Document:

Exhibit
10.4

 

ESCROW
AGREEMENT

 

Escrow
Agreement (the “Escrow Agreement”) dated as of the effective date (the “Effective Date”) set forth on
Schedule 1 hereto (“Schedule 1”) by and among the corporation identified as the “Company” on Schedule
1 hereto (the “Company”), the company identified on Schedule 1 hereto (the “Depositor”), and Delaware
Trust Company, as escrow agent hereunder (the “Escrow Agent”).

 

WHEREAS,
the Company intends to offer and sell to buyers (the “Subscribers”) and Subscribers desire to purchase from the Company
in a private placement offering (the “Offering”) Series B Preferred Stock (the “Securities”), with each
Security having voting power equivalent to 15,463.7183 shares of the Company’s common stock (“Common Stock”).
The Company intends to raise an amount up to Four Million Dollars ($4,000,000), which amount will include the cancellation of
up to $500,000 of debt, with an over allotment up to One Million Five Hundred Thousand Dollars ($1,500,000) (collectively referred
to as the “Offering Amount”). The price per Security is $1.25 (the “Purchase Price”);

 

WHEREAS,
the Offering is being made on a reasonable best efforts basis until the Offering Amount is reached, to “accredited investors,”
as such term is defined in Rule 501 of Regulation D (“Regulation D”) as promulgated by the U.S. Securities and Exchange
Commission (the “SEC”) under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Act”);

 

WHEREAS,
the Company’s Securities may be offered through February 29, 2016 (the “Initial Offering Period”), which
period may be extended, at the discretion of the Company, to April 15, 2016 (this additional period and the Initial Offering Period
shall be referred to as the “Offering Period”);

 

WHEREAS,
the initial closing of the Offering (the “Initial Closing”) is conditioned on the receipt of acceptable subscriptions
by the Company and the satisfaction of other closing conditions, including but not limited to the condition that at least $1,000,000
of the Offering Amount shall have been received by the Escrow Agent prior thereto (collectively, the “Initial Closing Conditions”);

 

WHEREAS,
after the Initial Closing, the Company and the Depositor may mutually agree to continue the Offering until the Offering Amount
has been reached or the end of the Offering Period, whichever is earlier, and subsequent closings (each, a “Subsequent Closing”)
may take place on an intermittent basis, as deemed practical by the Company and the Depositor, conditioned on the receipt of acceptable
subscriptions (this requirement for the receipt of acceptable subscriptions, together with certain other conditions to closing,
are collectively referred to as the “Subsequent Closing Conditions”);

 

WHEREAS,
the Subscribers in the Offering in connection with their intent to purchase the Securities in the Offering, shall execute and
deliver Subscription Agreements and certain related documents memorializing the Subscriber’s agreements to purchase and
the Company’s agreement to sell the Securities set forth therein at the Purchase Price;

 

     

     

    

 

WHEREAS,
the parties hereto desire to provide for the safekeeping of the Escrow Deposit (as defined below) until such time as the Escrow
Deposit is released by the Escrow Agent in accordance with the terms and conditions of this Agreement; and

 

WHEREAS,
the Escrow Agent has agreed to accept, hold, and disburse the Escrow Deposit deposited with it and the earnings thereon in accordance
with the terms of this Escrow Agreement.

 

NOW
THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:

 

1.             Appointment.  The
Company and Depositor hereby appoint the Escrow Agent as their escrow agent for the purposes set forth herein, and the Escrow
Agent hereby accepts such appointment under the terms and conditions set forth herein.

 

2.             Escrow
Fund.  On or before the Initial Closing, or on or before any Subsequent Closing with respect to the Securities sold
after the Initial Closing, each Subscriber shall have delivered to the Escrow Agent the full Purchase Price for the total number
of Securities subscribed for by such Subscriber by check sent to the Escrow Agent at its address set forth on Schedule 1 hereto,
or by wire transfer of immediately available funds pursuant to the wire transfer instructions set forth on Schedule 2 hereto,
to the account of the Escrow Agent referenced on Schedule 2 hereto. All funds received from the subscribers in connection with
the sale of the Securities in the Offering shall be deposited with the Escrow Agent (the “Escrow Deposit”). The Escrow
Agent shall hold the Escrow Deposit and, subject to the terms and conditions hereof, shall invest and reinvest the Escrow Deposit
and the proceeds thereof (the “Escrow Fund”) as directed in Section 3 hereto.

 

3.             Investment
of Escrow Fund.  During the term of this Escrow Agreement, the Escrow Fund shall be invested and reinvested by the
Escrow Agent in the investment indicated on Schedule 1 hereto, or such other investments as shall be directed in writing by the
Company and the Depositor and as shall be acceptable to the Escrow Agent. All investment orders involving U.S. Treasury obligations,
commercial paper and other direct investments may be executed through broker-dealers selected by the Escrow Agent. Periodic statements
will be provided to the Company and the Depositor reflecting transactions executed on behalf of the Escrow Fund. The Company and
the Depositor, upon written request, will receive a statement of transaction details upon completion of any securities transaction
in the Escrow Fund without any additional cost. The Escrow Agent shall have the right to liquidate any investments held in order
to provide funds necessary to make required payments under this Escrow Agreement. The Escrow Agent shall have no liability for
any loss sustained as a result of any investment in an investment indicated on Schedule 1 hereto, or any investment made pursuant
to the instructions of the parties hereto or as a result of any liquidation of any investment prior to its maturity or for the
failure of the parties to give the Escrow Agent instructions to invest or reinvest the Escrow Fund. The Escrow Agent may earn
compensation in the form of short-term interest (“float”) on items like uncashed distribution checks (from the date
issued until the date cashed), funds that the Escrow Agent is directed not to invest, deposits awaiting investment direction or
received too late to be invested overnight in previously directed investments.

 

     

     

    

 

4.             Disposition
and Termination.  The Depositor and the Company agree to notify the Escrow Agent in writing of any valid revocations
and the Initial Closing date of the Offering. Additionally, subsequent to an Initial Closing, the Depositor and the Company agree
to notify the Escrow Agent in writing of Subsequent Closing dates, if any, and of the termination of the Offering. Upon receipt
of such written notification(s), the following procedures will take place:

 

		(i)	Release
                                         of Escrow Fund upon Initial Closing. Prior to the Initial Closing, the Company and
                                         the Depositor shall deliver to the Escrow Agent joint written instructions executed by
                                         a duly authorized executive officer of each of the Company and the Depositor (“Instructions”),
                                         which Instructions shall provide the day designated as the Initial Closing date, and
                                         shall specify the time and payment instructions, including the address and tax identification
                                         number of each payee, of the Escrow Fund, including with respect to placement fees that
                                         may be disbursed to the Depositor or to any other placement agent or selected dealer
                                         with respect to the Offering. Further, the Instructions shall include an acknowledgement
                                         and agreement from the Company and the Depositor that as of the Initial Closing date,
                                         the Closing Conditions have been or will be fully satisfied. The Escrow Agent shall,
                                         at the time and in accordance with the payment instructions specified in the Instructions,
                                         deliver the Escrow Fund (without interest).

 

		(ii)	Release
                                         of Escrow Fund upon a Subsequent Closing. Prior to a Subsequent Closing, the Company
                                         and the Depositor shall deliver to the Escrow Agent Instructions, which Instructions
                                         shall provide the day designated as the Subsequent Closing date, and acknowledge and
                                         agree that as of the Subsequent Closing date the Subsequent Closing Conditions have been
                                         or will be fully satisfied and shall specify the time and payment instructions, including
                                         the address and tax identification number of each payee, of the Escrow Fund, including
                                         with respect to placement fees that may be disbursed to the Depositor or to any other
                                         placement agent or selected dealer. The Escrow Agent shall, at the time and in accordance
                                         with the payment instructions specified in the Instructions, deliver the then Escrow
                                         Fund (without interest).

 

		(iii)	Release
                                         of Escrow Fund on Termination of Offering. In the event that the Escrow Agent shall
                                         have received written notice executed by a duly authorized executive officer of each
                                         of the Company and the Depositor indicating that the Offering has been terminated prior
                                         to the Initial Closing and designating a termination date, the Escrow Agent shall return
                                         to each Subscriber, the Purchase Price (without interest and deduction) delivered by
                                         such Subscriber to the Escrow Agent. The Company and the Depositor shall provide the
                                         Escrow Agent with time and payment instructions, including the address and tax identification
                                         number of each payee, for each Subscriber whose Purchase Price the Escrow Agent is to
                                         deliver pursuant to this Section (but in no case shall the Escrow Agent deliver such
                                         Purchase Price more than seven (7) days following receipt by the Escrow Agent of such
                                         delivery instructions).

 

     

     

    

 

		(iv)	Return
                                         of Escrow Fund on Rejection of Subscription. In the event the Company determines
                                         it is necessary or appropriate to reject the subscription of any Subscriber for whom
                                         the Escrow Agent has received an Escrow Deposit, the Company shall deliver written notice
                                         of such event to the Escrow Agent and the Depositor which notice shall include the reason
                                         for such rejection and the time and payment instructions, including the address and tax
                                         identification number of each payee, for the return to such Subscriber of the Purchase
                                         Price delivered by such Subscriber. The Escrow Agent shall deliver such funds (without
                                         interest and deduction) pursuant to such written notice.

 

		(v)	Return
                                         of Escrow Fund on Revocation of Subscription. In the event that the Escrow Agent
                                         shall have received written notice executed by a duly authorized executive officer of
                                         each of the Company and the Depositor indicating that any subscription has been revoked
                                         prior to the Initial Closing, pursuant to the subscription agreement between the Company
                                         and the relevant Subscriber, the Escrow Agent shall return to such revoking Subscriber,
                                         the Purchase Price (without interest and deduction) delivered by such Subscriber to the
                                         Escrow Agent. The Company and the Depositor shall provide the Escrow Agent with time
                                         and payment instructions, including the address and tax identification number of each
                                         payee, for each Subscriber whose Purchase Price the Escrow Agent is to deliver pursuant
                                         to this Section (but in no case shall the Escrow Agent deliver such Purchase Price more
                                         than seven (7) days following receipt by the Escrow Agent of such delivery instructions).

 

		(vi)	Delivery
                                         Pursuant to Court Order. Notwithstanding any provision contained herein, upon receipt
                                         by the Escrow Agent of a final and non-appealable judgment, order, decree or award of
                                         a court of competent jurisdiction (a “Court Order”), the Escrow Agent shall
                                         deliver the Escrow Fund in accordance with the Court Order. Any Court Order shall be
                                         accompanied by an opinion of counsel for the party presenting the Court Order to the
                                         Escrow Agent (which opinion shall be satisfactory to the Escrow Agent) to the effect
                                         that the court issuing the Court Order has competent jurisdiction and that the Court
                                         Order is final and non-appealable.

 

Upon
delivery of the Escrow Fund by the Escrow Agent (i) to the Company following the Initial Closing, if there are to be no Subsequent
Closings, (ii) following a Subsequent Closing, or (iii) to the Subscribers upon termination of the Offering prior to the Initial
Closing, as the case may be, and in each case notice of termination of the Offering having been delivered by the Company and the
Depositor to the Escrow Agent, this Escrow Agreement shall terminate, subject to the provisions of Section 8.

