Document:

Exhibit

Exhibit 4.2
DESCRIPTION OF FB FINANCIAL CORPORATION’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934

The following description sets forth certain material terms and provisions of FB Financial Corporation’s securities that are registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As of the date of the Annual Report on Form 10-K of which this exhibit is a part, the registrant has one class of securities registered under Section 12 of the Exchange Act, which is its common stock, par value $1.00 per share.
The following is a description of the common stock of FB Financial Corporation (“we”, “us”, “our” and the “Company”) and the material provisions of our amended and restated charter and amended and restated bylaws and other agreements to which we and our shareholders are parties. The following is only a summary does not purport to be complete. The following is qualified by applicable law and by the provisions of our amended and restated certificate of incorporation and amended and restated bylaws and other agreements, which are incorporated by reference to the Annual Report on Form 10-K, of which this exhibit is a part.
General. Our authorized capital stock consists of 75,000,000 shares of common stock, par value $1.00 per share. As of February 15, 2020, there were 31,035,182 shares of common stock outstanding. All outstanding shares of common stock are fully paid and non-assessable. 
Voting rights.   The holders of common stock are entitled to one vote per share on all matters to be voted upon by the shareholders, and are not entitled to cumulative voting in the election of directors. At any meeting of the shareholders, the holders of a majority of the outstanding stock of the Company then having voting rights, present in person or by proxy, shall constitute a quorum for all purposes. If a quorum exists, action on a matter (other than the election of directors) by a voting group is approved if the votes cast within the voting group favoring the action exceeds the votes cast opposing the action, unless otherwise provided by the charter or bylaws.
Dividend rights.    Subject to the rights that may be applicable to any outstanding preferred stock and all other classes of stock at the time outstanding having prior rights as to dividends, the holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available therefor. 
Rights upon liquidation.    In the event of liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding.
Other rights.    The holders of our common stock have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of holders of our preferred stock.
Election and removal of directors
Our bylaws provide that our board of directors will consist of between one and fifteen directors. Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. The exact number of directors will be fixed from time to time by resolution of our board of directors. Our bylaws provide that shareholders may remove any director, with cause only, by the affirmative vote of the holders of a majority of the issued and outstanding stock of the Company then having voting rights at a shareholder meeting called for that purpose.
As of February 15, 2020, James W. Ayers owned approximately 44% of our common stock. In connection with our initial public offering, we entered into a shareholder’s agreement with Mr. Ayers, in his capacity as our then-sole shareholder. The shareholder’s agreement provides that our board of directors will consist of between five and 13 members (unless otherwise agreed by Mr. Ayers and the Company). Additionally, Mr. Ayers has the right under the shareholder's agreement to designate up to 40% of our directors and at least one member of the nominating and corporate governance committee, and one member of the compensation committee. Mr. Ayers’ director designation rights decrease as his percentage ownership of our common stock decreases, in each case rounded up to the nearest whole number of directors, and as set forth in the below table.

	
			
	Ownership Percentage
	 
	Percentage of Directors Designated

	More than 40% but less than or equal to 50%
	 
	40%

	 
	 
	 

	More than 30% but less than or equal to 40%
	 
	30%

	 
	 
	 

	More than 20% but less than or equal to 30%
	 
	20%

	 
	 
	 

