report.

 

Series
F Preferred Stock

 

General
Terms.

 

The
Clearday Series F Preferred stock and rank with respect to rights to receive dividends and to participate in distributions or payments
upon liquidation, dissolution or winding up of Clearday) rank (a) senior to Clearday’s common stock and any other securities that
are designated as junior to the Clearday Series F Preferred stock, and (b) on parity with any class or series of capital stock of Clearday
expressly designated as ranking on parity with the Clearday Series F Preferred stock as to dividend rights and rights upon voluntary
or involuntary liquidation, dissolution or winding up of Clearday.

 

    	 

     

    

 

Dividend
Rights.

 

Each
share of Clearday Series F Preferred stock is entitled to receive cumulative dividends at the rate of six and three quarters percent
(6.75%) per annum of the $20.00 per share Series A Original Issue Price from the date of issue of such share or the most recent dividend
payment date with respect to such share, as applicable. Dividends are payable, as and when declared, quarterly in arrears to holders
of record as of the last day of each fiscal quarter of Clearday. Dividends that have not been paid on a dividend payment date, will accrue
until paid. Dividends may be paid in cash or be paid by Clearday issuing additional shares of the Clearday Series F Preferred stock equal
to the amount of dividend to be paid divided by the $20.00 per share Series A Original Issue Price (“PIK Dividend”). Without
the consent of the holders of the Clearday Series F Preferred representing more than 50% of the issued and outstanding shares of the
Clearday Series F Preferred stock (the “Requisite Holders”), Clearday will not authorize, declare or pay any dividend on
account of securities that rank junior or on parity with the Clearday Series F Preferred stock if the accrued dividends on account of
the Clearday Series F Preferred stock have not been paid in full, unless such divided is paid by the issuance of securities such as the
common stock of Clearday or other securities that rank junior to the Clearday Series F Preferred stock.

 

Liquidation
Rights.

 

The
holders of the Clearday Series F Preferred stock have a right to the distribution of the net assets of Clearday upon any liquidation,
dissolution, winding up or Deemed Liquidation (as defined below) of Clearday that is senior to the common stock or other junior securities
of Clearday and pari passu with the holders with any securities that rank on parity with the Clearday Series F Preferred stock in an
amount equal to the aggregate of the $20.00 per share Original Issue Price and the amount of the accrued and unpaid dividends. A “Deemed
Liquidation” of Clearday shall mean any of the following events:

 

	 	●	the
    acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Securities
    Exchange Act of 1934, as amended, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition
    transaction or series of purchases, mergers or other acquisition transactions of shares of Clearday entitling that person to exercise
    more than fifty percent (50%) of the total voting power of all shares of Clearday entitled to vote generally in elections of directors
    (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire,
    whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition);
	 	●	any
    consolidation or merger of Clearday in which Clearday is not the surviving entity, to the extent that (x) in connection therewith,
    the holders of Common stock receive as consideration, whether in whole or in part, for such Common stock (1) cash, (2) notes, debentures
    or other evidences of indebtedness or obligations to pay cash or (3) preferred stock of the surviving entity (whether or not the
    surviving entity is Clearday) which ranks on a parity with or senior to the preferred stock received by holders of the Clearday Series
    F Preferred stock with respect to liquidation or dividends or (y) the holders of the Clearday Series F Preferred stock do not receive
    preferred stock of the surviving entity, or a Person that owns on the date of such consolidation or merger 100% of the surviving
    entity, with rights, powers and preferences equal to (or more favorable to the holders than) the rights, powers and preferences of
    the Clearday Series F Preferred stock; or
	 	●	the
    sale, lease, transfer or other disposition (but not a consolidation or merger described in clause (ii) of this definition), in a
    single transaction or series of related transactions, by Clearday or any subsidiary of Clearday of all or substantially all the assets
    of Clearday and Clearday’s subsidiaries taken as a whole, except where such sale, lease, transfer or other disposition is to
    a wholly owned subsidiary of Clearday.

 

    	 

     

    

 

Voting
Rights.