 

     

     

    

 

5.             Escrow
Agent.  The Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no duties
shall be implied. The Escrow Agent shall have no liability under and no duty to inquire as to the provisions of any agreement
other than this Escrow Agreement. The Escrow Agent may rely upon and shall not be liable for acting or refraining from acting
upon any written notice, instruction or request furnished to it hereunder and believed by it to be genuine and to have been signed
or presented by the proper party or parties. The Escrow Agent shall be under no duty to inquire into or investigate the validity,
accuracy or content of any such document. The Escrow Agent shall have no duty to solicit any payments which may be due it or the
Escrow Fund. The Escrow Agent shall not be liable for any action taken or omitted by it in good faith except to the extent that
a court of competent jurisdiction determines that the Escrow Agent’s gross negligence or willful misconduct was the primary
cause of any loss to the Company or Depositor. The Escrow Agent may execute any of its powers and perform any of its duties hereunder
directly or through agents or attorneys (and shall be liable only for the careful selection of any such agent or attorney) and
may consult with counsel, accountants and other skilled persons to be selected and retained by it. The Escrow Agent shall not
be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel,
accountants or other skilled persons. In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder
or shall receive instructions, claims or demands from any party hereto which, in its opinion, conflict with any of the provisions
of this Escrow Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely
all property held in escrow until it shall be directed otherwise in writing by all of the other parties hereto or by a final order
or judgment of a court of competent jurisdiction. Anything in this Escrow Agreement to the contrary notwithstanding, in no event
shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not
limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of
the form of action.

 

6.             Succession.  The
Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving ten (10) Business Days (as defined
below) advance notice in writing of such resignation to the other parties hereto specifying a date when such resignation shall
take effect. The Escrow Agent shall have the right to withhold an amount equal to any amount due and owing to the Escrow Agent,
plus any costs and expenses the Escrow Agent shall reasonably believe may be incurred by the Escrow Agent in connection with the
termination of the Escrow Agreement. Any corporation or association into which the Escrow Agent may be merged or converted or
with which it may be consolidated shall be the Escrow Agent under this Escrow Agreement without further act.

 

7.             Fees.  The
Company agrees to (i) pay the Escrow Agent upon the Closing and from time to time thereafter reasonable compensation for the services
to be rendered hereunder, which unless otherwise agreed in writing shall be as described in Schedule 4 hereto, and (ii) pay or
reimburse the Escrow Agent upon request for all expenses, disbursements and advances, including reasonable attorney’s fees
and expenses, incurred or made by it in connection with the preparation, execution, performance, delivery, modification and termination
of this Escrow Agreement. The Escrow Agent is authorized to deduct such fees from the Escrow Fund at the time of the Initial Closing
without prior authorization from the Company or the Depositor. In the event that the Offering is terminated prior to the Initial
Closing, the Company agrees to pay the Escrow Agent the Review Fee and the Acceptance Fee as described in Schedule 4 hereto.

 

     

     

    

 

8.             Indemnity.  The
Company shall indemnify and save harmless the Escrow Agent and its directors, officers, agents and employees (the “indemnitees”)
from all loss, liability or expense (including the reasonable fees and expenses of in house or outside counsel) arising out of
or in connection with (i) the Escrow Agent’s execution and performance of this Escrow Agreement, except in the case of any
indemnitee to the extent that such loss, liability or expense is due to the gross negligence or willful misconduct of such indemnitee,
or (ii) its following any instructions or other directions from the Company and/or the Depositor, except to the extent that (x)
its following any such instruction or direction is in violation of the terms hereof or (y) such loss, liability or expense is
due to the gross negligence or willful misconduct of a Depositor, in which case such Depositor shall be the indemnifying party
hereunder. The parties hereto acknowledge that the foregoing indemnities shall survive the resignation or removal of the Escrow
Agent or the termination of this Escrow Agreement.

 

9.             TINs.  The
Company and the Depositor each represent that its correct TIN assigned by the Internal Revenue Service or any other taxing authority
is set forth in Schedule 1 hereto. All interest or other income earned under the Escrow Agreement, if any, shall be allocated
and/or paid as directed in a joint written direction of the Company and the Depositor and reported by the recipient to the Internal
Revenue Service or any other taxing authority. Unless otherwise indicated in writing by the Company and the Depositor, no taxes
or other withholdings are required to be made under applicable law or otherwise with respect to any payment to be made by Escrow
Agent. All documentation necessary to support a claim of exemption or reduction in such taxes or other withholdings has been timely
collected by Company and the Depositor and copies will be provided to Escrow Agent promptly upon a request therefor. Unless otherwise
agreed to in writing by Escrow Agent, all tax returns required to be filed with the IRS and any other taxing authority as required
by law with respect to payments made hereunder shall be timely filed and prepared by Company and/or the Depositor, as applicable,
including but not limited to any applicable reporting or withholding pursuant to the Foreign Account Tax Reporting Act ("FATCA"). 
The parties hereto acknowledge and agree that the Escrow Agent shall have no responsibility for the preparation and/or filing
of any tax return or any applicable FATCA reporting with respect to the Escrow Fund.    The Escrow Agent shall
withhold any taxes it deems appropriate, including but not limited to required withholding in the absence of proper tax documentation,
and shall remit such taxes to the appropriate authorities as it determines may be required by any law or regulation in effect
at the time of the distribution..

 

10.             Notices.  All
communications hereunder shall be in writing and shall be deemed to be duly given and received:

 

		(i)	upon delivery
                                         if delivered personally or upon confirmed transmittal if by facsimile;

 

		(ii)	on the
                                         next Business Day (as defined herein) if sent by overnight courier; or

 

		(iii)	four
                                         (4) Business Days after mailing if mailed by prepaid registered mail, return receipt
                                         requested, to the appropriate notice address set forth on Schedule 1 hereto or at such
                                         other address as any party hereto may have furnished to the other parties in writing
                                         by registered mail, return receipt requested.

 

     

     

    

 

Notwithstanding
the above, in the case of communications delivered to the Escrow Agent pursuant to (ii) and (iii) of this Section 10, such communications
shall be deemed to have been given on the date received by the Escrow Agent. In the event that the Escrow Agent, in its sole discretion,
shall determine that an emergency exists, the Escrow Agent may use such other means of communication as the Escrow Agent deems
appropriate. “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which the Escrow
Agent located at the notice address set forth on Schedule 1 hereto is authorized or required by law or executive order to remain
closed.

 

11.          Security
Procedures.  In the event funds transfer instructions are given (other than in writing at the time of execution
of this Escrow Agreement), whether in writing, by telecopier or otherwise, the Escrow Agent is authorized to seek confirmation
of such instructions by telephone call-back to the person or persons designated on Schedule 3 hereto, and the Escrow Agent may
rely upon the confirmation of anyone purporting to be the person or persons so designated. The persons and telephone numbers for
call-backs may be changed only in a writing actually received and acknowledged by the Escrow Agent. The Escrow Agent and the beneficiary’s
bank in any funds transfer may rely solely upon any account numbers or similar identifying numbers provided by the Company or
the Depositor to identify (i) the beneficiary, (ii) the beneficiary’s bank, or (iii) an intermediary bank. The Escrow Agent
may apply any of the escrowed funds for any payment order it executes using any such identifying number, even where its use may
result in a person other than the beneficiary being paid, or the transfer of funds to a bank other than the beneficiary’s
bank or an intermediary bank designated. The parties to this Escrow Agreement acknowledge that these security procedures are commercially
reasonable.

 

12.          Miscellaneous.  The
provisions of this Escrow Agreement may be waived, altered, amended or supplemented, in whole or in part, only by a writing signed
by all of the parties hereto. Neither this Escrow Agreement nor any right or interest hereunder may be assigned in whole or in
part by any party, except as provided in Section 6, without the prior consent of the other parties, which consent shall not be
unreasonably withheld. This Escrow Agreement shall be governed by and construed under the laws of the State of Delaware. Each
party hereto irrevocably waives any objection on the grounds of venue, forum non-conveniens or any similar grounds and irrevocably
consents to service of process by mail or in any other manner permitted by applicable law and consents to the jurisdiction of
the courts located in the State of Delaware. The parties further hereby waive any right to a trial by jury with respect to any
lawsuit or judicial proceeding arising or relating to this Escrow Agreement. No party to this Escrow Agreement is liable to any
other party for losses due to, or if it is unable to perform its obligations under the terms of this Escrow Agreement because
of, acts of God, fire, floods, strikes, equipment or transmission failure, or other causes reasonably beyond its control. This
Escrow Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.

 

     

     

    

 

IN
WITNESS WHEREOF, the parties hereto have executed this Subscription Escrow Agreement as of the date set forth in Schedule
1. 

 

	 	Delaware Trust Company
	 	as Escrow Agent
	 	 	 
	 	By:	/s/ Alan R. Halpern
	 	Name: 	Alan R. Halpern
	 	Title:	Vice President
	 	 	 
	 	COMPANY
	 	 
	 	ATRINSIC, INC.
	 	 	 
	 	By:	/s/ Edward Gildea
	 	Name:	Edward Gildea
	 	Title:	Chief Executive Officer
	 	 	 
	 	DEPOSITOR:
	 	 
	 	KATALYST SECURITIES LLC
	 	 	 
	 	By:	/s/ Michael A. Silverman
	 	Name:	Michael A. Silverman
	 	Title:	Managing Director

 

     

     

    

 

Schedule
1

 

	Effective Date:	January 25, 2016
	 	 
	Name of Company:	Atrinsic, Inc.
	 	 
	Company Notice Address	 
	(through the First Closing):	65 Atlantic Avenue
	 	Boston, MA  02110
	 	 
	With a copy to:	Sanders Ortoli Vaughn-Flam Rosentadt
	(which shall not	501 Madison Avenue, 14th Floor
	constitute notice)	New York, NY 10022
	 	Attn:  Tim Dockery, Esq.
	 	 
	After the First Closing:	149 Fifth Avenue, Suite 500
	 	New York, NY 10010
	 	 
	With a copy to:	Meister Seelig & Fein LLP
	(which shall not	125 Park Avenue, 7th Floor
	constitute notice)	New York, NY 10017
	 	Attn:  Kenneth S. Goodwin, Esq.
	 	 
	Company TIN:	06-1390025
	 	 
	Name of Depositor:	 
	 	 
	Depositor:	Katalyst Securities LLC
	 	1330 Avenue of the Americas, 35th Floor
	 	New York, NY 10019
	 	Attn:  Michael Silverman
	Facsimile:	1-212-400-6901
	 	 
	Depositor TIN:	23-3071873
	 	 
	With a copy to:	Barbara J. Glenns, Esq.
	(which shall not	30 Waterside Plaza, Suite 25G
	constitute notice)	New York, NY 10010
	 	 
	Escrow Deposit:	$5.5 million, in whole or in parts
	 	 
	Security:	Series B Preferred Stock
	 	 
	Purchase Price:	$1.25 per share

 

     

     

    

 

Investment:

 

		 ̈	Goldman
                                         Sachs Financial Square Funds Prime Obligations Fund Service Shares (the “Share
                                         Class”), an institutional money market mutual fund for which the Escrow Agent serves
                                         as shareholder servicing agent and/or custodian or subcustodian. The parties hereto:
                                         (i) acknowledge Escrow Agent’s disclosure of the services CSC is providing to and
                                         the fees it receives from Goldman Sachs; (ii) consent to the Escrow Agent’s receipt
                                         of these fees in return for providing shareholder services for the Share Class; and (iii)
                                         acknowledge that the Escrow Agent has provided on or before the date hereof a Goldman
                                         Sachs Financial Square Funds Prime Obligations Fund Service Shares prospectus which discloses,
                                         among other things, the various expenses of the Share Class and the fees to be received
                                         by the Escrow Agent. 

