Document:

Exhibit
10.3

 

NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND
THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED BY HOLDER IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

WARRANT
TO PURCHASE SHARES OF COMMON STOCK

OF

SCOUTCAM
INC.

(the
“Corporation”)

 

Number
of Shares of Common Stock of the Corporation, par value $0.001 each (the “Common Stock”): 787,471.

Issue
Date: June 23, 2020.

Initial
Exercise Date: June 23, 2020.

 

This
warrant to purchase shares of Common Stock (the “Warrant”) certifies that, for value received, Medigus Ltd.
(the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after June 23, 2020 (the “Initial Exercise Date”), and on or prior to the close
of business eighteen (18) months following the Issue Date (the “Termination Date”), provided that, if such
date is not a Trading Day, the Termination Date should be the immediate following Trading Day but not thereafter, to subscribe
for and purchase from the Corporation, up to 787,471 shares of Common Stock (the “Warrant Shares”). The purchase
price of one Warrant Share shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section
1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain
Side Letter Agreement (the “Letter Agreement”), dated June 23, 2020, among the Corporation and the Holder.
In addition to the foregoing, the following terms shall have the meanings indicated in this Section 1:

 

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

 

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

 

    	 	 	 

    	 

    

 

Section
2. Exercise.

 

a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any
time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Corporation (or such
other office or agency that the Corporation may designate by notice in writing to the registered Holder at the address of the
Holder appearing on the books of the Corporation) of a duly executed facsimile copy or PDF copy submitted by electronic mail (or
e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within
the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined
in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price
for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United
States bank. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee
or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not
be required to physically surrender this Warrant to the Corporation until the Holder has purchased all of the Warrant Shares available
hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Corporation
for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Corporation.
Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder
shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable
number of Warrant Shares purchased. The Holder and the Corporation shall maintain records showing the number of Warrant Shares
purchased and the date of such purchases. The Holder, by acceptance of this Warrant, acknowledges and agrees that, by reason
of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

In
no event will the Corporation be required to net cash settle a Warrant exercise.

 

b)
Exercise Price. The exercise price per Share under this Warrant shall be $0.893, subject to adjustment hereunder (the “Exercise
Price”).

 

c)
Mechanics of Exercise.

 

i.
Delivery of Warrant Shares Upon Exercise. The Corporation shall cause its transfer agent (the “Transfer Agent”)
to register the Warrant Shares, and credit the account of the Holder with The Depository Trust Company (or another established
clearing corporation performing similar functions) through its Deposit/Withdrawal At Custodian system (“DWAC”)
if the Transfer Agent is then a participant in such system and either (A) there is an effective registration statement permitting
the issuance of the Warrant Shares or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale
by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate,
registered in the name of the Holder, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise
to the address specified by the Holder in the Notice of Exercise, by the date that is the earlier of (i) two (2) Trading Days
and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Corporation of the Notice
of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder
shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this
Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate
Exercise Price is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard
Settlement Period following delivery of the Notice of Exercise. As used herein, “Standard Settlement Period”
means the standard settlement period, expressed in a number of Trading Days, on the Corporation’s primary Trading Market
with respect to the Shares as in effect on the date of delivery of the Notice of Exercise.

 

    	 	 	 

    	 

    

 

ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Corporation shall, at the
request of the Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to
the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant,
which new Warrant shall in all other respects be identical with this Warrant.

 

iii.
Rescission Rights. If the Corporation fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant
to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv.
No Fractional Warrant Shares or Scrip. No fractional Warrant Shares shall be issued upon the exercise of this Warrant.
As to any fraction of a Share that the Holder would otherwise be entitled to purchase upon such exercise, the Corporation shall
be entitled to round down such to the next whole Share.

 

v.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of Warrant Shares, all of which taxes and expenses shall be paid by
the Corporation, and such Warrant Shares shall be issued in the name of the Holder. The Corporation shall pay all applicable fees
and expenses of the Transfer Agent in connection with the issuance of the Warrant Shares hereunder.