 

The
holders of the Clearday Series F Preferred stock, generally, have the right to vote on all matters presented to the stockholders of Clearday
for their action or consideration at any meeting of stockholders of Clearday (or by written consent of stockholders in lieu of meeting),
as a single class. Each holder of the Clearday Series F Preferred stock is entitled to cast the number of votes equal to the number of
whole shares of common stock into which the shares of Clearday Series F Preferred stock held by such holder are convertible as of the
record date for determining stockholders entitled to vote on such matter (subject to the conversion limitations of the Clearday Series
F Preferred stock) and shall be entitled to notice of any stockholders’ meeting.

 

For
as long as any shares of Clearday Series F Preferred stock are outstanding, Clearday shall not, without the affirmative vote of the Requisite
Holders, take any of the following actions:

 

	 	●	alter
    or change adversely the powers, preferences or rights given to the Clearday Series F Preferred stock or alter or amend any of the
    charter documents of Clearday in a manner that is adverse to the holders of the Clearday Series F Preferred stock other than for
    an amendment approved by the stockholders of Clearday (even if such amendment is adverse to the holders of the Clearday Series F
    Preferred stock) that is not disproportionately adverse to rights of the holders of the Clearday Series F Preferred stock;
	 	●	pay
    any divided on account to any of the capital stock of Clearday, other than on account of any Senior Securities, for any period during
    which the accrued dividend of the Clearday Series F Preferred stock has not been paid past the date such payment was required to
    be made;
	 	●	during
    the period that the accrued dividend of the Clearday Series F Preferred stock has not been paid past the date such payment was required
    to be made, redeem any shares of Clearday’s capital stock, other than: (x) shares of any securities that by their terms rank
    senior to the Clearday Series F Preferred stock or (y) Common stock pursuant to employee or consultant agreements giving Clearday
    the right to repurchase shares at the original cost thereof upon the termination of services and provided that such repurchase is
    approved by Clearday’s Board of Directors;
	 	●	enter
    into any agreement with respect to any of the foregoing; or
	 	●	enter
    into any agreement, amend or modify any existing agreement or obligation, or issue any security that prohibits, conflicts or is inconsistent
    with, or would be breached by, Clearday’s performance of Clearday’s obligations to the holders of the Clearday Series
    F Preferred stock under the charter documents of Clearday.

 

Conversion
Right.

 

The
shares of the Clearday Series F Preferred stock are convertible into shares of common stock at an initial conversion ratio set forth
in the certificate of designations for such securities, or 2.384656 of shares of common stock for each share of Series F Preferred stock,
subject to appropriate adjustment for any stock split, combination, reclassification, exchange or substitution, reorganization, merger,
consolidation or sale of assets as provided in the certificate of designation of the Clearday Series F Preferred stock.

 

Clearday
may convert all or any of the shares of the Clearday Series F Preferred stock on the date of any of the following:

 

	 	●	Shares
    of common stock of Clearday is listed on a securities exchange or market, if Clearday so elects on or prior to the date of such listing
    or any date that is not more than 30 days after the date of such listing; or
	 	●	The
    closing of an underwritten public offering of the common stock providing aggregate gross proceeds to Clearday equal to, or in excess
    of, $5,000,000.

 

A
holder of the Clearday Series F Preferred stock may convert their shares to common stock from and after the Initial Series A Conversion
Date up to a specified percentage of their shares of Clearday Series F Preferred stock referred to as the “Permitted Conversion
Amount” in the certificate of designation of the Clearday Series F Preferred stock, which is generally 15% for each 90 day period
after the Initial Series A Conversion Date, subject to adjustment for the fundamental transaction and less the number of shares converted
by Clearday as provided above. The conversion right of a holder of the Clearday Series F Preferred stock is subject to customary limitations
if the holder would beneficially own more than 4.99% of Clearday’s common stock, subject to waiver by the holder providing a notice
at least 61 days prior to the date of such conversion. In any such conversion, Clearday will not issue fractional shares and the holder
will tender their shares and the conversion procedures will be as provided in the certificate of designation of the Clearday Series F
Preferred stock.

 

    	 

     

    

 

For
a complete description of the terms of the Series F Preferred Stock, please see the certificate of designations, filed with or incorporated
by reference into, this Report.

 

Warrants

 

AIU
Warrants

 

AIU
had issued warrants to purchasers of the Clearday Care Preferred and the units of Clearday OZ LP Interests. Each such warrant provides
the following:

 

	 	●	An
    exercise period of ten (10) years from the closing date of the AIU Merger;
	 	●	An
    exercise price equal to $5.00 per share, which was 50% of the trading price of Clearday’s common stock, based on the initial
    price of the common stock on the OTCQB after the AIU Merger;
	 	●	Anti-dilution
    protection that provides for appropriate adjustment in the event of any stock dividend, stock split, combination or other similar
    recapitalization.

