Document:

FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
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THIS FIRST AMENDMENT to Loan and Security Agreement (this “Amendment”) is entered into as of November 16, 2021, by and among OXFORD FINANCE LLC, a Delaware limited liability company with an office located at 115 South Union Street, Suite 300, Alexandria, Virginia 22314 (“Oxford”), as collateral agent (in such capacity, “Collateral Agent”), the Lenders listed on Schedule 1.1 to the Loan Agreement (as defined below) or otherwise a party thereto from time to time including Oxford in its capacity as a Lender and SILICON VALLEY BANK, a California corporation with an office located at 3003 Tasman Drive, Santa Clara, CA 95054 (“Bank” or “SVB”) (each a “Lender” and collectively, the “Lenders”), and SCHOLAR ROCK HOLDING CORPORATION, a Delaware corporation (“Parent”) and SCHOLAR ROCK, INC., a Delaware corporation (together with Parent, individually and collectively, jointly and severally, “Borrower”) with an office located at 301 Binney Street, 3rd Floor, Cambridge, MA 02142.
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A.WHEREAS, Collateral Agent, Borrower and Lenders have entered into that certain Loan and Security Agreement dated as of October 16, 2020 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”) pursuant to which Lenders have provided to Borrower certain loans in accordance with the terms and conditions thereof; and
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B.WHEREAS, Borrower has requested that Collateral Agent and Lenders modify the defined term Term B Milestone; and
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C.WHEREAS, Borrower, the Lenders party to this Amendment (constituting the Required Lenders) and Collateral Agent desire to amend such defined term as provided herein and subject to the terms and conditions set forth herein.
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AGREEMENT
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NOW, THEREFORE, in consideration of the promises, covenants and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Borrower, Lenders and Collateral Agent hereby agree as follows:
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1.Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.
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2.Amendments to Loan Agreement.
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2.1Notices. The address information for Borrower (but not the address information for Goodwin Procter LLP, which remains unchanged) in Section 10 of the Loan Agreement hereby is amended and restated in its entirety as follows:
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SCHOLAR ROCK HOLDING CORPORATION
301 Binney Street, 3rd Floor Cambridge, MA 02142
Attn: Junlin Ho, SVP, Head of Legal Email: jho@scholarrock.com
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2.2Definitions. The following term and its definition in Section 13.1 of the Loan Agreement hereby are amended and restated in their entirety as follows:
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“Term B Milestone” is Borrower’s delivery to Collateral Agent and the Lenders of evidence, satisfactory to Collateral Agent and the Lenders in their sole but reasonable discretion, that Borrower has both (i) publicly announced the Phase 3 clinical trial (SAPPHIRE) design for SRK-015 (Apitegromab) and registration of such clinical trial with clinicaltrials.gov and (ii) initiated the Part B of the DRAGON Phase 1 clinical trial for SRK-181 (as confirmed by public disclosure).
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3.Limitation of Amendment.
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3.1The amendment set forth above are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right, remedy or obligation which Lenders or Borrower may now have or may have in the future under or in connection with any Loan Document, as amended hereby.
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3.2This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents are hereby ratified and confirmed and shall remain in full force and effect.
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4.Representations and Warranties. To induce Collateral Agent and Lenders to enter into this Amendment, Borrower hereby represents and warrants to Collateral Agent and Lenders as follows:
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4.1Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date) and (b) no Event of Default has occurred and is continuing;
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4.2Borrower has the power and due authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;
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4.3The organizational documents of Borrower delivered to Collateral Agent on the Effective Date, and updated pursuant to subsequent deliveries by or on behalf of the Borrower to the Collateral Agent, remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;
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4.4The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not contravene (i) any material law or regulation binding on or affecting Borrower, (ii) any material contractual restriction with a Person binding on Borrower, (iii) any material order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (iv) the organizational documents of Borrower;