 

Each
of the Corporation and the Holder is aware and agree that it shall be exclusively responsible for its own tax liability arising
from the grant or exercise of any Warrant, from the payment for Warrant Shares covered thereby or from any other event or act
hereunder. The Company and/or its Affiliates shall withhold taxes according to the requirements under the applicable laws, rules,
and regulations, including withholding taxes at source, if required under applicable law (unless the Holder provides a tax certificate,
stating that no withholding, or reduced withholding, of tax is required).

 

    	 	 	 

    	 

    

 

The
Holder will not be entitled to receive from the Corporation any Warrant Shares allocated or issued upon the exercise of the Warrant
prior to the full payments of any tax liabilities arising from the exercise of the Warrant, which are required to be paid by the
Holder, if any, prior to the issuance of such Warrant Shares issued upon the exercise of the Warrant. For the avoidance of doubt,
the Corporation shall not be required to release any share to the Holder until all such payments required to be made by the Holder
have been fully satisfied.

 

vi.
Closing of Books. The Corporation will not close its shareholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.

 

Section
3. Certain Adjustments.

 

a)
Share Dividends and Splits. If the Corporation, at any time while this Warrant is outstanding: (i) pays a share dividend
or otherwise makes a distribution or distributions on its shares of capital stock (“Shares”) or any other equity
or equity equivalent securities payable in Shares or other securities of the Corporation, as applicable, (ii) subdivides outstanding
Shares into a larger number of Shares, as applicable, (iii) combines (including by way of reverse share split) outstanding Shares
into a smaller number of Shares, as applicable, or (iv) issues by reclassification of Shares, or any shares of capital stock of
the Corporation, as applicable, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator
shall be the number of Shares, (excluding treasury shares, if any) outstanding immediately before such event and the denominator
of which shall be the number of Shares, outstanding immediately after such event, and the number of shares issuable upon exercise
of this Warrant shall be proportionately increased in the case of share dividend or a subdivision, or proportionately decreased
in the case of a combination, such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made
pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of shareholders entitled
to receive such dividend or distribution or immediately after the effective date in the case of a subdivision, combination or
re-classification.

 

    	 

     

    

 

b)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Corporation, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the
Corporation, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of
all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer,
tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Shares
are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders
of 50% or more of the outstanding Shares, (iv) the Corporation, directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the Shares or any compulsory share exchange pursuant to which the
Shares are effectively converted into or exchanged for other securities, cash or property, or (v) the Corporation, directly or
indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or
group of Persons whereby such other Person or group acquires more than 50% of the outstanding Shares (not including Shares held
by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to,
such stock purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon
any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Share that would have been issuable
upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of capital stock
of the successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration
(the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the same
type and number of Shares for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes
of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one Share, in such Fundamental Transaction, and the Corporation
shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any
different components of the Alternate Consideration, provided the aggregate Exercise Price shall remain the same. If holders of
Shares are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder
shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation
is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Corporation
under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(b) pursuant to written
agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay)
prior to such Fundamental Transaction, and as a condition thereof, and shall, at the option of the Holder, deliver to the Holder
in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form
and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity
(or its parent entity) equivalent to the Shares represented by each Warrant Share acquirable and receivable upon exercise of this
Warrant prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares
of capital stock (but taking into account the relative value of the Shares pursuant to such Fundamental Transaction and the value
of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably
satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity
shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this
Warrant and the other Transaction Documents referring to the “Corporation” shall refer instead to the Successor Entity),
and may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this
Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation
herein.

 

    	 	 	 

    	 

    

 

c)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a Share,
as the case may be. For purposes of this Section 3, the number of Shares deemed to be issued and outstanding as of a given date
shall be the sum of the number of Shares (excluding treasury shares, if any) issued and outstanding.

 

d)
Notice to Holder. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Corporation
shall deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting
adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

Section
4. Transfer of Warrant.

 

a)
Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are non-transferable.

 

b)
Warrant Register. The Corporation shall register this Warrant, upon records to be maintained by the Corporation for that
purpose (the “Warrant Register”), in the name of the record Holder hereof.

 

c)
Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant
and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a
view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable
state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section
5. Miscellaneous.