 

A
holder may exercise such warrant from and after the closing of this offering by delivering an exercise notice to Clearday together with
the aggregate exercise price for the shares to be purchased by the exercise of such warrant. Such warrants have anti-dilution protection
for any stock dividend, stock split, combination or other similar corporate transaction. There is no anti-dilution regarding the price
of additional shares of common stock issued or deemed issued.

 

These
warrants include limitations on the ability of the holder of the warrant to exercise such warrant to the extent that such exercise would
violate beneficial ownership limitations included therein. Such warrants generally provide that the holder of the warrants cannot exercise
such warrant to the extent the holder would, following such exercise, beneficially own, together with other shares attributed to such
holder more than 4.99% of our common stock (subject to waiver of such limitation upon at least approximately 60 days prior notice).

 

For
a complete description of the terms of such warrants, please see the Form of such warrant issued to the Investors in securities issued
by AIU Alternative Care, Inc. and Clearday Alternative Care OZ Fund LP, filed with or incorporated by reference into, this Report.

 

STI
Warrants

 

Prior
to the AIU Merger, STI issued warrants to purchase Clearday common stock. The number of such outstanding warrants and the weighted average
exercise price as of the date of the financial statements including this Report are as set forth in such financial statements.

 

These
warrants include limitations on the ability of the holder of the warrant to exercise such warrant to the extent that such exercise would
violate beneficial ownership limitations included therein. Such warrants generally provide that the holder of the warrants cannot exercise
such warrant to the extent the holder would, following such exercise, beneficially own, together with other shares attributed to such
holder more than 4.99% of our common stock (subject to such limitation being increased to 9.99% upon at least 60 days prior notice).

 

Such
warrants have anti-dilution protection for any stock dividend, stock split, combination or other similar corporate transaction. There
is no anti-dilution regarding the price of additional shares of common stock issued or deemed issued.

 

For
a complete description of the terms of such warrants, please see the form of such warrant, filed with or incorporated by reference into,
this Report.

 

    	 

     

    

 

Clearday
Care Preferred

 

During
2019, Clearday formed a subsidiary, Clearday Care. All of the shares of the common stock of Clearday Care are owned by Allied Integral
United, Inc. Clearday Care has authorized 1,500,000 shares of its Clearday Care Preferred.

 

The
terms of the Clearday Care Preferred are set forth in the certificate of designation for such shares and are summarized as follows:

 

Ranking.

 

The
Clearday Care Preferred rank senior in right of dividends and liquidation preference to of the Clearday Care common stock.

 

Dividends.

 

Each
share of Clearday Care Preferred is entitled to an annual dividend equal to 10.25% per annum of the $10.00 Original Purchase Price of
such shares (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization,
compounded annually. Such dividend ranks in preference to the holders of any other stock of Clearday Care, when, as and if declared by
the Board of Directors of Clearday Care, but only out of funds that are legally available therefor. Such dividends will be paid on a
semi-annual basis and, at the option of Clearday Care, be paid in cash or by the issuing of additional shares of Clearday Care Preferred
at the $10.00 Original Purchase Price, subject to appropriate adjustment in the event of any stock dividend, stock split, combination
or other similar recapitalization. For so long as the Clearday Care Preferred stock is outstanding, Clearday Care will not declare or
make a dividend on account of its common stock.

 

Conversion
and Exchange.

 

Each
holder of the Clearday Care Preferred may convert any or all of their shares into shares of Clearday’s common stock at the following
conversion rate:

 

	 	●	Prior
    to the closing date of this offering or other event that causes Clearday to be a public company, a rate of 1 share of Clearday Care
    Preferred to 1 share of Clearday’s common stock, subject to adjustment for any stock dividend, stock split, combination or
    other similar recapitalization;
	 	●	On
    or after the closing of this offering, at the ratio equal to (A) the $10.00 Original Purchase Price, (B) divided by amount equal
    to (i) the 20 day volume weighted average price or volume weighted average price of the Clearday’s common stock; (ii) multiplied
    by 80% (which provides a 20% discount).