	More than or equal to 5%, but less than or equal to 20%
	 
	10%

In addition, the shareholder’s agreement also provides that our Chief Executive Officer shall serve as a member of the board of directors.
If at any time a designee of Mr. Ayers ceases to serve on our board, Mr. Ayers has the right to designate or nominate a successor to fill such vacancy, or, if he loses his right to designate or nominate any successor directors pursuant to the terms of the shareholder’s agreement, these positions will be filled in accordance with our charter and bylaws. All other directorships will be filled in accordance with the charter and bylaws.
The shareholder’s agreement will terminate upon the earlier of Mr. Ayers’ death or permanent disability or when Mr. Ayers holds less than 5% of our outstanding shares of common stock.
Limitation of liability of directors and officers
The Tennessee Business Corporation Act, or TBCA, provides that a corporation may indemnify any of its directors and officers against liability incurred in connection with a proceeding if: (a) such person acted in good faith; (b) in the case of conduct in an official capacity with the corporation, he reasonably believed such conduct was in the corporation’s best interests; (c) in all other cases, he reasonably believed that his conduct was at least not opposed to the best interests of the corporation; and (d) in connection with any criminal proceeding, such person had no reasonable cause to believe his conduct was unlawful. In actions brought by or in the right of the corporation, however, the TBCA provides that no indemnification may be made if the director or officer was adjudged to be liable to the corporation. The TBCA also provides that in connection with any proceeding charging improper personal benefit to an officer or director, no indemnification may be made if such officer or director is adjudged liable on the basis that such personal benefit was improperly received. In cases where the director or officer is wholly successful, on the merits or otherwise, in the defense of any proceeding instigated because of his or her status as a director or officer of a corporation, the TBCA mandates that the corporation indemnify the director or officer against reasonable expenses incurred in the proceeding. The TBCA provides that a court of competent jurisdiction, unless the corporation’s charter provides otherwise, upon application, may order that an officer or director be indemnified for reasonable expenses if, in consideration of all relevant circumstances, the court determines that such individual is fairly and reasonably entitled to indemnification, notwithstanding the fact that (a) such officer or director was adjudged liable to the corporation in a proceeding by or in the right of the corporation; (b) such officer or director was adjudged liable on the basis that personal benefit was improperly received by him; or (c) such officer or director breached his duty of care to the corporation. Our charter provides that the Company shall, to the fullest extent permitted by the TBCA, indemnify its directors and officers, and may indemnify all other person whom it has the power to indemnify under the TBCA. The right of any director or officer of the Company to indemnification conferred in our charter shall also include the right to be paid by the Company the expenses incurred in connection with any such proceeding in advance of its final disposition to the fullest extent authorized by Tennessee law.
Anti-takeover effects of some provisions
Some provisions of our charter and bylaws could make more difficult the removal of our incumbent officers and directors. These provisions, as well as our ability to issue preferred stock, are designed to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our Board of Directors. We believe that the benefits of increased protection give us the potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us, and that the benefits of this increased protection outweigh the disadvantages of discouraging those proposals, because negotiation of those proposals could result in an improvement of their terms.
Our charter provides that our Board of Directors may issue “blank check” preferred stock without shareholder approval. Some of the rights and preferences of these shares of preferred stock would be superior to the rights and preferences of shares of our common stock. Accordingly, the issuance of new shares of preferred stock may adversely affect the rights of the holders of shares of our common stock.

Anti-takeover provisions in the TBCA
In addition to certain of the provisions in our charter discussed above, the State of Tennessee has adopted statutes that can have an anti-takeover effect and may delay or prevent a tender offer or takeover attempt that a shareholder might consider in its best interest, including those attempts that might result in a premium over the market price for shares of our common stock.
The Tennessee Control Share Acquisition Act generally provides that, except as stated below, “control shares” will not have any voting rights. Control shares are shares acquired by a person under certain circumstances which, when added to their shares owned, would give such person effective control over one-fifth or more, or a majority of all voting power (to the extent such acquired shares cause such a person to exceed one-fifth or one-third of all voting power) in the election of a Tennessee corporation’s directors. However, voting rights will be restored to control shares by resolutions approved by the affirmative vote of the holders of a majority of the corporation’s voting stock, other than shares held by the owner of the control shares. If voting rights are granted to control shares which give the holder a majority of all voting power in the election of the corporation’s directors, then the corporation’s other shareholders may require the corporation to redeem their shares at fair value.
The Tennessee Control Share Acquisition Act is not applicable to us because our charter does not contain a specific provision “opting in” to the act, as is required.
The Tennessee Investor Protection Act provides that unless a Tennessee corporation’s board of directors has recommended a takeover offer to shareholders, no offeror beneficially owning 5% or more of any class of equity securities of the offeree company, any of which was purchased within the preceding year, may make a takeover offer for any class of equity security of the offeree company if after completion the offeror would be a beneficial owner of more than 10% of any class of outstanding equity securities of the company unless the offeror, before making such purchase: (1) makes a public announcement of his or her intention with respect to changing or influencing the management or control of the offeree company; (2) makes a full, fair and effective disclosure of such intention to the person from whom he or she intends to acquire such securities; and (3) files with the Tennessee Commissioner of Commerce and Insurance, or Commissioner, and the offeree company a statement signifying such intentions and containing such additional information as may be prescribed by the Commissioner.
The offeror must provide that any equity securities of an offeree company deposited or tendered pursuant to a takeover offer may be withdrawn by an offeree at any time within seven days from the date the offer has become effective following filing with the Commissioner and the offeree company and public announcement of the terms or after 60 days from the date the offer has become effective. If the takeover offer is for less than all the outstanding equity securities of any class, such an offer must also provide for acceptance of securities pro rata if the number of securities tendered is greater than the number the offeror has offered to accept and pay for. If such an offeror varies the terms of the takeover offer before its expiration date by increasing the consideration offered to offerees, the offeror must pay the increased consideration for all equity securities accepted, whether accepted before or after the variation in the terms of the offer.
The Tennessee Investor Protection Act does not apply to us, as it does not apply to bank holding companies subject to regulation by a federal agency and does not apply to any offer involving a vote by holders of equity securities of the offeree company.
The Tennessee Business Combination Act, generally prohibits a “business combination” by a company or any of our subsidiaries with an “interested shareholder” within five years after the shareholder becomes an interested shareholder. The company or any of its subsidiaries can, however, enter into a business combination within that period if, before the interested shareholder became such, the company’s board of directors approved the business combination or the transaction in which the interested shareholder became an interested shareholder. After that five-year moratorium, the business combination with the interested shareholder can be consummated only if it satisfies certain fair price criteria or is approved by two-thirds of the other shareholders.
For purposes of these provisions of the Tennessee Business Combination Act, a “business combination” includes mergers, share exchanges, sales and leases of assets, issuances of securities, and similar transactions. An “interested shareholder” is generally any person or entity that beneficially owns 10% or more of the voting power of any outstanding class or series of our stock.
The Tennessee Greenmail Act applies to a Tennessee corporation that has a class of voting stock registered or traded on a national securities exchange or registered with the SEC pursuant to Section 12(g) of the Exchange Act. Under the Tennessee Greenmail Act, a company may not purchase any of its shares at a price above the market value of such shares from any person who holds more than 3% of the class of securities to be purchased if such 