 

		 ̈	Such
                                         other investments as Company, Depositor and Escrow Agent may from time to time mutually
                                         agree upon in a writing executed and delivered by the Company and the Depositor and accepted
                                         by the Escrow Agent. 

 

		x	The
                                         funds shall not be invested. 

 

Escrow
Agent notice address:

 

Delaware
Trust Company

2711
Centerville Road

One
Little Falls Centre

Wilmington,
DE 19808

Attention:
Alan R. Halpern

Fax
No.:  302-636-8666

 

Escrow
Agent’s compensation: See Appended Schedule 4.

 

     

     

    

 

Schedule
2

 

Wire
Instructions

 

PNC Bank

300 Delaware Avenue

Wilmington DE 19899

ABA# 031100089

SWIFT Code: PNCCUS33

Account Name:  Delaware
Trust Company

Account Number:  5605012373

FFC:  ATRINSIC,
INC. Acct# 79-2579

MUST
INCLUDE THE SUBSCRIBER’S NAME

 

     

     

    

 

Schedule
3

 

Telephone
Number(s) for Call-Backs and

Person(s)
Designated to Confirm Funds Transfer Instructions

 

If
to Company:

 

	Name	 	Telephone
    Number(s)
	 	 	 
	1. Edward Gildea	 	617-823-2300
	 	 	 
	2. Robert Ziroyan	 	(416) 500-3305
	 	 	 
	3. Alexander Arrow	 	(310) 766-6223

 

If
to Depositor:

 

	Name	 	Telephone
    Number
	 	 	 
	Katalyst Securities
    LLC	 	 
	 	 	 
	1. Michael A. Silverman	 	917-696-1708
	 	 	 
	2. Barbara J. Glenns	 	212-689-6153

 

Telephone call-backs
may be made to the Company and the Depositor if joint instructions are required pursuant to this Escrow Agreement.

 

     

     

    

 

Schedule
4

 

REVIEW FEE:

For
initial examination of the Escrow Agreement and all supporting documents. This is a one-time fee payable upon execution of the
agreement.

$500.00                      

 

ACCEPTANCE
FEE:

For
initial services associated with establishing the Escrow Account. This is a one-time fee payable upon execution of the agreement.

$500.00                      

 

ANNUAL ADMINISTRATION
FEE:

An
annual charge or any portion of a 12-month period thereof. This fee is payable 45 days after the opening of the Escrow Account
or prior to the final disbursement of the Escrow Fund, whichever event occurs first, and in advance of the annual anniversary
date thereafter. This charge is not prorated for the first year. There is an additional annual charge of $250.00/subaccount
opened.

 

$1,500.00 covering
up to 100 deposits. There will be an additional administration fee of $750.00 for each block of 50 deposits over the initial 100
deposits.

 

TRANSACTION
FEES:

Wire transfer
of fund: $35.00/domestic wire initiated; $50.00/international wire initiated

Checks Cut: $10.00/check
cut

Securities Purchase
(Buy and Sell): $50.00/transaction

Returned Check:
$30.00/returned item

 

Out-of-pocket
expenses, fees and disbursements and services of an unanticipated or unexpected nature are not included in the above schedule.Exhibit 4.2

 

EXECUTION COPY

 

PHASERX, INC.

 

SECOND AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

November 17, 2014

 

    	 	 	 

     

    

 

TABLE OF CONTENTS

 

	 	 	Page
	 	 	 
	Section 1 Definitions	1
	 	 	 
	1.1	Certain Definitions	1
	 	 	 
	Section 2 Registration Rights	4
	 	 	 
	2.1	Requested Registration	4
	2.2	Company Registration	6
	2.3	Registration on Form S-3	7
	2.4	Expenses of Registration	8
	2.5	Registration Procedures	8
	2.6	Indemnification	10
	2.7	Information by Holder	12
	2.8	Restrictions on Transfer	12
	2.9	Rule 144 Reporting	14
	2.10	Market Stand-Off Agreement	14
	2.11	Delay of Registration	15
	2.12	Transfer or Assignment of Registration Rights	15
	2.13	Limitations on Subsequent Registration Rights	15
	2.14	Termination of Registration Rights	15
	 	 	 
	Section 3 Covenants of the Company	15
	 	 	 
	3.1	Basic Financial Information and Inspection Rights	15
	3.2	Directors’ and Officers’ Liability Insurance	16
	3.3	Fire and Casualty Insurance	16
	3.4	Confidentiality	16
	3.5	Termination of Covenants	17
	 	 	 
	Section 4 Right of First Refusal	17
	 	 	 
	4.1	Right of First Refusal to Significant Holders	17
	 	 	 
	Section 5 Miscellaneous	19
	 	 	 
	5.1	Amendment	19
	5.2	Notices	19
	5.3	Governing Law	20
	5.4	Successors and Assigns	20
	5.5	Entire Agreement	20
	5.6	Delays or Omissions	20
	5.7	Severability	20
	5.8	Titles and Subtitles	20
	5.9	Counterparts	21
	5.10	Telecopy Execution and Delivery	21
	5.11	Jurisdiction; Venue	21
	5.12	Further Assurances	21
	5.13	Termination Upon Change of Control	21
	5.14	Conflict	21
	5.15	Aggregation of Stock	21
	5.16	Prior Rights Agreement	21
	5.17	Waiver of Right of First Offer	22

 

    	 	-i-	 

     

    

 

PHASERX, INC.

 

SECOND AMENDED AND RESTATED INVESTORS’
RIGHTS AGREEMENT

 

This Second Amended
and Restated Investors’ Rights Agreement (this “Agreement”) is made as of November 17, 2014, by and among
PhaseRx, Inc., a Delaware corporation (the “Company”), the persons and entities (each, a “Series A
Investor”) listed on Exhibit A hereto, the persons and entities (each, a “Series A-1 Investor”
and together with the Series A Investors, the “Investors”) listed on Exhibit A-1 hereto and the persons
(each, a “Founder” and collectively, the “Founders”) listed on Exhibit B hereto. The
Founders and Investors are referred to herein collectively as the “Stockholders.” Unless otherwise defined herein,
capitalized terms used in this Agreement have the meanings ascribed to them in Section 1 hereof.

 

Recitals

 

WHEREAS: The
Company and the Stockholders are parties to the Amended and Restated Investors’ Rights Agreement dated as of April 9, 2014
(the “Prior Rights Agreement”).

 

WHEREAS: The
Company and the Stockholders each desire to supersede and replace the Prior Rights Agreement in its entirety as provided herein.
Pursuant to Section 5.1 of the Prior Rights Agreement, any term of the Prior Rights Agreement may be amended or waived by the written
consent of the Company and the Holders (as defined in the Prior Rights Agreement) of a majority of the voting power of the shares
of Common Stock issued or issuable upon conversion of the Shares (as defined in the Prior Rights Agreement) (collectively, the
“Requisite Holders”).

 

NOW, THEREFORE:
In consideration of the mutual promises and covenants set forth herein, and other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

Section 1

Definitions

 

1.1         Certain
Definitions.  As used in this Agreement, the following terms shall have the meanings set forth below:

 

(a)          “Charter”
shall mean the Third Amended and Restated Certificate of Incorporation of the Company as may be amended and/or restated from time
to time.

 

(b)          “Commission”
shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

 

(c)          “Common
Stock” shall mean the Common Stock of the Company.

 

(d)          “Conversion
Shares” shall mean shares of Common Stock issued upon conversion of the Series A Preferred Stock and Series A-1
Preferred Stock.

 

    	 	 	 

     

    

 

(e)          “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, or any similar successor federal statute and the rules
and regulations thereunder, all as the same shall be in effect from time to time.

 

(f)          “Founders’
Stock” shall mean the shares of Common Stock currently held, directly or indirectly, or hereafter acquired, directly
or indirectly, by Founders.

 

(g)          “Holder”
shall mean any Investor who holds Registrable Securities and any holder of Registrable Securities to whom the registration rights
conferred by this Agreement have been duly and validly transferred in accordance with Section 2.12 of this Agreement
and shall include Lighthouse Capital Partners VI, L.P. (“Lighthouse”) only for purposes of Sections 2 (other
than Section 2.13), 3.1(a), 3.4, 3.5 and 5 (other than Section 5.1) of this Agreement; provided, however, that the
Founders shall be deemed Holders for the purposes of Section 2 (other than Sections 2.1 and 2.3).

 

(h)          “Indemnified
Party” shall have the meaning set forth in Section 2.6(c) hereto.

 

(i)          “Indemnifying
Party” shall have the meaning set forth in Section 2.6(c) hereto.

 

(j)          “Initial
Public Offering” shall mean the closing of the Company’s first firm commitment underwritten public offering of
the Company’s Common Stock registered under the Securities Act.

 

(k)          “Initiating
Holders” shall mean any Holder or Holders who in the aggregate hold not less than twenty percent (20%) of the voting
power of the outstanding Registrable Securities.

 

(l)          “Lighthouse
Warrant” shall mean the warrant to purchase up to 125,000 shares of the Company’s Series A Preferred Stock issued
to Lighthouse on December 1, 2010.

 

(m)          “New
Securities” shall have the meaning set forth in Section 4.1(a) hereto.

 

(n)          “Other
Selling Stockholders” shall mean persons other than Holders who, by virtue of agreements with the Company, are entitled
to include their Other Shares in certain registrations hereunder.

 

(o)          “Other
Shares” shall mean shares of Common Stock, other than Registrable Securities (as defined below), with respect to which
registration rights have been granted.

 

(p)          “Preferred
Directors” shall mean those directors that are designated pursuant to Section 2(b)(i) of the Voting Agreement entered
into among the Company, Founders, and Investors dated of even date herewith.

 

(q)          “Purchase
Agreements” shall mean the Purchase Agreement and any other purchase agreement between the Company and a Series A-1
Investor or its affiliates.

 

(r)          “Registrable
Securities” shall mean (i) shares of Common Stock issued or issuable pursuant to the conversion of the Shares or
upon exercise of the Warrants, (ii) for the purposes of Section 2 only (other than Sections 2.1 and 2.3), shares of Founders’
Stock, (iii) only for purposes of Sections 2 (other than Section 2.13), 3.4, 3.5 and 5 (other than Section 5.1) of this Agreement,
shares of Common Stock issued or issuable upon conversion of the shares of Series A Preferred Stock issued or issuable upon exercise
of the Lighthouse Warrant or any shares of Common Stock issued in respect of the Lighthouse Warrant and (iv) any Common Stock issued
as a dividend or other distribution with respect to or in exchange for or in replacement of the shares referenced in clauses (i)
through (iii) above; provided, however, that Registrable Securities shall not include any shares of Common Stock
described in clauses (i) through (iii) above the offer and sale of which have previously been registered or which have been sold
to the public either pursuant to a registration statement or Rule 144, or which have been sold in a private transaction in
which the transferor’s rights under this Agreement are not validly assigned in accordance with this Agreement.

 

    	 	-2-	 

     

    

 

(s)          The
terms “register,” “registered” and “registration” shall refer to a registration
effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such registration statement.

 

(t)          “Registration
Expenses” shall mean all expenses incurred in effecting any registration pursuant to this Agreement, including, without
limitation, all registration, qualification, and filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company and one special counsel for the Holders, blue sky fees and expenses, and expenses of any regular or special audits
incident to or required by any such registration, but shall not include Selling Expenses, fees and disbursements of other counsel
for the Holders and the compensation of regular employees of the Company, which shall be paid in any event by the Company.

 

(u)          “Restricted
Securities” shall mean any Registrable Securities required to bear the first legend set forth in Section 2.8(c)
hereof.

 

(v)         “Requisite
Preferred Directors” shall have the meaning set forth in Article V, Section 1(l) of the Charter.