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4.5The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower, except as already has been obtained or made;
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4.6This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.
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5.Release by Borrower.
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5.1FOR GOOD AND VALUABLE CONSIDERATION, Borrower hereby forever relieves, releases, and discharges Collateral Agent and each Lender and their respective present or former employees, officers, directors, agents, representatives, attorneys, and each of them, from any and all claims, debts, liabilities, demands, obligations, promises, acts, agreements, costs and expenses, actions and causes of action, of every type, kind, nature, description or character whatsoever, whether known or unknown, suspected or unsuspected, absolute or contingent, arising out of or in any manner whatsoever connected with or related to facts, circumstances, issues, controversies or claims existing or arising from the beginning of time through and including the date of execution of this Amendment solely to the
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extent such claims arise out of or are in any manner whatsoever connected with or related to the Loan Documents, the Recitals hereto, any instruments, agreements or documents executed in connection with any of the foregoing or the origination, negotiation, administration, servicing and/or enforcement of any of the foregoing (collectively “Released Claims”).
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5.2By entering into this release, Borrower recognizes that no facts or representations are ever absolutely certain and it may hereafter discover facts in addition to or different from those which it presently knows or believes to be true, but that it is the intention of Borrower hereby to fully, finally and forever settle and release all matters, disputes and differences, known or unknown, suspected or unsuspected in relation to the Released Claims; accordingly, if Borrower should subsequently discover that any fact that it relied upon in entering into this release was untrue, or that any understanding of the facts was incorrect, Borrower shall not be entitled to set aside this release by reason thereof, regardless of any claim of mistake of fact or law or any other circumstances whatsoever. Borrower acknowledges that it is not relying upon and has not relied upon any representation or statement made by Bank with respect to the facts underlying this release or with regard to any of such party’s rights or asserted rights.
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5.3This release may be pleaded as a full and complete defense and/or as a cross-complaint or counterclaim against any action, suit, or other proceeding that may be instituted, prosecuted or attempted in breach of this release. Borrower acknowledges that the release contained herein constitutes a material inducement to Collateral Agent and the Lenders to enter into this Amendment, and that Collateral Agent and the Lenders would not have done so but for Collateral Agent’s and the Lenders’ expectation that such release is valid and enforceable in all events.
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6.Effectiveness. This Amendment shall be deemed effective as of the date hereof upon the due execution of this Amendment by the parties thereto.
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7.Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument. Delivery by electronic transmission (e.g. “.pdf”) of an executed counterpart of this Amendment shall be effective as a manually executed counterpart signature thereof.
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8.Governing Law. This Amendment and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Loan and Security Agreement to be executed as of the date first set forth above.
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BORROWER:
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SCHOLAR ROCK HOLDING CORPORATION
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By: /s/ Edward Myles​ ​
Name: Edward Myles​ ​
Title: Chief Financial Officer and Treasurer​ ​
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SCHOLAR ROCK, INC.
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By: /s/ Edward Myles​ ​
Name: Edward Myles​ ​
Title: Chief Financial Officer and Treasurer​ ​
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COLLATERAL AGENT AND LENDER:
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OXFORD FINANCE LLC
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By: /s/ Colette H. Featherly​ ​
Name: Colette H. Featherly​ ​
Title: Senior Vice President​ ​
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LENDER:
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SILICON VALLEY BANK
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By: /s/ Ryan Roller​ ​
Name: Ryan Roller​ ​
Title: Director​ ​