 

a)
No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other
rights as a shareholder of the Corporation prior to the exercise hereof as set forth in Section 2(c)(i).

 

b)
Loss, Theft, Destruction or Mutilation of Warrant. The Corporation covenants that upon receipt by the Corporation of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating
to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and
upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Corporation will make and deliver a new
Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

    	 	 	 

    	 

    

 

c)
Fridays, Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration
of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised
on the next succeeding Business Day.

 

d)
Authorized Shares. The Corporation covenants that, during the period the Warrant is outstanding, it will reserve from its
authorized and unissued Shares a sufficient number of shares to provide for the issuance of the Warrant Shares and underlying
Shares upon the exercise of any purchase rights under this Warrant. The Corporation further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with the duty of issuing the Warrant Shares needed for
the Transfer Agent to issue the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Corporation
will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of the applicable Trading Market upon which the Shares may
be listed. The Corporation covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in
accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges
created by the Corporation in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).

 

e)
Jurisdiction. This Warrant shall be governed by and construed in accordance with to the laws of the State of Israel, disregarding
its conflict of laws rules. Any dispute arising under or in relation to this Agreement shall be resolved exclusively in the competent
court located in Tel Aviv-Jaffa, Israel and each of the parties hereby irrevocably submits to the exclusive jurisdiction of such
court.

 

f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered,
will have restrictions upon resale imposed by state and federal securities laws.

 

g)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the
Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding
the fact that all rights hereunder terminate on the Termination Date. If the Corporation willfully and knowingly fails to comply
with any provision of this Warrant, which results in any material damages to the Holder, the Corporation shall pay to the Holder
such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’
fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder, without limiting such other rights and remedies as may be available
to the Holder at law or in equity.

 

    	 	 	 

    	 

    

 

h)
Notices. All notices and other communications given or made pursuant to this Warrant shall be in writing and shall be deemed
effectively given upon the earlier of actual receipt, or (i) when delivered, if sent by personal delivery to the party to be notified,
(ii) when sent, if sent by electronic mail or facsimile (with electronic conformation of delivery) on a business day and during
normal business hours of the recipient, and otherwise on the first business day in the place of recipient, (iii) five (5) business
days after having been sent, if sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1)
business day after deposit with an internationally recognized overnight courier, freight prepaid, specifying next business day
delivery, with written confirmation of receipt. All communications shall be sent to the respective parties at their address or
contact details as set forth below, or to such address or contact details as subsequently modified by written notice given in
accordance with this section or, in the case of the Holder, as used for purposes of sending shareholders’ notices by the
Company.

 

i)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability
of the Holder for the purchase price of any Shares or as a shareholder of the Corporation, whether such liability is asserted
by the Corporation or by creditors of the Corporation.

 

j)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Warrant. The Corporation agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees
to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k)
Successors. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors of the Corporation and the successors of Holder.

 

l)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Corporation
and the Holder.

 

m)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.

 

n)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.

 

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

 

(Signature
Page Follows)

 

    	 	 	 

    	 

    

 

IN
WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by its officer thereunto duly authorized as of the date
first above indicated.

 

	 	SCOUTCAM
    INC.
	 	 
	 	By:	            
	 	Name:	 
	 	Title:	 

 

    	 	 	 

    	 

    

 

NOTICE
OF EXERCISE

 

To:
SCOUTCAM INC.

 

(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Corporation pursuant to the terms of the attached Warrant
(to be attached only if exercised in full), and tenders herewith payment of the exercise price in full in form of United States
currency; or

 

(2)
Please register and issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

(3)
The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933,
as amended.

 

(4)
If applicable pursuant to Section 2(c)(i) of the Warrant, the Warrant Shares shall be delivered to the following DWAC Account
Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

[SIGNATURE
OF HOLDER]

 

Name
of Investing Entity: ________________________________________________________________________

 

Signature
of Authorized Signatory of Investing Entity: _________________________________________________

 

Name
of Authorized Signatory: ___________________________________________________________________

 

Title
of Authorized Signatory:____________________________________________________________________

 

Date:
____________________________________________________________Exhibit 4.2

 

 

Description of Securities

 

The following
is a description of the capital stock of America’s Car-Mart, Inc. (the “Company”) and certain provisions of the
Company’s Articles of Incorporation, as amended (“Articles”), Amended and Restated Bylaws, as amended (“Bylaws”),
and certain provisions of applicable law. The following is only a summary and is qualified by applicable law and by the provisions
of the Company’s Articles and Bylaws, copies of which have been filed with the Securities and Exchange Commission.