 

(w)          “Rule 144”
shall mean Rule 144 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time,
or any similar successor rule that may be promulgated by the Commission.

 

(x)          “Rule
145” shall mean Rule 145 as promulgated by the Commission under the Securities Act, as such Rule may be amended
from time to time, or any similar successor rule that may be promulgated by the Commission

 

(y)          “Rule 415”
shall mean Rule 415 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time,
or any similar successor rule that may be promulgated by the Commission.

 

(z)          “Securities
Act” shall mean the Securities Act of 1933, as amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.

 

(aa)         “Selling
Expenses” shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale
of Registrable Securities and fees and disbursements of counsel for any Holder (other than the fees and disbursements of one special
counsel to the Holders included in Registration Expenses).

 

(bb)         “Series A
Preferred Stock” shall mean the shares of Series A Preferred Stock of the Company.

 

    	 	-3-	 

     

    

 

(cc)         “Series A-1
Preferred Stock” shall mean the shares of Series A-1 Preferred Stock issued pursuant to any of the Purchase Agreements.

 

(dd)         “Shares”
shall mean the Company’s Series A Preferred Stock and Series A-1 Preferred Stock.

 

(ee)         “Significant
Holders” shall have the meaning set forth in Section 4.1 hereof.

 

(ff)         “Voting
Agreement” shall mean the second amended and restated voting agreement, of even date herewith, among the parties hereto,
as may be amended and/or restated from time to time.

 

(gg)         “Warrants”
shall mean the warrants issued by the Company pursuant to the Series A Preferred Stock, Note and Warrant Purchase Agreement dated
as of February 22, 2008, as amended; the Preferred Stock Purchase Warrant dated December 1, 2010 issued by the Company to Lighthouse
Capital Partners VI, L.P.; and the warrants issued by the Company in connection with convertible debt financings.

 

(hh)         “Withdrawn
Registration” shall mean a forfeited demand registration under Section 2.1 in accordance with the terms and conditions
of Section 2.4.

 

Section 2

Registration Rights

 

2.1         Requested
Registration. 

 

(a)          Request
for Registration. Subject to the conditions set forth in this Section 2.1, if the Company shall receive from Initiating
Holders a written request signed by such Initiating Holders that the Company effect any registration with respect to all or a part
of the Registrable Securities (such request shall state the number of shares of Registrable Securities to be disposed of by such
Initiating Holders), the Company shall:

 

(i)          promptly
give written notice of the proposed registration to all other Holders; and

 

(ii)         as
soon as practicable, file and use its commercially reasonable efforts to effect such registration (including, without limitation,
filing post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws, and appropriate
compliance with the Securities Act) and to permit or facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders
joining in such request as are specified in a written request received by the Company within twenty (20) days after such written
notice from the Company is mailed or delivered.

 

(b)          Limitations
on Requested Registration. The Company shall not be obligated to effect, or to take any action to effect, any such registration
pursuant to this Section 2.1:

 

(i)          prior
to one hundred and eighty (180) days following the effective date of the first registration statement filed by the Company covering
an underwritten offering of any of its securities to the general public (or the subsequent date on which all market stand-off agreements
applicable to the offering have terminated);

 

    	 	-4-	 

     

    

 

(ii)         in
any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting
such registration, qualification, or compliance, unless the Company is already subject to service in such jurisdiction and except
as may be required by the Securities Act;

 

(iii)        after
the Company has initiated two (2) such registrations pursuant to this Section 2.1 (counting for these purposes only (x) registrations
which have been declared or ordered effective and pursuant to which securities have been sold, and (y) Withdrawn Registrations);

 

(iv)        during
the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of filing of, and
ending on a date one hundred eighty (180) days after the effective date of, a Company-initiated registration (or ending on the
subsequent date on which all market stand-off agreements applicable to the offering have terminated); provided that the
Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective;

 

(v)         if
the Initiating Holders propose to dispose of shares of Registrable Securities the offer and sale of which may be registered immediately
on Form S-3 pursuant to a request made under Section 2.3 hereof;

 

(vi)        if
the Initiating Holders do not request that such offering be firmly underwritten by underwriters selected by the Initiating Holders
(subject to the consent of the Company); and

 

(vii)       if
the Company and the Initiating Holders are unable to obtain the commitment of the underwriter described in clause (b)(vi) above
to firmly underwrite the offer.

 

(c)          Deferral.
If (i) in the good faith judgment of the Board of Directors of the Company, the filing of a registration statement covering
the Registrable Securities would be materially detrimental to the Company and the Board of Directors of the Company concludes,
as a result, that it is in the best interests of the Company to defer the filing of such registration statement at such time, and
(ii) the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company for such registration
statement to be filed in the near future and that it is, therefore, in the best interests of the Company to defer the filing of
such registration statement, then (in addition to the limitations set forth in Section 2.1(b)(iv) above) the Company shall
have the right to defer such filing for a period of not more than sixty (60) days after receipt of the request of the Initiating
Holders, and, provided further, that the Company shall not defer its obligation in this manner more than two (2) times in
any twelve-month period.

 

(d)          Other
Shares. The registration statement filed pursuant to the request of the Initiating Holders may, subject to the provisions of
Section 2.1(e), include Other Shares, and may include securities of the Company being sold for the account of the Company.

 

    	 	-5-	 

     

    

 

(e)          Underwriting.
The right of any Holder to include all or any portion of its Registrable Securities in a registration pursuant to this Section 2.1
shall be conditioned upon such Holder’s participation in an underwriting and the inclusion of such Holder’s Registrable
Securities to the extent provided herein. If the Company shall request inclusion in any registration pursuant to Section 2.1
of securities being sold for its own account, or if other persons shall request inclusion in any registration pursuant to Section 2.1,
the Initiating Holders shall, on behalf of all Holders, offer to include such securities in the underwriting and such offer shall
be conditioned upon the participation of the Company or such other persons in such underwriting and the inclusion of the Company’s
and such person’s other securities of the Company and their acceptance of the further applicable provisions of this Section 2
(including Section 2.10). The Company shall (together with all Holders and other persons proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or
underwriters selected for such underwriting by the Company, which underwriters are reasonably acceptable to a majority-in-interest
of the Initiating Holders.

 

Notwithstanding any
other provision of this Section 2.1, if the underwriters advise the Initiating Holders in writing that marketing factors require
a limitation on the number of shares to be underwritten, the number of Registrable Securities and Other Shares that may be so included
shall be allocated as follows: (i) first, among all Holders requesting to include Registrable Securities in such registration
statement based on the pro rata percentage of Registrable Securities held by such Holders, assuming conversion; (ii) second,
to the Other Selling Stockholders; and (iii) third, to the Company, which the Company may allocate, at its discretion, for
its own account, or for the account of other holders or employees of the Company.

 

If a person who has
requested inclusion in such registration as provided above does not agree to the terms of any such underwriting, such person shall
be excluded therefrom by written notice from the Company, the underwriter or the Initiating Holders. The securities so excluded
shall also be withdrawn from registration. Any Registrable Securities or other securities excluded or withdrawn from such underwriting
shall also be withdrawn from such registration. If shares are so withdrawn from the registration and if the number of shares to
be included in such registration was previously reduced as a result of marketing factors pursuant to this Section 2.1(e),
then the Company shall then offer to all Holders and Other Selling Stockholders who have retained rights to include securities
in the registration the right to include additional Registrable Securities or Other Shares in the registration in an aggregate
amount equal to the number of shares so withdrawn, with such shares to be allocated among such Holders and Other Selling Stockholders
requesting additional inclusion, as set forth above.

 

2.2         Company
Registration. 

 

(a)          Company
Registration. If the Company shall determine to register the offer and sale of any of its securities either for its own account
or the account of a security holder or holders, other than a registration pursuant to Section 2.1 or 2.3, a registration relating
solely to employee benefit plans, a registration relating to the offer and sale of debt securities, a registration relating to
a corporate reorganization or other Rule 145 transaction, or a registration on any registration form that does not permit secondary
sales, the Company will:

 

(i)          promptly
give written notice of the proposed registration to all Holders; and

 

(ii)         use
its commercially reasonable efforts to include in such registration (and any related qualification under blue sky laws or other
compliance), except as set forth in Section 2.2(b) below, and in any underwriting involved therein, all of such Registrable
Securities as are specified in a written request or requests made by any Holder or Holders received by the Company within ten (10)
days after such written notice from the Company is mailed or delivered. Such written request may specify all or a part of a Holder’s
Registrable Securities.

 

    	 	-6-	 

     

    

 

(b)          Underwriting.
If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company
shall so advise the Holders as a part of the written notice given pursuant to Section 2.2(a)(i). In such event, the right
of any Holder to registration pursuant to this Section 2.2 shall be conditioned upon such Holder’s participation in
such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities through such underwriting shall (together with the Company, the Other Selling
Stockholders and other holders of securities of the Company with registration rights to participate therein distributing their
securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter
or underwriters selected by the Company.

 

(A)         Notwithstanding
any other provision of this Section 2.2, if the underwriters advise the Company in writing that marketing factors require
a limitation on the number of shares to be underwritten, the underwriters may (subject to the limitations set forth below) limit
the number of Registrable Securities to be included in, the registration and underwriting. The Company shall so advise all holders
of securities requesting registration, and the number of shares of securities that are entitled to be included in the registration
and underwriting shall be allocated, as follows: (i) first, to the Company for securities being sold for its own account,
(ii) second, to the Holders requesting to include Registrable Securities in such registration statement based on the pro rata
percentage of Registrable Securities held by such Holders, assuming conversion and (iii) third, to the Other Selling Stockholders
requesting to include Other Shares in such registration statement based on the pro rata percentage of Other Shares held by such
Other Selling Stockholders, assuming conversion. Notwithstanding the foregoing, no such reduction shall reduce the value of the
Registrable Securities of the Holders included in such registration below twenty five percent (25%) of the total value of securities
included in such registration, unless such offering is the Company’s Initial Public Offering and such registration does not
include shares of any other selling stockholders (excluding shares the offer and sale of which are registered for the account of
the Company), in which event any or all of the Registrable Securities of the Holders may be excluded.

 

If a person who has
requested inclusion in such registration as provided above does not agree to the terms of any such underwriting, such person shall
also be excluded therefrom by written notice from the Company or the underwriter. The Registrable Securities or other securities
so excluded shall also be withdrawn from such registration. Any Registrable Securities or other securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration.

 

(c)          Right
to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under
this Section 2.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities
in such registration.

 

2.3         Registration
on Form S-3. 

 

(a)          Request
for Form S-3 Registration. After its initial public offering, the Company shall use its commercially reasonable efforts to
qualify for registration on Form S-3 or any comparable or successor form or forms. After the Company has qualified for the use
of Form S-3, in addition to the rights contained in the foregoing provisions of this Section 2 and subject to the conditions
set forth in this Section 2.3, if the Company shall receive from a Holder or Holders of Registrable Securities a written request
that the Company effect any registration on Form S-3 or any similar short form registration statement with respect to all or part
of the Registrable Securities (such request shall state the number of shares of Registrable Securities to be disposed of and the
intended methods of disposition of such shares by such Holder or Holders), the Company will take all such action with respect to
such Registrable Securities as required by Section 2.1(a)(i) and (ii).