person has held such shares for less than two years, unless the purchase has been approved by the affirmative vote of a majority of the outstanding shares of each class of voting stock issued by the company or the company makes an offer, or at least equal value per share, to all shareholders of such class.
Listing and trading market for common stock.  Our common stock is listed on the NYSE under the symbol FBK.
Transfer agent and registrar. The transfer agent and registrar for the common stock is Computershare Trust Company, N.A.Exhibit 4.17

 

DESCRIPTION OF SECURITIES

 

The following is a
summary of material characteristics of the capital stock of Neurotrope, Inc. (“we,” “us,” “our,”
 “Neurotrope,” or the “Company”) as set forth in our certificate of incorporation and bylaws, our outstanding
warrants, and certain provisions of Nevada law. The following description does not purport to be complete and is subject to and
qualified in its entirety by, and should be read in conjuncture with, our certificate of incorporation and bylaws, each of which
are filed as exhibits to this Annual Report on Form 10-K to which this description is an exhibit, and to applicable provisions
of Nevada law.

 

Authorized Capital Stock

 

Our certificate of
incorporation authorized us to issue 150,000,000 shares of common stock, par value $0.0001 per share, and 50,000,000 shares of
preferred stock, par value $0.0001 per share.

 

Common Stock

 

The
holders of our common stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends
at such times and in such amounts as our Board of Directors (the “Board”) from time to time may determine. To
date, we have not paid dividends on our common stock. Holders of our common stock are entitled to one vote for each share held
on all matters submitted to a vote of stockholders. There is no cumulative voting of the election of directors then standing for
election. Our common stock is not entitled to pre-emptive rights and is not subject to conversion or redemption. Upon liquidation,
dissolution or winding up of the Company, the assets legally available for distribution to stockholders are distributable ratably
among the holders of our common stock after payment of liabilities, accrued dividends and liquidation preferences, if any. Each
outstanding share of our common stock is duly and validly issued, fully paid and non-assessable.

 

As of February 20, 2020,
we had 19,748,328 shares of our common stock issued and outstanding held by approximately 230 stockholders of record.

 

Preferred Stock

 

We have the authority
to issue up to 50,000,000 shares of preferred stock. The shares of preferred stock may be issued from time to time in one or more
series, each of which will have such distinctive designation or title as shall be determined by our Board prior to the issuance
of any shares thereof. Preferred stock will have such voting powers, full or limited, or no voting powers, and such preferences
and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as
shall be stated in such resolution or resolutions providing for the issue of such class or series of preferred stock as may be
adopted from time to time by the Board prior to the issuance of any shares thereof. The number of authorized shares of preferred
stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the voting power of all the then outstanding shares of our capital stock entitled to vote generally in
the election of the directors, voting together as a single class, without a separate vote of the holders of the preferred stock,
or any series thereof, unless a vote of any such holders is required pursuant to any preferred stock designation.