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[Signature Page to First Amendment to Loan and Security Agreement]

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​Exhibit
4.1

 

DESCRIPTION
OF SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE

SECURITIES
EXCHANGE ACT OF 1934

 

As
of March 7, 2022, InspireMD, Inc., a Delaware corporation (“we,” “our” and the “Company”)
has two classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: (i) common stock, par value
$0.0001 per share; and (ii) Series B Warrants, with each warrant exercisable for one share of common stock at an exercise price of $52,500
per share. The following description of such securities is intended as a summary of the terms of such securities as currently in effect
and is qualified in its entirety by the provisions of our amended and restated certificate of incorporation, as amended (the “Certificate
of Incorporation”), the bylaws, and the respective warrant agreements and the warrant certificates, copies of which are filed as
exhibits to this Annual Report on Form 10-K and are incorporated by reference herein. We encourage you to read our amended and restated
Certificate of Incorporation and amendments thereto, our bylaws, the forms of the respective warrant agreements and the warrant certificates
and the applicable provisions of the Delaware General Corporation Law, as amended (the “DGCL”), for additional information.

 

Authorized
Capital Stock

 

Pursuant
to our Certificate of Incorporation, we have authorized 155,000,000 shares of capital stock, par value $0.0001 per share, of which 150,000,000
are shares of common stock and 5,000,000 are shares of “blank check” preferred stock. The authorized and unissued shares
of common stock and the authorized and undesignated shares of preferred stock are available for issuance without further action by our
stockholders, unless such action is required by applicable law or the rules of any stock exchange on which our securities may be listed.
Unless approval of our stockholders is so required, our board of directors does not intend to seek stockholder approval for the issuance
and sale of our common stock or preferred stock.

 

Common
Stock

 

The
holders of our common stock are entitled to one vote per share. Our Certificate of Incorporation does not provide for cumulative voting.
Our directors are divided into three classes. At each annual meeting of stockholders, directors elected to succeed those directors whose
terms expire are elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election.
The holders of our common stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors
out of legally available funds; however, the current policy of our board of directors is to retain earnings, if any, for operations and
growth. Upon liquidation, dissolution or winding-up, the holders of our common stock are entitled to share ratably in all assets that
are legally available for distribution. The holders of our common stock have no preemptive, subscription, redemption or conversion rights.
The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of
the holders of any series of preferred stock, which may be designated solely by action of our board of directors and issued in the future.

 

On
April 26, 2021, Company effectuated a reverse stock split of its common stock at a ratio of 1-for-15.

 

The
transfer agent and registrar for our common stock is Action Stock Transfer Corp. The transfer agent’s address is 2469 E. Fort Union
Blvd., Suite 214, Salt Lake City, Utah 84121.

 

    	 

     

    

 

Our
common stock is listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “NSPR.”

 

Preferred
Stock

 

The
board of directors is authorized, subject to any limitations prescribed by law, without further vote or action by the stockholders, to
issue from time to time shares of preferred stock in one or more series. Each such series of preferred stock shall have such number of
shares, designations, preferences, voting powers, qualifications, and special or relative rights or privileges as shall be determined
by the board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights
and preemptive rights. Issuance of preferred stock by our board of directors may result in such shares having dividend and/or liquidation
preferences senior to the rights of the holders of our common stock and could dilute the voting rights of the holders of our common stock.

 

Prior
to the issuance of shares of each series of preferred stock, the board of directors is required by the Delaware General Corporation Law
and our Certificate of Incorporation to adopt resolutions and file a certificate of designation with the Secretary of State of the State
of Delaware. The certificate of designation fixes for each class or series the designations, powers, preferences, rights, qualifications,
limitations and restrictions, including, but not limited to, some or all of the following:

 

	 	●	the
    number of shares constituting that series and the distinctive designation of that series, which number may be increased or decreased
    (but not below the number of shares then outstanding) from time to time by action of the board of directors;
	 	 	 
	 	●	the
    dividend rate and the manner and frequency of payment of dividends on the shares of that series, whether dividends will be cumulative,
    and, if so, from which date;
	 	 	 
	 	●	whether
    that series will have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights;
	 	 	 
	 	●	whether
    that series will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment
    of the conversion rate in such events as the board of directors may determine;
	 	 	 
	 	●	whether
    or not the shares of that series will be redeemable, and, if so, the terms and conditions of such redemption;
	 	 	 
	 	●	whether
    that series will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of
    such sinking fund;
	 	 	 
	 	●	whether
    or not the shares of the series will have priority over or be on a parity with or be junior to the shares of any other series or
    class in any respect;
	 	 	 
	 	●	the
    rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation,
    and the relative rights or priority, if any, of payment of shares of that series; and
	 	 	 
	 	●	any
    other relative rights, preferences and limitations of that series.

 

    	2

     

    

 

Once
designated by our board of directors, each series of preferred stock may have specific financial and other terms.

 

Series
C Convertible Preferred Stock (the “Series C Preferred Stock”)

 

As
of March 7, 2022, there were 1,718 shares of Series C Preferred Stock outstanding, convertible into an aggregate of 2,284 shares of our
common stock.