 

    	 	-7-	 

     

    

 

(b)          Limitations
on Form S-3 Registration. The Company shall not be obligated to effect, or take any action to effect, any such registration
pursuant to this Section 2.3:

 

(i)          in
the circumstances described in either Sections 2.1(b)(i), 2.1(b)(ii) or 2.1(b)(iv);

 

(ii)         if
the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose
to sell Registrable Securities and such other securities (if any) on Form S-3 at an aggregate price to the public of less
than $1,000,000; or

 

(iii)        if,
in a given twelve-month period, the Company has effected one (1) such registration in such period.

 

(c)          Deferral.
The provisions of Section 2.1(c) shall apply to any registration pursuant to this Section 2.3.

 

(d)          Underwriting.
If the Holders of Registrable Securities requesting registration under this Section 2.3 intend to distribute the Registrable
Securities covered by their request by means of an underwriting, the provisions of Section 2.1(e) shall apply to such registration.
Notwithstanding anything contained herein to the contrary, registrations effected pursuant to this Section 2.3 shall not be
counted as requests for registration or registrations effected pursuant to Section 2.1.

 

2.4         Expenses
of Registration.  All Registration Expenses incurred in connection with registrations pursuant to Sections 2.1, 2.2
and 2.3 hereof shall be borne by the Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Sections 2.1 and 2.3 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the voting power of the Registrable Securities to be registered or because
a sufficient number of Holders shall have withdrawn so that the minimum offering conditions set forth in Sections 2.1 and
2.3 are no longer satisfied (in which case all participating Holders shall bear such expenses pro rata among each other based on
the number of Registrable Securities requested to be so registered), unless the Holders of a majority of the voting power of the
Registrable Securities agree to forfeit their right to a demand registration pursuant to Section 2.1; provided, however,
in the event that a withdrawal by the Holders is based upon material adverse information relating to the Company that is different
from the information known or available (upon request from the Company or otherwise) to the Holders requesting registration at
the time of their request for registration under Section 2.1, such registration shall not be treated as a counted registration
for purposes of Section 2.1 hereof, even though the Holders do not bear the Registration Expenses for such registration. All
Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the holders of securities included
in such registration pro rata among each other on the basis of the number of Registrable Securities so registered.

 

2.5         Registration
Procedures.  In the case of each registration effected by the Company pursuant to Section 2, the Company will keep
each Holder advised in writing as to the initiation of each registration and as to the completion thereof. At its expense, the
Company will use its commercially reasonable efforts to:

 

(a)          keep
such registration effective for a period of ending on the earlier of the date which is sixty (60) days from the effective date
of the registration statement or such time as the Holder or Holders have completed the distribution described in the registration
statement relating thereto;

 

    	 	-8-	 

     

    

 

(b)          to
the extent the Company is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) (a “WKSI”)
at the time any request for registration is submitted to the Company in accordance with Section 2.3, (i) if so requested,
file an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an “automatic shelf
registration statement”) to effect such registration, and (ii) remain a WKSI (and not become an ineligible issuer
(as defined in Rule 405 under the Securities Act)) during the period during which such automatic shelf registration statement is
required to remain effective in accordance with this Agreement;

 

(c)          prepare
and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement for the period set forth in subsection (a) above;

 

(d)          furnish
such number of prospectuses, including any preliminary prospectuses, and other documents incident thereto, including any amendment
of or supplement to the prospectus, as a Holder from time to time may reasonably request;

 

(e)          register
and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdiction
as shall be reasonably requested by the Holders; provided, that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;

 

(f)          notify
each seller of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not misleading or incomplete in light of the circumstances
then existing, and following such notification promptly prepare and furnish to such seller a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such shares, such
prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or incomplete in light of the circumstances then existing;

 

(g)          if
at any time when the Company is required to re-evaluate its WKSI status for purposes of an automatic shelf registration statement
used to effect a request for registration in accordance with Section 2.3 (i) the Company determines that it is not a
WKSI, (ii) the registration statement is required to be kept effective in accordance with this Agreement, and (iii) the
registration rights of the applicable Holders have not terminated, promptly amend the registration statement onto a form the Company
is then eligible to use or file a new registration statement on such form, and keep such registration statement effective in accordance
with the requirements otherwise applicable under this Agreement;

 

(h)          if
(i) a registration made pursuant to a shelf registration statement is required to be kept effective in accordance with this
Agreement after the third anniversary of the initial effective date of the shelf registration statement and (ii) the registration
rights of the applicable Holders have not terminated, file a new registration statement with respect to any unsold Registrable
Securities subject to the original request for registration prior to the end of the three year period after the initial effective
date of the shelf registration statement, and keep such registration statement effective in accordance with the requirements otherwise
applicable under this Agreement;

 

    	 	-9-	 

     

    

 

(i)          furnish,
on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through
underwriters, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration,
in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters,
if any, and reasonably satisfactory to a majority in interest of the voting power of the Holders requesting registration of Registrable
Securities and (ii) a “comfort” letter dated as of such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters;

 

(j)          provide
a transfer agent and registrar for all Registrable Securities registered pursuant to such registration statement and a CUSIP number
for all such Registrable Securities, in each case not later than the effective date of such registration;

 

(k)          comply
with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve months, but not more than eighteen months, beginning
with the first month after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act;

 

(l)          cause
all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed; and

 

(m)          in
connection with any underwritten offering pursuant to a registration statement filed pursuant to Section 2.1 hereof, enter
into an underwriting agreement in form reasonably necessary to effect the offer and sale of Common Stock, provided such
underwriting agreement contains reasonable and customary provisions, and provided further, that each Holder participating
in such underwriting shall also enter into and perform its obligations under such an agreement.

 

2.6         Indemnification. 

 

(a)          To
the extent permitted by law, the Company will indemnify and hold harmless each Holder, each of its officers, directors and partners,
legal counsel and accountants and each person controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which registration, qualification or compliance has been effected pursuant to this Section 2, and each underwriter,
if any, and each person who controls within the meaning of Section 15 of the Securities Act any underwriter, against all expenses,
claims, losses, damages and liabilities (or actions, proceedings or settlements in respect thereof) arising out of or based on:
(i) any untrue statement (or alleged untrue statement) of a material fact contained or incorporated by reference in any registration
statement, any prospectus included in the registration statement, any issuer free writing prospectus (as defined in Rule 433
of the Securities Act), any issuer information (as defined in Rule 433 of the Securities Act) filed or required to be filed
pursuant to Rule 433(d) under the Securities Act or any other document incident to any such registration, qualification or
compliance prepared by or on behalf of the Company or used or referred to by the Company, (ii) any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iii) any
violation (or alleged violation) by the Company of the Securities Act, any state securities laws or any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the Company in connection with any offering covered by
such registration, qualification or compliance, and the Company will reimburse each such Holder, each of its officers, directors,
partners, legal counsel and accountants and each person controlling such Holder, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending or
settling any such claim, loss, damage, liability or action; provided that the Company will not be liable in any such case
to the extent that any such claim, loss, damage, liability, or action arises out of or is based on any untrue statement or omission
based upon written information furnished to the Company by such Holder, any of such Holder’s officers, directors, partners,
legal counsel or accountants, any person controlling such Holder, such underwriter or any person who controls any such underwriter,
and stated to be specifically for use therein; and provided, further that, the indemnity agreement contained in this
Section 2.6(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld).

 

    	 	-10-	 

     

    

 

(b)          To
the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as
to which such registration, qualification or compliance is being effected, indemnify and hold harmless the Company, each of its
directors, officers, partners, legal counsel and accountants and each underwriter, if any, of the Company’s securities covered
by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15
of the Securities Act, each other such Holder, and each of their officers, directors and partners, and each person controlling
each other such Holder, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based
on: (i) any untrue statement (or alleged untrue statement) of a material fact contained or incorporated by reference in any
prospectus, offering circular or other document (including any related registration statement, notification, or the like) incident
to any such registration, qualification or compliance, or (ii) any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and
such Holders, directors, officers, partners, legal counsel and accountants, persons, underwriters, or control persons for any legal
or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability
or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon
and in conformity with written information furnished to the Company by such Holder and stated to be specifically for use therein;
provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of
any such claims, losses, damages or liabilities (or actions in respect thereof) if such settlement is effected without the consent
of such Holder (which consent shall not be unreasonably withheld); and provided that in no event shall any indemnity under
this Section 2.6 exceed the net proceeds from the offering received by such Holder, except in the case of fraud or willful
misconduct by such Holder.

 

(c)          Each
party entitled to indemnification under this Section 2.6 (the “Indemnified Party”) shall
give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly
after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying
Party to assume the defense of such claim or any litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s
expense; and provided further that the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 2.6, to the extent such failure is not prejudicial. No
Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified
Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom.

 

    	 	-11-	 

     

    

 

(d)          If
the indemnification provided for in this Section 2.6 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage, or expense referred to herein, then the Indemnifying Party,
in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions
that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative
fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied
by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement or omission. No person or entity will be required under this Section 2.6(d)
to contribute any amount in excess of the net proceeds from the offering received by such person or entity, except in the case
of fraud or willful misconduct by such person or entity. No person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity that was not guilty
of such fraudulent misrepresentation.

 

(e)          Notwithstanding
the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.

 

2.7         Information
by Holder.  Each Holder of Registrable Securities shall furnish to the Company such information regarding such Holder
and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required
in connection with any registration, qualification, or compliance referred to in this Section 2.

 

2.8         Restrictions
on Transfer. 

 

(a)          The
holder of each certificate representing Registrable Securities by acceptance thereof agrees to comply in all respects with the
provisions of this Section 2.8. Each Holder agrees not to make any sale, assignment, transfer, pledge or other disposition
of all or any portion of the Restricted Securities, or any beneficial interest therein, unless and until the transferee thereof
has agreed in writing for the benefit of the Company to take and hold such Restricted Securities subject to, and to be bound by,
the terms and conditions set forth in this Agreement, including, without limitation, this Section 2.8 and Section 2.10,
and:

 

(i)          there
is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or

 

    	 	-12-	 

     

    

 

(ii)         such
Holder shall have given prior written notice to the Company of such Holder’s intention to make such disposition and shall
have furnished the Company with a detailed description of the manner and circumstances of the proposed disposition, and, if requested
by the Company, such Holder shall have furnished the Company, at its expense, with (i) an opinion of counsel reasonably satisfactory
to the Company to the effect that such disposition will not require registration of such Restricted Securities under the Securities
Act or (ii) a “no action” letter from the Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon
the holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms
of the notice delivered by the Holder to the Company.

 

(b)          Notwithstanding
the provisions of Section 2.8(a), no such registration statement, opinion of counsel or “no action” letter shall
be necessary for (i) a transfer not involving a change in beneficial ownership, or (ii) transactions involving the distribution
without consideration of Restricted Securities by any Holder to (x) a parent, subsidiary or other affiliate of the Holder,
if the Holder is a corporation; (y) any of the Holder’s partners, members or other equity owners, or retired partners,
retired members or other equity owners, or to the estate of any of the Holder’s partners, members or other equity owners
or retired partners, retired members or other equity owners; or (z) a venture capital fund that is controlled by or under
common control with one or more general partners or managing members of, or shares the same management company with, the Holder;
provided, in each case, that the Holder shall give written notice to the Company of the Holder’s intention to effect
such disposition and shall have furnished the Company with a detailed description of the manner and circumstances of the proposed
disposition.