 

Such
conversion right is limited by customary restrictions on beneficial ownership of the Clearday common stock so that such holder would
not have beneficial ownership that is more than 4.99% of our common stock (subject to waiver of such limitation upon at least approximately
60 days prior notice.

 

Redemption.

 

On
the date that is ten (10) years after the final closing of offering of the Clearday Care Preferred (the “Redemption Date”),
Clearday Care will redeem the Clearday Care Preferred Stock for cash equal to the purchase price of such shares or shares of Clearday
common stock at the valuation of such common stock. The redemption obligation of Clearday Care is guaranteed in full by Clearday.

 

Information
Rights.

 

Clearday
will provide information to the holders of the Clearday Care Preferred so that they can make an informed investment decision regarding
any conversion of such securities to Clearday common stock, such as the SEC filings made by Clearday.

 

    	 

     

    

 

Liquidation
Preference.

 

In
the event of any liquidation, dissolution or winding up of Clearday, including any Deemed Sale Event (as defined below), the proceeds
shall be paid as follows:

 

	 	●	First,
    pay one times (1x) the $10.00 Original Purchase Price plus accrued and unpaid dividends, if any, on each share of the Clearday Care
    Preferred.
	 	●	Then,
    the holders of the common stock of Clearday.

 

If
upon any liquidation, dissolution or winding up of Clearday, or any Deemed Sale Event of Clearday, the assets of Clearday available for
distribution to Clearday’s stockholders shall be insufficient to pay the holders of shares of the Clearday Care Preferred, then
the full amount to which they shall be entitled, then the holders of shares of Clearday Care Preferred shall share ratably in any distribution
of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

Sale
of Clearday Care.

 

Upon
any Deemed Sale Event, the holders of the Clearday Care Preferred will receive the greater of (i) the amount that the holders would receive
as if shares of the Clearday Care Preferred were converted into shares of Clearday common stock; or (ii) the amount equal to the liquidation
preference of the Clearday Care Preferred.

 

Sale
of Clearday.

 

Upon
any Deemed Sale Event of Clearday, each of the holders of the Clearday Care Preferred will receive the amount that they would receive
if their Clearday Care Preferred shares were converted to Clearday common stock based on the value of the distribution to the common
stockholders of Clearday, after giving effect to the 20% discount applicable to the conversion, immediately prior to such Deemed Sale
Event; provided, that if the transaction is not for cash, then a holder of Clearday Care Preferred may elect to continue to hold their
Clearday Care Preferred, in which case, the conversion right will become a right to receive the common stock of the successor or surviving
entity common stock, subject to appropriate adjustment based on the shares of such successor or surviving entity that is distributed
to the stockholders of Clearday.

 

A
“Deemed Sale Event” of Clearday Care or Clearday is any transaction that is a sale, lease, transfer, exclusive license or
other disposition of all or substantially all of the assets of such person or any merger or consolidation in which such person is not
the surviving entity, in each case, other than any Excluded Transaction.

 

An
“Excluded Transaction” is a transaction (i) in which stockholders of such person (Clearday Care or Clearday) prior to such
transaction own a majority by voting power of the outstanding shares of the surviving or acquiring company, or (ii) which is approved
by the consent of 66-2/3% of the Clearday Care Preferred (in the case of Clearday) or the stockholders of Clearday (in the case of Clearday).

 

Voting
Rights.

 

The
Clearday Care Preferred shall not have any voting rights other than the protective/veto rights described below.

 

Protective
/ Veto Rights.

 

So
long as shares of Clearday Care Preferred are outstanding, in addition to any other vote or approval required under Clearday Care’s
certificate of incorporation or bylaws, Clearday Care will not, without the written consent of the holders of at least 66-2/3% of the
Clearday Care Preferred then outstanding:

 

	 	●	amend,
    alter, or repeal any provision of the certificate of incorporation, bylaws or any other governing documents of the Clearday Care
    in a manner that is adverse to the rights of the holders of the Clearday Care Preferred;
	 	●	create
    or authorize the creation of or issue or reclassify any security of Clearday Care convertible into or exercisable for any Clearday
    Care equity security, having rights, preferences or privileges senior to or on parity with the Clearday Care Preferred;
	 	●	purchase
    or redeem or pay any dividend on any capital stock of Clearday Care prior to the Clearday Care Preferred, other than stock repurchased
    from former employees or consultants in connection with the cessation of their employment/services, at the lower of fair market value
    or cost;
	 	●	materially
    change the Clearday Care’s business plan to focus on the alternative care and wellness industry; or
	 	●	enter
    into any agreement to do any of the foregoing.