 

General

 

The
Company is authorized to issue up to 50,000,000 shares of common stock, par value $0.01 per share, and up to 1,000,000 shares of
preferred stock, par value $0.01 per share. Each share of the Company’s common stock has the same relative rights as, and
is identical in all respects to, each other share of the Company’s common stock.

 

As of June 15, 2020, 6,632,819 shares
of the Company’s common stock were issued and outstanding, and 276,962 shares of common stock were reserved for issuance
pursuant to the Company’s stock incentive, option and purchase plans. The Company’s common stock is listed on the
NASDAQ Global Select Market. The outstanding shares of the Company’s common stock are fully paid and non-assessable.

 

As
of June 15, 2020, no shares of the Company’s preferred stock were issued and outstanding.

 

Common Stock

 

Dividend
Rights. Subject to such preferential rights as the Board of Directors of the Company (the “Board”) may
grant in connection with future issuances of preferred stock, holders of shares of common stock are entitled to receive such dividends
as the Board may declare in its discretion out of funds legally available therefor. Under the Company’s Bylaws, the Board
may declare dividends at any regular or special meeting, and dividends may be paid in cash, in property, or in shares of the capital
stock, subject to any provisions of the Articles.

 

Voting
Rights.  Holders of shares of common stock are entitled to elect all of the members of the Board, and such holders
are entitled to vote as a class on all matters required or permitted to be submitted to the shareholders of the Company. Each director
shall be elected by a majority of the votes cast with respect to that director at the annual meeting. However, if the number of
nominees is greater than the number of directors to be elected, the directors shall be elected by the vote of a plurality of the
shares represented in person or by proxy at the annual meeting. All other matters require the affirmative vote of the holders of
a majority of the shares entitled to vote on, and that voted for or against or expressly abstained with respect to, that matter
at a meeting of shareholders at which a quorum is present. Holders of the Company’s common stock do not have cumulative voting
rights.

 

Liquidation
and Dissolution. Holders of shares of common stock are entitled to share ratably in any distribution made to holders
of common stock in the event of a liquidation, dissolution or winding up of the Company after payment of liabilities and any liquidation
preference on any shares of preferred stock then outstanding.

 

Other
Rights. Holders of shares of common stock have no preemptive rights, nor do they have any conversion, preemptive or
other rights to subscribe for additional shares or other securities. There are no redemption or sinking fund provisions with respect
to such shares.

 

     

     

    

 

Modification
of Rights. The Board, acting by a majority vote of the members present and without shareholder approval, may amend
the Company’s Bylaws and may issue shares of the Company’s preferred stock under terms determined by the Board as described
below under “Preferred Stock.” Rights of holders of the Company’s common stock may not otherwise be modified
by less than a majority vote of the common stock outstanding.

 

Preferred Stock

 

The
Board is authorized, without further action of the shareholders of the Company, to issue up to 1,000,000 shares of preferred stock
in one or more series and to fix the number of shares constituting any such series and the rights and preferences thereof, including
dividend rates, terms of redemption (including sinking fund provisions), redemption price or prices, voting rights, conversion
rights and liquidation preferences of the shares constituting such series. The issuance of preferred stock by the Board could adversely
affect the rights of holders of common stock. For example, an issuance of preferred stock could result in a class of securities
outstanding with preferences over the common stock with respect to dividends and liquidations, and that could (upon conversion
or otherwise) enjoy all of the rights appurtenant to common stock.

 

The
Company has no present plans to issue any shares of the preferred stock.