 

(c)          Each
certificate representing Registrable Securities shall (unless otherwise permitted by the provisions of this Agreement) be stamped
or otherwise imprinted with legends substantially similar to the following (in addition to any legend(s) required under applicable
state securities laws):

 

THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER
THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

THE SHARES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO (1) RESTRICTIONS ON TRANSFERABILITY AND RESALE, INCLUDING A LOCK-UP PERIOD IN THE EVENT
OF A PUBLIC OFFERING, AS SET FORTH IN AN INVESTORS’ RIGHTS AGREEMENT, AND (2) VOTING RESTRICTIONS AS SET FORTH IN A
VOTING AGREEMENT AMONG THE COMPANY AND THE ORIGINAL HOLDERS OF THESE SHARES, COPIES OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE
OF THE COMPANY.

 

The Holders consent
to the Company making a notation on its records and giving instructions to any transfer agent of the Restricted Securities in order
to implement the restrictions on transfer established in this Section 2.8.

 

    	 	-13-	 

     

    

 

(d)          The
first legend referring to federal and state securities laws identified in Section 2.8(c) hereof stamped on a certificate evidencing
the Restricted Securities and the stock transfer instructions and record notations with respect to such Restricted Securities shall
be removed and the Company shall issue a certificate without such legend to the holder of such Restricted Securities if (i) such
securities are registered under the Securities Act, or (ii) such holder provides the Company with an opinion of counsel reasonably
acceptable to the Company to the effect that a sale or transfer of the securities may be made without registration or qualification.

 

2.9         Rule 144
Reporting.  With a view to making available the benefits of certain rules and regulations of the Commission that may permit
the sale of the Restricted Securities to the public without registration, the Company agrees to use its commercially reasonable
efforts to:

 

(a)          make
and keep adequate current public information with respect to the Company available in accordance with Rule 144 under the Securities
Act, at all times from and after ninety (90) days following the effective date of the first registration under the Securities Act
filed by the Company for an offering of its securities to the general public;

 

(b)          file
with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the
Exchange Act at any time after it has become subject to such reporting requirements; and

 

(c)          so
long as a Holder owns any Restricted Securities, furnish to the Holder forthwith upon written request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 (at any time from and after ninety (90) days following
the effective date of the first registration statement filed by the Company for an offering of its securities to the general public),
and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy
of the most recent annual or quarterly report of the Company, and such other reports and documents so filed as a Holder may reasonably
request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration.

 

2.10       Market
Stand-Off Agreement.  Each Holder hereby agrees that such Holder shall not sell or otherwise transfer, make any short
sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as
a sale, of any Common Stock (or other securities) of the Company held by such Holder (other than those included in the registration)
during the one hundred and eighty (180) day period following the effective date of the registration statement for the Company’s
Initial Public Offering filed under the Securities Act (or such other period as may be requested by the Company or an underwriter
to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst
recommendations and opinions, including, but not limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4),
or any successor provisions or amendments thereto) provided that all directors, officers and holders of one percent (1%)
or more of the Company’s outstanding capital stock are similarly bound. The obligations described in this Section 2.10
shall not apply to a registration relating solely to employee benefit plans on Form S-l or Form S-8 or similar forms that may be
promulgated in the future, or a registration relating solely to a transaction on Form S-4 or similar forms that may be promulgated
in the future. The Company may impose stop-transfer instructions and may stamp each such certificate with the second legend set
forth in Section 2.8(c) hereof with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction
until the end of such one hundred and eighty (180) day (or other) period. Each Holder agrees to execute a market standoff agreement
with said underwriters in customary form consistent with the provisions of this Section 2.10.

 

    	 	-14-	 

     

    

 

2.11       Delay
of Registration.  No Holder shall have any right to take any action to restrain, enjoin, or otherwise delay any registration
as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

 

2.12       Transfer
or Assignment of Registration Rights.  The rights to cause the Company to register the offer and sale of securities granted
to a Holder by the Company under this Section 2 may be transferred or assigned by a Holder only to a transferee or assignee
of not less than 500,000 shares of Registrable Securities (as presently constituted and subject to subsequent adjustments for stock
splits, stock dividends, reverse stock splits, and the like); provided that (i) such transfer or assignment of Registrable
Securities is effected in accordance with the terms of Section 2.8 hereof, the Right of First Refusal and Co-Sale Agreement,
and applicable securities laws, (ii) the Company is given written notice prior to said transfer or assignment, stating the
name and address of the transferee or assignee and identifying the securities with respect to which such registration rights are
intended to be transferred or assigned and (iii) the transferee or assignee of such rights assumes in writing the obligations
of such Holder under this Agreement, including without limitation the obligations set forth in Section 2.10.

 

2.13       Limitations
on Subsequent Registration Rights.  From and after the date of this Agreement, the Company shall not, without the prior
written consent of Holders holding a majority of the voting power of the Registrable Securities, enter into any agreement with
any holder or prospective holder of any securities of the Company giving such holder or prospective holder any registration rights
the terms of which are pari passu with or senior to the registration rights granted to the Holders hereunder.

 

2.14       Termination
of Registration Rights.  The right of any Holder to request registration or inclusion in any registration pursuant to
Sections 2.1, 2.2 or 2.3 shall terminate on the earlier of (i) such date, on or after the closing of the Company’s
first registered public offering of Common Stock, on which all shares of Registrable Securities held or entitled to be held upon
conversion by such Holder may immediately be sold under Rule 144 during any ninety (90) day period, (ii) four (4) years
after the closing of the Company’s Initial Public Offering and (iii) upon termination of the Agreement as provided herein.

 

Section 3

Covenants of the Company

 

The Company hereby
covenants and agrees, as follows:

 

3.1         Basic
Financial Information and Inspection Rights. 

 

(a)          Basic
Financial Information. The Company will furnish the following reports to each Holder who owns at least 500,000 Shares and/or
Conversion Shares (as presently constituted and subject to subsequent adjustments for stock splits, stock dividends, reverse stock
splits, and the like):

 

(i)          as
soon as practicable after the end of each fiscal year of the Company, and in any event within one hundred twenty (120) days after
the end of each fiscal year of the Company, an audited consolidated balance sheet of the Company and its subsidiaries, if any,
as at the end of such fiscal year, and audited consolidated statements of income and cash flows of the Company and its subsidiaries,
if any, for such year, in each case audited by a firm approved by the Board of Directors including the Requisite Preferred Directors,
and prepared in accordance with U.S. generally accepted accounting principles consistently applied, and certified by the Chief
Financial Officer of the Company;

 

    	 	-15-	 

     

    

 

(ii)         as
soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company,
and in any event within forty-five (45) days after the end of the first, second, and third quarterly accounting periods in each
fiscal year of the Company, an unaudited consolidated balance sheet of the Company and its subsidiaries, if any, as of the end
of each such quarterly period, and unaudited consolidated statements of income and cash flows of the Company and its subsidiaries,
if any, for such period, prepared in accordance with U.S. generally accepted accounting principles consistently applied, subject
to changes resulting from normal year-end audit adjustments, but excluding footnotes; and

 

(iii)        at
least thirty (30) days prior to the beginning of each fiscal year an operating plan for such fiscal year.

 

(b)          Inspection
Rights. The Company will afford to (i) each Holder who (A) is entitled to designate a Preferred Director pursuant to the Voting
Agreement and who owns at least 500,000 Shares and/or Conversion Shares (as presently constituted and subject to subsequent adjustments
for stock splits, stock dividends, reverse stock splits, and the like) and (B) each Series A-1 Investor, so long as such Holder
owns at least 500,000 Shares and/or Conversion Shares (as presently constituted and subject to subsequent adjustments for stock
splits, stock dividends, reverse stock splits, and the like), and (ii) accountants and counsel to such Holders and Investors, reasonable
access during normal business hours to all of the Company’s respective properties, books and records. Each such Holder and
Investor shall have such other access to management for discussions and information as reasonably requested. The Company shall
not be required to disclose details of contracts with or work performed for specific customers and other business partners where
to do so would violate confidentiality obligations to those parties. Holders and Investors may exercise their rights under this
Section 3.1(b) only for purposes reasonably related to their interests under this Agreement and related agreements. The rights
granted pursuant to this Section 3.1(b) may not be assigned or otherwise conveyed by the Holders or Investors or by any subsequent
transferee of any such rights without the prior written consent of the Company except as authorized in this Section 3.1(b).

 

3.2         Directors’
and Officers’ Liability Insurance.  The Company shall purchase and maintain in full force and effect, directors
and officers liability insurance on reasonable terms and conditions reasonably acceptable to the directors designated by the Investors.

 

3.3         Fire
and Casualty Insurance.  The Company shall purchase and maintain in full force and effect, fire and casualty insurance
policies, sufficient in amount (subject to reasonable deductibles) to allow it to replace any of its material properties that may
be damaged or destroyed on reasonable terms and conditions reasonably acceptable to the directors designated by the Investors.

 

    	 	-16-	 

     

    

 

3.4         Confidentiality. 
Anything in this Agreement to the contrary notwithstanding, no party hereto by reason of this Agreement shall have access to any
trade secrets or classified information of the Company. The Company shall not be required to comply with any information rights
of Section 3.1 in respect of any Holder whom the Company reasonably determines to be a competitor or an officer, employee, director
or holder of more than ten percent (10%) of a competitor; provided, that none of Synageva BioPharma Corp. or its subsidiaries
shall be deemed a competitor under this Section 3.4. Each Holder acknowledges that the information received by them pursuant
to this Agreement may be confidential and for its use only, and it will not use such confidential information in violation of the
Exchange Act or reproduce, disclose or disseminate such information to any other person (other than its employees or agents having
a need to know the contents of such information, and its attorneys), except in connection with the exercise of rights under this
Agreement, unless the Company has made such information available to the public generally or such Holder is required to disclose
such information by a governmental authority. Notwithstanding the foregoing, the Company (i) acknowledges that the Investors listed
in Exhibit A and Exhibit A-1 hereto as of the date of this Agreement are in the business of making investments in, and
have or may have investments in other businesses similar to and that may compete with the Company’s business (“Competing
Business”) and (ii) agrees that Holders shall have the unfettered right to make investments in or have relationships
with Competing Businesses independent of their investments in the Company; and accordingly such Investors shall have access to
information pursuant to Section 3.1 (except pursuant to the first sentence of this Section 3.4) provided that each such
Holder agrees to keep in confidence and prevent the use by or disclosure to any other person or entity of the confidential information
of the Company.

 

3.5         Termination
of Covenants.  The covenants set forth in this Section 3 shall terminate and be of no further force and effect after
the Company’s Initial Public Offering.