 

On
March 14, 2017, we issued 1,069,822 shares of Series C Preferred Stock in a public offering. Our Series C Preferred Stock has a stated
value of $6.40, and each share of Series C Preferred Stock was initially convertible into 0.00015267 of a share of common stock at an
initial conversion price equal to $42,000 per share of common stock. Series C Preferred Stock, to the extent that it has not been converted
previously, is subject to full ratchet anti-dilution price protection upon the issuance of equity or equity-linked securities at an effective
common stock purchase price of less than the conversion price then in effect, subject to adjustment as provided in the certificate of
designation. In accordance with the anti-dilution price protection contained in the certificate of designation for the Series C Preferred
Stock as further described below, we reduced the Series C Preferred Stock conversion price to $2250.00 per share in connection with the
underwritten public offering that closed on March 1, 2018, to $1312.50 per share in connection with the underwritten public offering
that closed on April 2, 2018, to $225.00 per share in connection with the underwritten public offering that closed on July 3, 2018, to
$75.00 per share in connection with the underwritten public offering that closed on April 8, 2019, then to $27 per share in connection
with the underwritten public offering that closed on September 24, 2019, to $6.75 per share in connection with the underwritten public
offering that closed on June 5, 2020, and to $4.815 per share in connection with the utilization of the ATM Facility.

 

The
Series C Preferred Stock is convertible at any time at any time at the option of the holder, provided that the holder will be prohibited
from converting Series C Preferred Stock into shares of our common stock if, as a result of such conversion, the holder, together with
its affiliates, would own more than 4.99% of the total number of shares of our common stock then issued and outstanding. However, any
holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage
shall not be effective until 61 days after such notice to us.

 

In
the event of our liquidation, dissolution, or winding up, holders of our Series C Preferred Stock will be entitled to receive the amount
of cash, securities or other property to which such holder would be entitled to receive with respect to such shares of Series C Preferred
Stock if such shares had been converted to common stock immediately prior to such event (without giving effect for such purposes to the
4.99% or 9.99% beneficial ownership limitation, as applicable) subject to the preferential rights of holders of any class or series of
our capital stock specifically ranking by its terms senior to the Series C Preferred Stock as to distributions of assets upon such event,
whether voluntarily or involuntarily.

 

Shares
of Series C Preferred Stock are not entitled to receive any dividends, unless and until specifically declared by our board of directors.
However, holders of our Series C Preferred Stock are entitled to receive dividends on shares of Series C Preferred Stock equal (on an
as-if-converted-to-common-stock basis, and without giving effect for such purposes to the 4.99% or 9.99% beneficial ownership limitation,
as applicable) to and in the same form as dividends actually paid on shares of the common stock when such dividends are specifically
declared by our board of directors. We are not obligated to redeem or repurchase any shares of Series C Preferred Stock. Shares of Series
C Preferred Stock are not otherwise entitled to any redemption rights, or mandatory sinking fund or analogous fund provision.

 

    	3

     

    

 

The
holders of the Series C Preferred Stock have no voting rights, except as required by law. Any amendment to our Certificate of Incorporation,
bylaws or certificate of designation that adversely affects the powers, preferences and rights of the Series C Preferred Stock requires
the approval of the holders of a majority of the shares of Series C Preferred Stock then outstanding.

 

Pursuant
to the anti-dilution provisions contained in the certification of designation for our Series C Preferred Stock, in the event that, while
any of our Series C Preferred Stock is outstanding, we issue equity or equity-linked securities at an effective common stock purchase
price of less than the Series C Preferred Stock conversion price then in effect, we are required, subject to certain limitations and
adjustments as provided in the certificate of designation, to reduce the Series C Preferred Stock conversion price to equal the effective
common stock purchase price. This reduction in the Series C Preferred Stock conversion price will result in a greater number of shares
of common stock becoming issuable upon conversion of the Series C Preferred Stock for no additional consideration.

 

We
have not listed, and we do not plan on making an application to list, the Series C Preferred Stock on Nasdaq, any other national securities
exchange or any other nationally recognized trading system.