 

Clearday
OZ LP Interests

 

The
holders of the Clearday OZ LP Interests are party to the amended and restated limited partnership agreement of Clearday OZ Fund which
provides rights to such holders that are substantially equivalent to the rights of the holders of the Clearday Care Preferred stock.

 

Registration
Rights.

 

The
holders of the Clearday Care Preferred and the holders of the Warrants have the right to include the shares of Parent Common Stock that
will be issued upon any conversation, exchange of the Clearday Care Preferred or exercise of the Warrants to be registered as, when and
if Parent registers any other class of its equity securities, subject to certain exceptions. All such securities were included in the
AIU Merger Registration Statement.

 

    	 

     

    

 

Anti-Takeover
Effects of Certain Provisions of Delaware Law and Our Charter Documents

 

The
following is a summary of certain provisions of Delaware law, our certificate of incorporation, as amended, and our bylaws, as amended,
in each case, as of December 31, 2021. This summary does not purport to be complete and is qualified in its entirety by reference to
the corporate law of Delaware and our certificate of incorporation and bylaws that are filed or incorporated by reference in this Report.

 

Effect
of Delaware Anti-Takeover Statute. We are subject to Section 203 of the Delaware General Corporation Law, an anti-takeover law. In general,
Section 203 prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of
three years following the date that the stockholder became an interested stockholder, unless:

 

	 	●	prior
    to that date, the board of directors of the corporation approved either the business combination or the transaction that resulted
    in the stockholder becoming an interested stockholder;
	 	 	 
	 	●	upon
    consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned
    at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of
    determining the number of shares of voting stock outstanding (but not the voting stock owned by the interested stockholder) those
    shares owned by persons who are directors and officers and by excluding employee stock plans in which employee participants do not
    have the right to determine whether shares held subject to the plan will be tendered in a tender or exchange offer; or
	 	 	 
	 	●	on
    or subsequent to that date, the business combination is approved by the board of directors of the corporation and authorized at an
    annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding
    voting stock that is not owned by the interested stockholder.

 

Section
203 defines “business combination” to include the following:

 

	 	●	any
    merger or consolidation involving the corporation and the interested stockholder;
	 	 	 
	 	●	any
    sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
	 	 	 
	 	●	subject
    to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation
    to the interested stockholder;
	 	 	 
	 	●	any
    transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series
    of the corporation beneficially owned by the interested stockholder; or
	 	 	 
	 	●	the
    receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided
    by or through the corporation.

 

In
general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting
stock of the corporation, or who beneficially owns 15% or more of the outstanding voting stock of the corporation at any time within
a three-year period immediately prior to the date of determining whether such person is an interested stockholder, and any entity or
person affiliated with or controlling or controlled by any of these entities or persons.

 

Our
Charter Documents. Our charter documents include provisions that may have the effect of discouraging, delaying or preventing a change
in control or an unsolicited acquisition proposal that a stockholder might consider favorable, including a proposal that might result
in the payment of a premium over the market price for the shares held by our stockholders. Certain of these provisions are summarized
in the following paragraphs.

 

Classified
Board of Directors. Pursuant to our certificate of incorporation, the number of directors is fixed by our board of directors. Our directors
are divided into three classes, each class to serve a three-year term and to consist as nearly as possible of one-third of the total
number of directors. Pursuant to our bylaws, directors elected by stockholders at an annual meeting of stockholders will be elected by
a plurality of all votes cast.

 

No
Stockholder Action by Written Consent. Our bylaws provide that a special meeting of stockholders may be called only by the chairman of
the board, a majority of the entire board of directors or the president. Stockholders are not permitted to call, or to require that the
board of directors call, a special meeting of stockholders. Moreover, the business permitted to be conducted at any special meeting of
stockholders is limited to the business brought before the meeting pursuant to the notice of the meeting given. In addition, our certificate
of incorporation provides that any action taken by our stockholders must be effected at an annual or special meeting of stockholders
and may not be taken by written consent instead of a meeting. Our bylaws establish an advance notice procedure for stockholders to nominate
candidates for election as directors or to bring other business before meetings of our stockholders.

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