 

While we do not currently
have any plans for the issuance of additional preferred stock, the issuance of such preferred stock could adversely affect the
rights of the holders of common stock and, therefore, reduce the value of the common stock. It is not possible to state the actual
effect of the issuance of any shares of preferred stock on the rights of holders of the common stock until the Board determines
the specific rights of the holders of the preferred stock; however, these effects may include:

 

		·	Restricting dividends on the common stock;

		·	Diluting the voting power of the common stock;

		·	Impairing the liquidation rights of the common stock; or

		·	Delaying or preventing a change in control of the Company without further action by the stockholders.

 

As
of February 20, 2020, we had 7,277 shares of Series D Convertible Preferred Stock, par value $0.0001 per share, convertible
into an aggregate of 4,319,704 shares of common stock, issued and outstanding.

 

     

     

    

 

Series D Convertible
Preferred Stock

 

Rank. 

 

Except
with respect to any current series of preferred stock of senior rank to the Series D Convertible Preferred Stock in respect of
the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company and
any current or future series of preferred stock of pari passu rank to the Series D Convertible Preferred Stock in respect of the
preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company, all shares
of capital stock shall be junior in rank to all Series D Convertible Preferred Stock with respect to the preferences as to dividends,
distributions and payments upon the liquidation, dissolution and winding up of the Company (the “Junior Stock”).

 

Dividends. 

 

Holders
of Series D Convertible Preferred Stock are entitled to receive dividends on shares of Series D Convertible Preferred Stock, on
an as if converted to common stock basis, to and in the same form as dividends actually paid on shares of common stock when, as
and if such dividends are paid on shares of common stock.

 

Liquidation.

 

In
the event of a liquidation event, the holders of Series D Convertible Preferred Stock shall be entitled to receive in cash out
of our assets, whether from capital or from earnings available for distribution to its stockholders, before any amount shall be
paid to the holders of any of shares of Junior Stock, an amount per share of Series D Convertible Preferred Stock equal to the
amount per share such holder would receive if such holder converted such Series D Convertible Preferred Stock into common stock
immediately prior to the date of such payment.

 

Conversion. 

 

Each
share of Series D Convertible Preferred Stock shall be convertible, at any time and from time to time at the option of the holder
thereof, into that number of shares of common stock determined by dividing the stated value of such share by the conversion price.
Each share of Series D Convertible Preferred Stock has a stated value of $1,000. The conversion price is $1.65 per share of common
stock and is subject to adjustment described below. This right to convert is limited by the beneficial ownership limitation described
below.

 

Beneficial
Ownership Limitation. 

 

We
shall not effect any conversion of Series D Convertible Preferred Stock, and a holder shall have no right to convert any portion
of Series D Convertible Preferred Stock, to the extent that, after giving effect to such conversion, such holder, together with
such holder’s affiliates, and any persons acting as a group together with such holder or any such affiliate, would beneficially
own in excess of 4.99% of the number of shares of common stock outstanding immediately after effect to the issuance of shares of
common stock upon such conversion. By written notice to us, a holder may increase or decrease such percentage to any other percentage
not in excess of 9.99%. Beneficial ownership of the holder and its affiliates will be determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

Stock
dividends and stock splits. 

 

If
we pay a stock dividend or otherwise make a distribution payable in shares of common stock on shares of common stock, subdivide
or combine outstanding common stock, or reclassify common stock, the conversion price will be proportionately adjusted.

 

     

     

    

 

Voting
Rights. 

 

Except
as otherwise provided in the Certificate of Designations, Preferences and Rights of Series D Preferred Stock or required by law,
Series D Convertible Preferred Stock shall have no voting rights.

 

Fractional
Shares. 

 

No
fractional shares of common stock will be issued upon conversion of Series D Convertible Preferred Stock. Rather, we shall round
up to the next whole share.

  

Options

 

As
of February 20, 2020, we had outstanding stock options to purchase an aggregate of 2,296,981 shares of our common stock
with a weighted average exercise price equal to $12.99 per share.