 

Anti-Takeover Provisions of the Company’s
Articles, Bylaws and Texas Law

 

The Company’s
authorized but unissued shares of common stock and preferred stock are available for future issuance without shareholder approval,
subject to any limitations imposed by the listing standards of the NASDAQ Stock Market. These additional shares may be utilized
for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and
employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could make it more
difficult or discourage an attempt to obtain control of a majority of the Company’s common stock by means of a proxy contest,
tender offer, merger or otherwise.

 

As discussed above,
the ability to designate and issue preferred stock makes it possible for the Board, without approval of the shareholders, to issue
preferred stock with super voting, special approval, dividend or other rights or preferences on a discriminatory basis that could
impede the success of any attempt to acquire the Company or otherwise effect a change in control of the Company. These and other
provisions may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of
the Company. Such provisions may also impede or discourage transactions that some, or a majority, of the Company’s shareholders
might believe to be in their best interests, or in which the Company’s shareholders might receive a premium for their shares
of common stock over the market price for such shares.

 

If the Company meets
the definition of an “issuing public corporation,” provisions of Texas law also may discourage delay or prevent someone
from acquiring or merging with the Company, which may cause the market price of the Company’s common stock to decline. Under
Title 2, Chapter 21, Subchapter M of the Texas Business Organizations Code, a Texas issuing public corporation may not engage in
specified types of business combinations, including mergers, consolidations and asset sales, with an affiliated shareholder, or
an affiliate or associate of an affiliated shareholder, unless:

 

		·	the business combination or the acquisition of shares by the affiliated shareholder was approved
by the board of directors of the corporation before the affiliated shareholder became an affiliated shareholder; or

 

		·	the business combination was approved by the affirmative vote of the holders of at least two-thirds
of the outstanding voting shares of the corporation not beneficially owned by the affiliated shareholder, at a meeting of shareholders
called for that purpose, not less than six months after the affiliated shareholder became an affiliated shareholder.

  

     

     

    

 

Under Texas law, a
shareholder who beneficially owns more than 20% of the Company’s outstanding voting stock or who during the preceding three-year
period was the beneficial owner of 20% or more of the Company’s outstanding voting stock is an affiliated shareholder. An
“issuing public corporation” means a domestic corporation that has: (i) 100 or more shareholders of record as shown
by the share transfer records of the corporation; (ii) a class or series of the corporation’s voting shares registered under
the Securities Exchange Act of 1934, as amended; or (iii) a class or series of the corporation’s voting shares qualified
for trading on a national securities exchange.

 

Other provisions of
Texas law and the Company’s Bylaws may have the effect of delaying or preventing a change in control or acquisition, whether
by means of a tender offer, business combination, proxy contest, or otherwise. Texas law requires that a change in control generally
be approved by the holders of two thirds of the outstanding votes, rather than a mere majority. The Company’s Bylaws include
certain procedural requirements governing the nomination of directors and proposals of other business by shareholders and shareholder
meetings. These provisions could have the effect of delaying or preventing a change in control or management of the Company.

 

Limitation of Liability and Indemnification

 

The Company’s Articles provide that
a director shall not be personally liable to the Company or its shareholders for monetary damages for an act or omission in the
director’s capacity as a director, except that such provision shall not eliminate or limit the liability of a director for
(a) a breach of the director’s duty of loyalty to the Company or its shareholders; (b) an act or omission not in good faith
that constitutes a breach of duty of the director to the Company or an act or omission that involves intentional misconduct or
a knowing violation of the law; (c) a transaction from which the director received an improper benefit, whether or not the benefit
resulted from an action taken within the scope of the director’s office; or (d) an act or omission for which the liability
of a director is expressly provided by an applicable statute. In appropriate circumstances, equitable remedies or non-monetary
relief, such as an injunction, will remain available to a shareholder seeking redress from a violation of fiduciary duty. In addition,
the provision applies only to claims against a director arising out of his or her role as a director and not in any other capacity
(such as an officer or employee of the Company).

 

The Company’s
Bylaws provide that directors and officers of the Company will be indemnified by the Company to the fullest extent authorized by
Texas law, as it now exists or may in the future be amended, against all expenses and liabilities reasonably incurred in connection
with service for or on behalf of the Company.

 

Transfer Agent and Registrar

 

Securities Transfer Corporation acts as
the transfer agent and registrar for the common stock.

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