 

Section 4

Right of First Refusal

 

4.1         Right
of First Refusal to Significant Holders.  The Company hereby grants to each Holder who owns at least 500,000 Shares or
Conversion Shares (as presently constituted and subject to subsequent adjustments for stock splits, stock dividends, reverse stock
splits and the like) (the “Significant Holders”), the right of first refusal to purchase its pro rata
share of New Securities (as defined in this Section 4.1(a)) which the Company may, from time to time, propose to sell and
issue after the date of this Agreement. A Significant Holder’s pro rata share, for purposes of this right of first refusal,
is equal to the ratio of (a) the number of shares of Common Stock owned by such Significant Holder immediately prior to the
issuance of New Securities (assuming full conversion of the Shares and exercise of all outstanding convertible securities, rights,
options and warrants, directly or indirectly, into Common Stock held by said Significant Holder) to (b) the total number of
shares of Common Stock outstanding immediately prior to the issuance of New Securities (assuming full conversion of the Shares
and exercise of all outstanding convertible securities, rights, options and warrants, directly or indirectly). This right of first
refusal shall be subject to the following provisions:

 

(a)          “New
Securities” shall mean any capital stock (including Common Stock and/or Preferred Stock) of the Company whether now authorized
or not, and rights, convertible securities, options or warrants to purchase such capital stock, and securities of any type whatsoever
that are, or may become, exercisable or convertible into capital stock; provided that the term “New Securities”
does not include:

 

(i)          the
Shares and the Conversion Shares;

 

(ii)         up
to a number of shares of Common Stock or options convertible securities or other rights to purchase Common Stock equal to the Incentive
Securities Threshold Amount (as defined in the Charter) issued or issuable to officers, employees, directors, consultants, placement
agents, and other service providers of the Company (or any subsidiary) pursuant to stock grants, option plans, purchase plans,
agreements or other employee stock incentive programs or arrangements approved by the Board of Directors of the Company;

 

(iii)        securities
issued pursuant to the conversion or exercise of any outstanding convertible or exercisable securities as of this date of this
Agreement;

 

    	 	-17-	 

     

    

 

(iv)        securities
issued or issuable as a dividend or distribution on Preferred Stock of the Company or pursuant to any event for which adjustment
is made pursuant to paragraph 4(e), 4(f) or 4(g) of the Charter;

 

(v)         securities
offered pursuant to a bona fide, firmly underwritten public offering pursuant to a registration statement filed under the Securities
Act;

 

(vi)        securities
issued or issuable pursuant to the acquisition of another corporation by the Company by merger, purchase of substantially all of
the assets or other reorganization or to a joint venture agreement, provided, that such issuances are approved by the Board
of Directors of the Company, including the Requisite Preferred Directors;

 

(vii)       securities
issued or issuable to banks, equipment lessors or other financial institutions pursuant to a commercial leasing or debt financing
transaction approved by the Board of Directors of the Company including the Requisite Preferred Directors;

 

(viii)      securities
issued or issuable in connection with sponsored research, collaboration, technology license, development, OEM, marketing or other
similar agreements or strategic partnerships approved by the Board of Directors of the Company, including the Requisite Preferred
Directors;

 

(ix)         securities
issued or issuable to suppliers or third party service providers in connection with the provision of goods or services pursuant
to transactions approved by the Board of Directors of the Company, including the Requisite Preferred Directors;

 

(x)          securities
of the Company which are otherwise excluded by the affirmative vote or consent of the holders of a majority of the shares of Preferred
Stock of the Company then outstanding or the Board of Directors of the Company, including the Requisite Preferred Directors; and

 

(xi)         any
right, option or warrant to acquire any security convertible into the securities excluded from the definition of New Securities
pursuant to subsections (i) through (x) above.

 

(b)          If
the Company proposes to undertake an issuance of New Securities, it shall give each Significant Holder written notice of its intention,
describing the type of New Securities, and their price and the general terms upon which the Company proposes to issue the same.
Each Significant Holder shall have fifteen (15) days after any such notice is mailed or delivered to agree to purchase such Holder’s
pro rata share of such New Securities for the price and upon the terms specified in the notice by giving written notice to the
Company, in substantially the form attached hereto as Schedule 1, and stating therein the quantity of New Securities
to be purchased.

 

(c)          If
the Holders fail to exercise fully the right of first refusal within said fifteen (15) day period (the “Election Period”),
the Company shall have ninety (90) days thereafter to sell or enter into an agreement (pursuant to which the sale of New Securities
covered thereby shall be closed, if at all, within ninety (90) days from the date of said agreement) to sell that portion of the
New Securities with respect to which the Significant Holders’ right of first refusal option set forth in this Section 4.1
was not exercised, at a price and upon terms no more favorable to the purchasers thereof than specified in the Company’s
notice to Significant Holders delivered pursuant to Section 4.1(b). In the event the Company has not sold within such ninety
(90) day period following the Election Period, or such ninety (90) day period following the date of said agreement, the Company
shall not thereafter issue or sell any New Securities, without first again offering such securities to the Significant Holders
in the manner provided in this Section 4.1.

 

    	 	-18-	 

     

    

 

(d)          The
right of first refusal granted under this Agreement shall expire upon, and shall not be applicable to the Company’s Initial
Public Offering.

 

Section 5

Miscellaneous

 

5.1         Amendment. 
Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument referencing this Agreement and signed by the Company and (a) Holders holding a majority of the
voting power of the shares of Common Stock issued or issuable upon conversion of the Shares (excluding any of such shares that
have been sold to the public or pursuant to Rule 144), provided that each of the Shares held by the Series A-1 Investors
will be considered to have one tenth the voting power of one Share held by the Series A Investors in accordance with Article V,
Section 5(c) of the Charter; and provided, further, that if any amendment, waiver, discharge or termination operates
in a manner that treats any Holder different from other Holders, the consent of such Holder shall also be required for such amendment,
waiver, discharge or termination. Any such amendment, waiver, discharge or termination effected in accordance with this paragraph
shall be binding upon each Investor and each future holder of all such securities of Investor.

 

5.2         Notices. 
All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand or by messenger addressed:

 

(a)          if
to an Investor other than a Series A-1 Investor, at the Investor’s address, facsimile number or electronic mail address
as shown in the Company’s records, as may be updated in accordance with the provisions hereof;

 

(b)          if
to a Series A-1 Investor, at the Series A-1 Investor’s address, facsimile number or electronic mail address as
shown in the Company’s records, as may be updated in accordance with the provisions hereof, with a copy to Daniel T. Kajunski,
Esq., Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, MA 02111 (facsimile) (617) 542-2241, which
copy shall not constitute notice;

 

(c)          if
to any Holder, at such address, facsimile number or electronic mail address as shown in the Company’s records, or, until
any such holder so furnishes an address, facsimile number or electronic mail address to the Company, then to and at the address,
facsimile number or electronic mail address of the last holder of such shares for which the Company has contact information in
its records; or

 

(d)          if
to the Company, at 410 W. Harrison Street, Suite 300, Seattle, WA 98119, or at such other address or facsimile number as the Company
shall have furnished to the Voting Parties in writing, with a copy, which shall not constitute notice, to Michael Nordtvedt, Wilson
Sonsini Goodrich & Rosati, P.C., 701 Fifth Avenue, Suite 5100, Seattle, WA 98104, (facsimile) (206) 883-2699.

 

With respect to any
notice given by the Company under any provision of the Delaware General Corporation Law or the Company’s charter or bylaws,
each party hereto agrees that such notice may be given by facsimile or by electronic mail.

 

    	 	-19-	 

     

    

 

Each such notice or
other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered
personally, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid or, if sent by facsimile, one
(1) business day after confirmation of facsimile transfer or, if sent by electronic mail, one (1) business day after confirmation
of delivery when directed to the electronic mail address set forth on the Schedule of Investors. In the event of any conflict between
the Company’s books and records and this Agreement or any notice delivered hereunder, the Company’s books and records
will control absent fraud or error.

 

5.3         Governing
Law.  This Agreement shall be governed in all respects by the internal laws of the State of Delaware as applied to agreements
entered into among Delaware residents to be performed entirely within Delaware, without regard to principles of conflicts of law.

 

5.4         Successors
and Assigns.  This Agreement, and any and all rights, duties and obligations hereunder, shall not be assigned, transferred,
delegated or sublicensed by any Investor without the prior written consent of the Company. Any attempt by an Investor without such
permission to assign, transfer, delegate or sublicense any rights, duties or obligations that arise under this Agreement shall
be void. Subject to the foregoing and except as otherwise provided herein, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

 

5.5         Entire
Agreement.  This Agreement and the exhibits hereto constitute the full and entire understanding and agreement between
the parties with regard to the subjects hereof. No party hereto shall be liable or bound to any other party in any manner with
regard to the subjects hereof or thereof by any warranties, representations or covenants except as specifically set forth herein.

 

5.6         Delays
or Omissions.  Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing
to any party to this Agreement upon any breach or default of any other party under this Agreement shall impair any such right,
power or remedy of such non-defaulting party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any
party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically
set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party to this Agreement,
shall be cumulative and not alternative.

 

5.7         Severability. 
If any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Agreement,
and such court will replace such illegal, void or unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, void or unenforceable
provision. The balance of this Agreement shall be enforceable in accordance with its terms.

 

5.8         Titles
and Subtitles.  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement. All references in this Agreement to sections, paragraphs and exhibits shall, unless
otherwise provided, refer to sections and paragraphs hereof and exhibits attached hereto.

 

    	 	-20-	 

     

    

 

5.9         Counterparts. 
This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties that execute
such counterparts, and all of which together shall constitute one instrument.

 

5.10       Telecopy
Execution and Delivery.  A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more
parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant to which the signature
of or on behalf of such party can be seen. Such execution and delivery shall be considered valid, binding and effective for all
purposes. At the request of any party hereto, all parties hereto agree to execute and deliver an original of this Agreement as
well as any facsimile, telecopy or other reproduction hereof.

 

5.11       Jurisdiction;
Venue.  The parties, by their execution of this Agreement, hereby irrevocably submit to the non-exclusive in persona
jurisdiction of the state courts of the State of Washington and of the United States District Courts that are located in King County,
Washington, for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement.

 

5.12       Further
Assurances.  Each party hereto agrees to execute and deliver, by the proper exercise of its corporate, limited liability
company, partnership or other powers, all such other and additional instruments and documents and do all such other acts and things
as may be necessary to more fully effectuate this Agreement.

 

5.13       Termination
Upon Change of Control.  Notwithstanding anything to the contrary herein, this Agreement (excluding any then-existing
obligations) shall terminate upon (a) the acquisition of the Company by another entity by means of any transaction or series
of related transactions to which the Company is party (including, without limitation, any stock acquisition, reorganization, merger
or consolidation but excluding any sale of stock for capital raising purposes) other than a transaction or series of transactions
in which the holders of a majority of the total voting power of the voting securities of the Company outstanding immediately prior
to such transaction continue to retain (either by such voting securities remaining outstanding or by such voting securities being
converted into voting securities of the surviving entity), as a result of shares in the Company held by such holders prior to such
transaction, a majority of the total voting power represented by the voting securities of the Corporation or such surviving entity
outstanding immediately after such transaction or series of transactions; or (b) a sale, lease or other conveyance of all
substantially all of the assets of the Company.

 

5.14       Conflict. 
In the event of any conflict between the terms of this Agreement and the Company’s Certificate of Incorporation or its Bylaws,
the terms of the Company’s Certificate of Incorporation or its Bylaws, as the case may be, will control.

 

5.15       Aggregation
of Stock.  All securities held or acquired by affiliated entities (including affiliated venture capital funds) or persons
shall be aggregated together for purposes of determining the availability of any rights under this Agreement.

 

5.16       Prior
Rights Agreement. Effective and contingent upon the execution of this Agreement by the Company and the Requisite Holders, the
Prior Rights Agreement shall be superseded and replaced in its entirety as set forth in this Agreement, and this Agreement shall
constitute the entire agreement between the parties and shall supersede any other prior understandings or agreements concerning
the subject matter hereof.

 

    	 	-21-	 

     

    

 

5.17       Waiver
of Right of First Offer. Effective and contingent upon the execution of this Agreement by the Company and the Requisite Holders,
the Requisite Holders hereby waive, on behalf of themselves and all other Major Investors, the rights of first offer and notice
rights contained in Section 4 of the Prior Rights Agreement and this Agreement with respect to the sale and issuance of Series
A-1 Preferred Stock pursuant to the Purchase Agreements and the Common Stock issuable upon conversion thereof.

 

(signature page follows)

 

    	 	-22-	 

     

    

 

The parties hereto
have executed this Second Amended and Restated Investors’ Rights Agreement effective as of the day and year first above written.