 

Warrants

 

As
of February 20, 2020, we had the following warrants outstanding:

 

		·	Series A Warrants to purchase 49,449 shares of our common stock at an exercise price of $0.32 per share, with an expiration
date five years from the date of issuance. These warrants were issued on November 16, 2015.

 

		·	Series C Warrants to purchase 78,616 shares of our common stock at an exercise price of $0.32 per share, with an expiration
date of five years from the date of issuance. These warrants were issued on November 16, 2015.

 

		·	Series E Warrants, which are contingent upon the exercise of the Series C Warrants, to purchase 819,914 shares of our common
stock at an exercise price of $32.00 per share, with an expiration date that is five years from the date of the initial exercise
of the Series C Warrants. These warrants will begin to expire on November 28, 2021, based upon the dates that the Series C Warrants
were exercised.

 

		·	Series F Warrants to purchase 3,772,908 shares of our common stock at an exercise price of $12.80 per share, with an expiration
date five years from the date of issuance. These warrants were issued on November 16, 2016.

 

		·	Series G Warrants to purchase 4,916,603 shares of our common stock at an exercise price of $4.37 per share, with an expiration
date five years from the initial exercise date. These warrants have an exercise date beginning June 17, 2019.

 

		·	Series H Warrants to purchase 10,909,100 shares of our common stock at an exercise price of $1.65 per share, with an expiration
date five years from the initial exercise date. These warrants were issued on November 16, 2016.

 

		·	Placement agent warrants to purchase 19,541 shares of our common stock at an exercise price of $0.32 per share. 13,932 of these
warrants will expire on August 23, 2023, and 5,609 will expire on November 13, 2020.

 

		·	Placement agent warrants to purchase 382,887 shares of our common stock at an exercise price of $6.40 per share which expire
on November 17, 2021.

 

		·	Placement agent and consultant warrants to purchase 100,240 shares of our common stock at an exercise price of $6.25 per share
which expire on June 19, 2024.

 

		·	Placement agent warrants to purchase 200,000 shares of our common stock at an exercise price of $1.65 per share which expire
on January 22, 2025.

 

     

     

    

 

		·	Advisor warrants to purchase 90,000 shares of our common stock at an exercise price of $7.13 per share which expire June 1,
2024.

 

		·	Advisor warrants to purchase 24,000 shares of our common stock at an exercise price of $7.12 per share which expire June 5,
2024.

 

		·	Advisor warrants to purchase 114,000 shares of our common stock at an exercise price of $5.31 per share.

 

		·	Advisor warrants to purchase 114,000 shares of our common stock at an exercise price of $0.86 per share.

 

The warrants contain
customary provisions for adjustment in the event of stock splits, subdivision or combination, mergers, and similar events. The
holders of the warrants have the right to exercise the warrants by means of a cashless exercise in certain circumstances.

 

Convertible Securities

 

As of the date hereof,
other than the common stock options, placement agent and consultant warrants, advisor warrants, the Series A Warrants, Series C
Warrants, Series E Warrants, the Series F Warrants, the Series G Warrants, and the Series H Warrants described above, the Company
does not have any outstanding convertible securities.

   

Anti-Takeover Effects of Our Shareholder
Rights Plan and Provisions of Nevada State Law

 

Our
Shareholder Rights Plan

 

Overview

 

On
September 9, 2019, our Board adopted a shareholder rights plan (the “Rights Plan”). The Rights Plan is intended to
protect the interests of our stockholders and enable them realize the full potential value of their investment by reducing the
likelihood that any person or group gains our control through open market accumulation or other tactics without appropriately compensating
all stockholders. Pursuant to the Rights Plan, we issued, by means of a dividend, one preferred share purchase right for each outstanding
share of the our common stock to shareholders of record on the close of business on September 19, 2019. Initially, these Rights
(as defined below) will trade with, and be represented by, the shares of our common stock. The Rights will
generally become exercisable only if any person (or any persons acting as a group) acquires 15% or more of our outstanding common
stock (the “Acquiring Person”) in a transaction not approved by the Board, subject to certain exceptions, as explained
below.