 

Shares
of Series C Preferred Stock were issued in book-entry form under a transfer agency and service agreement between Action Stock Transfer
Corp., as transfer agent, and us, and are represented by one or more book-entry certificates deposited with DTC and registered in the
name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC.

 

The
transfer agent and registrar for our Series C Preferred Stock is Action Stock Transfer Corp. The transfer agent’s address is 2469
E. Fort Union Blvd., Suite 214, Salt Lake City, Utah 84121.

 

You
should review the certificate of designation of the Series C Preferred Stock, and a subsequent amendment, which are filed as an exhibit
to this Annual Report on Form 10-K, for a complete description of the terms and conditions of the Series C Preferred Stock.

 

Series
B Warrants

 

On
March 14, 2017, we issued to certain investors in an underwritten public offering Series B Warrants to purchase up to an aggregate of
168 shares of our common stock at an exercise price of $52,500 per share. The Series B Warrants are exercisable immediately and may be
exercised until 5:00 p.m. New York City time on March 14, 2022. The Series B Warrants may be exercised only for a whole number of shares
of common stock.

 

These
Series B Warrants trade on Nasdaq under the symbol “NSPR.Z.” As of March 7, 2022, the Series B Warrants issued and outstanding
are exercisable into 168 shares of common stock.

 

The
Series B Warrants were issued in book-entry form under a warrant agent agreement between Action Stock Transfer Corp., as warrant agent,
and us, and are represented by one or more global book-entry certificates deposited with DTC, and registered in the name of Cede &
Co., a nominee of DTC, or as otherwise directed by DTC. The warrant agent agreement, and the form of Series B Warrant certificate attached
thereto, is included as an exhibit to this Annual Report on Form 10-K. You should review the warrant agent agreement and the form of
Series B Warrant certificate for a complete description of the terms and conditions of the Series B Warrants.

 

    	4

     

    

 

The
warrant agent and registrar for the Series B Warrants is Action Stock Transfer Corp. The warrant agent’s address is 2469 E. Fort
Union Blvd., Suite 214, Salt Lake City, Utah 84121.

 

Exercisability.
The Series B Warrants are exercisable at any time after the date of issuance, and at any time up to the date that is 5 years from
the date of issuance, at which time any unexercised Series B Warrants will expire and cease to be exercisable. The Series B Warrants
will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice and by payment
in full in immediately available funds for the number of shares of common stock purchased upon such exercise. If a registration statement
registering the issuance of the shares of common stock underlying the Series B Warrants under the Securities Act is not then effective
or available, the holder may exercise the warrant through a cashless exercise, in whole or in part, in which case the holder would receive
upon such exercise the net number of shares of common stock determined according to the formula set forth in the warrant. No fractional
shares of common stock will be issued in connection with the exercise of a warrant. In lieu of fractional shares, we will either pay
the holder an amount in cash equal to the fractional amount multiplied by the exercise price or round up to the next whole share.

 

Exercise
Limitation. A holder will not have the right to exercise any portion of the warrant if the holder (together with its affiliates)
would beneficially own in excess of 4.99% of the number of shares of our stock outstanding immediately after giving effect to the exercise,
as such percentage ownership is determined in accordance with the terms of the Series B Warrants. However, any holder may increase or
decrease such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective
until 61 days after such notice to us.

 

Exercise
Price; Anti-Dilution. The current exercise price per share of common stock purchasable upon exercise of the Series B Warrants is
$52,500 per share of common stock. The exercise price is subject to appropriate adjustment in the event of certain stock dividends and
distributions, stock splits, stock combinations, reclassifications or similar events affecting our common stock.

 

Transferability. Subject
to applicable laws, the Series B Warrants may be offered for sale, sold, transferred or assigned without our consent. There is currently
no trading market for the Series B Warrants and a trading market may not ever develop.

