Item 4 — Purpose of Transaction
Subscription and Exchange Agreement On March 3, 2025, the White Hat Funds entered into a Subscription and Exchange Agreement (the "Subscription and Exchange Agreement") with the Issuer and the other investors listed on the signature pages attached thereto (each of the White Hat Funds and such other parties, an "Investor" and collectively, the "Investors") pursuant to which the parties agreed to change certain terms of the Series B-2 Convertible Preferred Stock. The changes provide (x) the holders of Series B-3 Preferred Stock (as defined below) with a board observer right and (y) the Investors with certain information access rights. To effect the changes described above, (i) WHSP exchanged 24,552.46 shares of Series B-2 Convertible Preferred Stock for 24,552.46 shares of the Issuer's newly issued Series B-3 Convertible Preferred Stock, par value $0.10 per share, with an initial liquidation preference of $1,104.48 per share (the per share liquidation preference of the Series B-2 Convertible Preferred Stock as of March 2, 2025) (the "Series B-3 Convertible Preferred Stock"), (ii) WHSP II exchanged 6,365.08 shares of Series B-2 Convertible Preferred Stock for 6,365.08 shares of Series B-3 Convertible Preferred Stock, (iii) WHSP acquired 23.70 shares of Series B-3 Convertible Preferred Stock as March 2025 Additional Shares and (iv) WHSP II acquired 6.14 shares of Series B-3 Convertible Preferred Stock as March 2025 Additional Shares. The transactions contemplated by the Subscription and Exchange Agreement closed on March 3, 2025 (the "Closing Date"). An employee of the Investment Manager serves as observer on the Board pursuant to clause (x) above. In connection with the closing of the transactions contemplated by the Subscription and Exchange Agreement, the White Hat Funds also entered into a Voting Agreement with the Issuer (the "Voting Agreement"), substantially consistent with the existing voting agreement between the parties, pursuant to which the White Hat Funds agreed, subject to the qualifications and exceptions set forth in the Voting Agreement, to vote their shares of Series B-3 Convertible Preferred Stock or shares issued upon conversion of the Series B-3 Convertible Preferred Stock that exceed 3.4999% of the Issuer's outstanding voting power as of January 22, 2024 in the same proportion as the vote of all holders (excluding the Investors) of the Series B-3 Convertible Preferred Stock or Common Stock, as applicable. The prior voting agreement dated as of October 17, 2024 by and among the White Hat Funds and the Issuer was terminated and is of no further force or effect in its entirety. Also, in connection with the closing of the transaction contemplated by the Subscription and Exchange Agreement, the White Hat Funds entered into a Registration Rights Agreement (the "Registration Rights Agreement"), substantially consistent with the existing registration rights agreement between the parties, with the Issuer and the other Investors, pursuant to which the Issuer granted the Investors certain customary registration rights with respect to the shares of Common Stock issued and issuable upon conversion of the Series B-3 Convertible Preferred Stock and upon exercise of the Warrants issued in substitution for the Series B-3 Convertible Preferred Stock in certain circumstances (described below). Except for the changes described above, the powers, preferences and rights of the Series B-3 Convertible Preferred Stock are substantially the same as those of the Series B-2 Convertible Preferred Stock, including, without limitation, that the shares of Series B-3 Convertible Preferred Stock are convertible, subject to the Blocker, into shares of Common Stock at a conversion price of $7.99 per share of Common Stock (the same as the conversion price of the Series B-2 Convertible Preferred Stock, and subject to the same adjustments). Like the Series B-2 Convertible Preferred Stock, the Series B-3 Convertible Preferred Stock will provide for repurchase of the Series B-3 Convertible Preferred Stock at the Issuer's option or the holders' options upon the occurrence of specified asset sales. Upon the occurrence of such repurchases by an Investor or the Issuer, the Issuer will issue to each Investor whose shares of Series B-3 Convertible Preferred Stock were repurchased a warrant to purchase Common Stock (a "Warrant"). A Warrant will represent the right to acquire Common Stock, as further described in the Subscription and Exchange Agreement, for a term of five years and six months from the issuance of such Warrant, in the amount of (x) the aggregate Liquidation Preference of shares of Series B-3 Convertible Preferred Stock purchased by the Issuer divided by (y) the conversion price as of such Optional Repurchase Date (as defined in the Certificate of Designations of the Series B-3 Convertible Preferred Stock (the "Series B-3 Certificate of Designations")) or the Optional Call Date (as defined in the Subscription and Exchange