 

If
the Rights become exercisable, all holders of Rights, other than the Acquiring Person, will be entitled to acquire shares of the
our common stock at a 50% discount or we may exchange each Right held by such holders
for one share of its common stock. In such situation, Rights held by the Acquiring Person would become void and will not be exercisable.
If any person at the time of the first public announcement of the Rights Plan owned more than the triggering percentage then that
stockholder’s existing ownership percentage will be grandfathered, although, with certain exceptions, the Rights will become
exercisable if at any time after the announcement of the Rights Plan such stockholder increases its ownership of our common stock.

 

Unless
earlier redeemed, terminated or exchanged pursuant to the terms of the Rights Plan,
the Rights will expire at the close of business on September 8, 2021. The Board may terminate the Rights Plan before that date
if the Board determines that there is no longer a threat to shareholder value.

 

     

     

    

 

Key
Features

 

On
September 9, 2019, the Board declared a dividend of one preferred share purchase right (a “Right”), payable on September
19, 2019, for each share of our common stock, par value $0.0001 per share, outstanding on September 19, 2019, to the stockholders
of record on that date. In connection with the distribution of the Rights, we entered into a Rights Agreement (the “Rights
Agreement”), dated as of September 9, 2019, with Philadelphia Stock Transfer, Inc., as rights agent. Each Right entitles
the registered holder to purchase from one one-thousandth of a share of our Series C Preferred Stock, par value $0.0001 per share
(the “Preferred Shares”), at a price of $20 per one one-thousandth of a Preferred Share represented by a Right, subject
to adjustment. Each one one-thousandth of a Preferred
Share entitles the holder thereof to receive (i) the same dividends and liquidation rights as if the holder held one share of common
stock and will be treated the same as one share of common stock in the event of a merger, consolidation or other share exchange
and (ii) one vote on all matters submitted to a vote of our stockholders, in each case subject to adjustment as described
in the Certificate of Designations, Preferences and Rights of Series C Preferred Stock. Until
a right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.

 

Nevada’s control share laws

 

We may in the future
become subject to Nevada’s control share laws. A corporation is subject to Nevada’s control share law if it has more
than 200 stockholders of record, at least 100 of whom are residents of Nevada, and if the corporation does business in Nevada,
including through an affiliated corporation. This control share law may have the effect of discouraging corporate takeovers. The
Company currently has fewer than 100 stockholders of record who are residents of Nevada and does not do business
in Nevada.

 

The control share law
focuses on the acquisition of a “controlling interest,” which means the ownership of outstanding voting shares that
would be sufficient, but for the operation of the control share law, to enable the acquiring person to exercise the following proportions
of the voting power of the corporation in the election of directors: (1) one-fifth or more but less than one-third; (2) one-third
or more but less than a majority; or (3) a majority or more. The ability to exercise this voting power may be direct or indirect,
as well as individual or in association with others.

 

The effect of the control
share law is that an acquiring person, and those acting in association with that person, will obtain only such voting rights in
the control shares as are conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting
of stockholders. The control share law contemplates that voting rights will be considered only once by the other stockholders.
Thus, there is no authority to take away voting rights from the control shares of an acquiring person once those rights have been
approved. If the stockholders do not grant voting rights to the control shares acquired by an acquiring person, those shares do
not become permanent non-voting shares. The acquiring person is free to sell the shares to others. If the buyer or buyers of those
shares themselves do not acquire a controlling interest, the shares are not governed by the control share law any longer.

 

If control shares are
accorded full voting rights and the acquiring person has acquired control shares with a majority or more of the voting power, a
stockholder of record, other than the acquiring person, who did not vote in favor of approval of voting rights for the control
shares, is entitled to demand fair value for such stockholder’s shares.

 

In addition to the
control share law, Nevada has a business combination law, which prohibits certain business combinations between Nevada corporations
and “interested stockholders” for two years after the interested stockholder first becomes an interested stockholder,
unless the corporation’s board of directors approves the combination in advance. For purposes of Nevada law, an interested
stockholder is any person who is: (a) the beneficial owner, directly or indirectly, of 10% or more of the voting power of the outstanding
voting shares of the corporation, or (b) an affiliate or associate of the corporation and at any time within the previous two years
was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then-outstanding shares of the corporation.
The definition of “business combination” contained in the statute is sufficiently broad to cover virtually any kind
of transaction that would allow a potential acquirer to use the corporation’s assets to finance the acquisition or otherwise
to benefit its own interests rather than the interests of the corporation and its other stockholders.

 

The effect of Nevada’s
business combination law is to potentially discourage a party interested in taking control of the Company from doing so if it cannot
obtain the approval of our Board.

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