 

	 	COMPANY:
	 	 
	 	PHASERX, INC.,
	 	a Delaware corporation
	 	 
	 	By:	/s/ Robert W. Overell
	 	 	Name:  Robert W. Overell
	 	 	Title:  President and Chief Executive Officer

 

(Signature Page to PhaseRx, Inc. Second
Amended and Restated Investors’ Rights Agreement)

 

    	 	 	 

     

    

 

The parties hereto
have executed this Second Amended and Restated Investors’ Rights Agreement effective as of the day and year first above written.

 

	 	INVESTOR:
	 	 
	 	SAVOY THERAPEUTICS CORP. 
	 	 	 
	 	By:	/s/ Thomas Butham
	 	Name: 	Thomas Butham
	 	Title:  	Secretary and Vice President

 

(Signature Page to PhaseRx, Inc. Second
Amended and Restated Investors’ Rights Agreement)

 

    	 	 	 

     

    

 

The parties hereto have
executed this Second Amended and Restated Investors’ Rights Agreement effective as of the day and year first above written.

 

	 	INVESTORS:
	 	 
	 	VERSANT VENTURE CAPITAL III, L.P.
	 	VERSANT SIDE FUND III, L.P.
	 	 	 
	 	By:	Versant Ventures III, LLC
	 	Its:	General Partner
	 	 	 
	 	By:	/s/ Brian G. Atwood
	 	 	Name:  Brian G. Atwood
	 	 	Title:  Managing Director
	 	 
	 	5AM VENTURES II, LP
	 	5AM CO-INVESTORS II, LP
	 	 
	 	By:	5AM Partners II LLC
	 	Its:	General Partner
	 	 	 
	 	By:	/s/ John Diekman
	 	 	Name:  John Diekman
	 	 	Title:  Managing Member

 

	 	ARCH VENTURE FUND VII, L.P.
	 	 
	 	By:	ARCH Venture Partners VII, L.P.
	 	Its:	General Partner
	 	 	 
	 	By:	ARCH Venture Partners VII, LLC
	 	Its:	General Partner
	 	 	 
	 	By:	Clinton W. Bybay
	 	 	Name: 	Clinton W. Bybay
	 	 	Title:	Managing Director

 

(Signature Page to PhaseRx, Inc. Second
Amended and Restated Investors’ Rights Agreement)

 

    	 	 	 

     

    

 

The parties hereto
have executed this Second Amended and Restated Investors’ Rights Agreement effective as of the day and year first above written.

 

	 	INVESTOR:
	 	 
	 	FOUNDATION BIOVENTURES LLC
	 	 
	 	By:	/s/ Robert W. Overell
	 	 	Name:  Robert W. Overell
	 	 	Title:  President and Chief Executive Officer

 

(Signature Page to PhaseRx, Inc. Second
Amended and Restated Investors’ Rights Agreement)

 

    	 	 	 

     

    

 

The parties hereto
have executed this Second Amended and Restated Investors’ Rights Agreement effective as of the day and year first above written.

 

	 	INVESTOR:
	 	 
	 	/s/ Steven Gillis
	 	Steven Gillis

 

(Signature Page to PhaseRx, Inc. Second
Amended and Restated Investors’ Rights Agreement)

 

    	 	 	 

     

    

 

The parties hereto
have executed this Second Amended and Restated Investors’ Rights Agreement effective as of the day and year first above written.

 

	 	INVESTOR:
	 	 
	 	/s/ Allan Hoffman
	 	Allan Hoffman

 

(Signature Page to PhaseRx, Inc. Second
Amended and Restated Investors’ Rights Agreement)

 

    	 	 	 

     

    

 

The parties hereto
have executed this Second Amended and Restated Investors’ Rights Agreement effective as of the day and year first above written.

 

	 	INVESTOR:
	 	 
	 	/s/ Pat Stayton
	 	Pat Stayton

 

(Signature Page to PhaseRx, Inc. Second
Amended and Restated Investors’ Rights Agreement)

 

    	 	 	 

     

    

 

The parties hereto
have executed this Second Amended and Restated Investors’ Rights Agreement effective as of the day and year first above written.

 

	 	FOUNDER:
	 	 
	 	FOUNDATION BIOVENTURES LLC
	 	 
	 	By:	/s/ Robert W. Overell
	 	 	Name:  Robert W. Overell
	 	 	Title:  President and Chief Executive Officer

 

(Signature Page to PhaseRx, Inc. Second
Amended and Restated Investors’ Rights Agreement)

 

    	 	 	 

     

    

 

The parties hereto
have executed this Second Amended and Restated Investors’ Rights Agreement effective as of the day and year first above written.

 

	 	FOUNDER:
	 	 
	 	/s/ Paul H. Johnson
	 	Paul H. Johnson

 

(Signature Page to PhaseRx, Inc. Investors’
Rights Agreement)

 

    	 	 	 

     

    

 

The parties hereto
have executed this Second Amended and Restated Investors’ Rights Agreement effective as of the day and year first above written.

 

	 	FOUNDER:
	 	 
	 	OLIVER W. PRESS LLC
	 	 
	 	By:	/s/ Oliver W. Press
	 	Name: 	Oliver W. Press, MD Phd
	 	Title:	Member

 

(Signature Page to PhaseRx, Inc. Second
Amended and Restated Investors’ Rights Agreement)

 

    	 	 	 

     

    

 

The parties hereto
have executed this Second Amended and Restated Investors’ Rights Agreement effective as of the day and year first above written.

 

	 	FOUNDER:
	 	 
	 	/s/ Allan Hoffman
	 	Allan Hoffman

 

(Signature Page to PhaseRx, Inc. Second
Amended and Restated Investors’ Rights Agreement)

 

    	 	 	 

     

    

 

The parties hereto
have executed this Second Amended and Restated Investors’ Rights Agreement effective as of the day and year first above written.

 

	 	FOUNDER:
	 	 
	 	/s/ Pat Stayton
	 	Pat Stayton

 

    	 	 	 

     

    

 

EXHIBIT A

 

SERIES A INVESTORS

 

ARCH Venture Fund VII,
L.P.

8725 West Higgins Road, Suite 290

Chicago, Illinois 60631

(773) 380-6606 (facsimile)

(206) 674-3026 (facsimile)

sgillis@archventure.com (email)

mmcdonnell@archventure.com (email)

 

5AM Ventures II, LP

3000 Sand Hill Road

Building 4, Suite 230

Menlo Park, CA 94025

(650) 233-8923 (facsimile)

john@5amventures.com (email)

 

5AM Co-Investors II, LP

3000 Sand Hill Road

Building 4, Suite 230

Menlo Park, CA 94025

(650) 233-8923 (facsimile)

john@5amventures.com (email)

 

Versant Venture Capital III, L.P.

3000 Sand Hill Road

Bldg. 4, Suite 210

Menlo Park, CA 94025

650-854-9513 (facsimile)

brian@versantventures.com (email)

scross@versantventures.com (email)

 

Versant Side Fund III, L.P.

3000 Sand Hill Road

Bldg. 4, Suite 210

Menlo Park, CA 94025

650-854-9513 (facsimile)

brian@versantventures.com (email)

scross@versantventures.com (email

 

    	 	 	 

     

    

 

Foundation BioVentures LLC

Robert W. Overell, President

1854 NW 195th Street #302

Shoreline, WA 98177

(206) 546-6805 (facsimile)

roverell@aol.com (email)

 

Richard Dunham Smith & Patricia Ann

Smith, as Trustees of the Smith 1987

Family Trust, U/A DTD 9/28/87

2415 South Court

Palo Alto, CA 94301

(650) 327-0635 (facsimile)

dick2415@sbcglobal.net (email)

 

Pat Stayton

Box 355061

Department of Bioengineering

University of Washington

Seattle, WA 98195

(206) 616-3928 (facsimile)

stayton@u.washington.edu (email)

 

Oliver W. Press LLC

Oliver W. Press, Member

Fred Hutchinson Cancer Research Center

1100 Fairview Ave. N, D3-190

Seattle, WA 98109

(206) 667-1874 (facsimile)

press@u.washington.edu (email)

 

Allan Hoffman

Box 355061 – Foege, room N530R

University of Washington

Seattle, WA 98195

(206) 543-6124 (facsimile)

hoffman@u.washington.edu (email)

 

Steven Gillis, Ph.D.

8725 West Higgins Road, Suite 290

Chicago, Illinois 60631

(773) 380-6606 (facsimile)

(206) 674-3026 (facsimile)

sgillis@archventure.com (email)

 

    	 	 	 

     

    

 

	David Cosman	 
	 	 
	 	 
	 	 (facsimile)	 
	 	 (email)	 

 

    	 	 	 

     

    

 

Exhibit A-1

 

SERIES A-1 INVESTORS

 

Savoy Therapeutics Corp.

c/o Synageva BioPharma Corp.

33 Hayden Avenue

Lexington, MA 02421 USA

Attention: Thomas Beetham

Facsimile: 781-357-9901

Email: thomas.beetham@synageva.com

 

    	 	 	 

     

    

 

EXHIBIT B

 

FOUNDERS

 

Allan Hoffman

Foundation BioVentures LLC (Robert W. Overell, President)

Paul H. Johnson

Oliver W. Press LLC (Oliver W. Press, Member)

Richard Dunham Smith &
Patricia Ann Smith, as Trustees of the Smith 1987 Family Trust, U/A DTD 9/28/87

Pat Stayton

 

    	 	 	 

     

    

 

SCHEDULE 1

 

NOTICE AND WAIVER/ELECTION OF

RIGHT OF FIRST REFUSAL

 

I do hereby waive
or exercise, as indicated below, my rights of first refusal under the Amended and Restated Investors’ Rights Agreement dated
as of April 9, 2014 (the “Agreement”):

 

		1.	Waiver of [___] days’ notice period in which to exercise right of first refusal: (please
check only one)

 

		 ̈

	WAIVE in full, on behalf of all Holders, the [___]-day notice period provided to exercise
my right of first refusal granted under the Agreement.

 

		 ̈

	DO NOT WAIVE the notice period described above.

 

		2.	Issuance and Sale of New Securities: (please check only one)

 

		 ̈

	WAIVE in full the right of first refusal granted under the Agreement with respect to the
issuance of the New Securities.

 

		 ̈

	ELECT TO PARTICIPATE in $__________ (please provide amount) in New Securities proposed
to be issued by PhaseRx, Inc., a Delaware corporation, representing LESS than my pro rata portion of the aggregate of $[_______]
in New Securities being offered in the financing.

 

		 ̈

	ELECT TO PARTICIPATE in $__________ in New Securities proposed to be issued by PhaseRx,
Inc., a Delaware corporation, representing my FULL pro rata portion of the aggregate of $[_______] in New Securities being offered
in the financing.

 

		 ̈

	ELECT TO PARTICIPATE in my full pro rata portion of the aggregate of $[_______] in New Securities
being made available in the financing AND, to the extent available, the greater of (x) an additional $__________ (please
provide amount) or (y) my pro rata portion of any remaining investment amount available in the event other Significant
Holders do not exercise their full rights of first refusal with respect to the $[_______] in New Securities being offered in the
financing.

  

Date: ________________

	 	 
	 	(Print investor name)
	 	 
	 	 
	 	(Signature)
	 	 
	 	 
	 	(Print name of signatory, if signing for an entity)
	 	 
	 	 
	 	(Print title of signatory, if signing for an entity)

 

This is neither a commitment to purchase
nor a commitment to issue the New Securities described above. Such issuance can only be made by way of definitive documentation
related to such issuance. PhaseRx, Inc. will supply you with such definitive documentation upon request or if you indicate that
you would like to exercise your first offer rights in whole or in part.

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