 

Fundamental
Transactions. In the event of a fundamental transaction, as described in the Series B Warrants and generally including any reorganization,
recapitalization or reclassification of our common stock, the sale, transfer or other disposition of all or substantially all of our
properties or assets, our consolidation or merger with or into another person, the holders of the Series B Warrants will be entitled
to receive upon exercise of the Series B Warrants the kind and amount of securities, cash or other property that the holders would have
received had they exercised the Series B Warrants immediately prior to such fundamental transaction. Notwithstanding the foregoing, in
the event of a fundamental transaction, each holder may, at its option, at any time concurrently with, or within 30 days after, the consummation
of such fundamental transaction, cause us to purchase the unexercised portion of the Series B Warrants at an amount of cash equal to
the Black-Scholes value of such Series B Warrants on the date of the consummation of such fundamental transaction; provided, however,
such holder may not require us or our successor entity to purchase the Series B Warrants for the Black-Scholes value solely in connection
with a fundamental transaction that is (i) not approved by our board of directors and (ii) not within our control.

 

    	5

     

    

 

Rights
as a Stockholder. Except as otherwise provided in the Series B Warrants or by virtue of such holder’s ownership of shares
of our common stock, the holder of a warrant does not have the rights or privileges of a holder of our common stock, including any voting
rights, until the holder exercises the warrant.

 

We,
with the consent of the Series B Warrant holders holding all of the then outstanding Series B Warrants, may increase the exercise price,
shorten the expiration date and amend all other warrant terms. We may lower the exercise price or extend the expiration date without
the consent of investors.

 

Delaware
Anti-Takeover Law, Provisions of our Certificate of Incorporation and Bylaws

 

Delaware
Anti-Takeover Law

 

We
are subject to Section 203 of the Delaware General Corporation Law. Section 203 generally prohibits a public Delaware corporation from
engaging in a “business combination” with an “interested stockholder” for a period of three years after the date
of the transaction in which the person became an interested stockholder, unless:

 

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

 

Section
203 defines a business combination to include:

 

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

 

In
general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting
stock of the corporation and any entity or person affiliated with, or controlling, or controlled by, the entity or person. The term “owner”
is broadly defined to include any person that, individually, with or through that person’s affiliates or associates, among other
things, beneficially owns the stock, or has the right to acquire the stock, whether or not the right is immediately exercisable, under
any agreement or understanding or upon the exercise of warrants or options or otherwise or has the right to vote the stock under any
agreement or understanding, or has an agreement or understanding with the beneficial owner of the stock for the purpose of acquiring,
holding, voting or disposing of the stock.

 

    	6

     

    

 

The
restrictions in Section 203 do not apply to corporations that have elected, in the manner provided in Section 203, not to be subject
to Section 203 of the Delaware General Corporation Law or, with certain exceptions, which do not have a class of voting stock that is
listed on a national securities exchange or held of record by more than 2,000 stockholders. Our Certificate of Incorporation and bylaws
do not opt out of Section 203.

 

Section
203 could delay or prohibit mergers or other takeover or change in control attempts with respect to us and, accordingly, may discourage
attempts to acquire us even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above
the prevailing market price.

 

Certificate
of Incorporation and Bylaws

 

Provisions
of our Certificate of Incorporation and bylaws may delay or discourage transactions involving an actual or potential change in our control
or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions
that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price
of our common stock. Among other things, our Certificate of Incorporation and bylaws:

 

	 	●	permit
    our board of directors to issue up to 5,000,000 shares of preferred stock, without further action by the stockholders, with any rights,
    preferences and privileges as they may designate, including the right to approve an acquisition or other change in control;
	 	 	 
	 	●	provide
    that the authorized number of directors may be changed only by resolution of the board of directors;
	 	 	 
	 	●	provide
    that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative
    vote of a majority of directors then in office, even if less than a quorum;
	 	 	 
	 	●	divide
    our board of directors into three classes, with each class serving staggered three-year terms;
	 	 	 
	 	●	do
    not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to
    vote in any election of directors to elect all of the directors standing for election, if they should so choose);
	 	 	 
	 	●	provide
    that special meetings of our stockholders may be called only by our board of directors; and
	 	 	 
	 	●	set
    forth an advance notice procedure with regard to the nomination, other than by or at the direction of our board of directors, of
    candidates for election as directors and with regard to business to be brought before a meeting of stockholders.
	 	 	 

    	7

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