Document:

skys-ex411_367.htm

 

Exhibit 4.11

EXECUTION VERSION

 

SETTLEMENT AGREEMENT

 

This SETTLEMENT AGREEMENT (this “Agreement”) is made as of this fifth day of November, 2019, by and among Hudson Solar Cayman, LP (“Hudson Solar”), Hudson Sustainable Management, LLC (“HSM”), Hudson Global Finance DE, LLC (“Hudson Global Finance”, and together with Hudson Solar and HSM, the “Hudson Parties”) on the one hand, and Sky Solar Holdings, Ltd. (“SSH ”), Sky Solar Power Ltd. (“SSP”), Sky International Enterprise Group Limited (“SIE”), and the other obligors listed on the schedule attached hereto as Schedule 1 (collectively, the “Other Obligors”, and together with SSH, SSP, and SIE, the “Sky Solar Parties”). The parties to this Agreement are referred to herein collectively as the “Parties” and individually as a “Party”.

 

R E C I T A L S

 

WHEREAS, Energy Capital Investments S.à r.l. (“ECI”), Renewable Capital Investment 2, Sociedad Limitada (“RCI 2”), and Lumens Holdings 1, LLC (“Lumens 1”), as Obligors, and Hudson Solar, as Administrative Agent, Initial Note Purchaser, and Note Holder, entered into the Amended and Restated Note Purchase Agreement dated as of July 15, 2016 (as amended, amended and restated, or otherwise modified from time to time, the “NPA”);

 

WHEREAS, ECI issued Notes to the Initial Note Purchaser with an aggregate principal balance of $54,629,006 as of the date hereof;

 

WHEREAS SSH, SSP, and SIE, each as Guarantor, and Hudson Solar entered into that certain Guaranty Agreement dated September 18, 2015, whereby SSH, SSP, and SIE have guaranteed the Obligations under the NPA, including but not limited to amounts owing under the Notes and the NPA, and a confirmation of the same was executed on July 15, 2016 (the “Guaranty”);

 

WHEREAS, each of SIE, ECI, Lumens 1, RCI 2, and certain of the Other Obligors have entered into the Security Documents, pursuant to which they agreed to grant Liens to Hudson on the Collateral as security for the payment to Hudson of all amounts owing on account of the Notes and any other Obligations owing under the Note Purchase Documents;

 

WHEREAS, on or around January 22, 2019, Hudson Solar took actions to accelerate all amounts due under the Notes and demand immediate payment of all Obligations under the NPA, including by making a demand for payment under the Guaranty from the Sky Solar Defendants (as defined below), as a result of alleged Events of Default under the NPA;

 

WHEREAS, on January 24, 2019, Hudson Solar designated Hudson Global Finance to exercise the right of appropriation of all the shares of ECI in all respects and Hudson Global Finance effected such appropriation on the same day allegedly in accordance with Luxembourg law and the Company Share Pledge, such that Hudson Global Finance is currently controlling 100% of the outstanding share capital of ECI;

 

 

 

WHEREAS, on February 8, 2019, Hudson Solar commenced a foreclosure process under the New York Uniform Commercial Code to sell 100% of the limited liability company interests in Lumens I, which are pledged to Hudson Solar pursuant to the U.S. Holdco Share Pledge agreement dated as of July 15, 2016, between Sky Capital America Inc. as pledgor and Hudson Solar as pledgee (the “Lumens Auction”);

 

WHEREAS, on February 8, 2019, Hudson Solar filed a motion for summary judgment in lieu of complaint commencing the action captioned Hudson Solar Cayman, LP v. Sky Solar Holdings, Ltd., et al,. in the Supreme Court of the State of New York (County of New York) (the “New York Court”) seeking recovery of all amounts allegedly due and owing under the Guaranty from SSH, SSP, and SIE (the “Sky Solar Defendants”), jointly and severally, and which action has been assigned to and pending before the Honorable Joel M. Cohen with Index No. 650847/2019 (the “Action”);

 

WHEREAS, a hearing on the Action is presently scheduled for November 6, 2019;

 

WHEREAS, the Parties desire to amicably resolve the Action and provide full and mutual releases in respect of all disputes at issue in or related to the Action; and

 

WHEREAS, upon the Parties’ entry into this Agreement, Hudson Solar expressed it shall dismiss the Action on a without prejudice basis.

 

NOW, THEREFORE, by the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

Section 1.Definitions and Interpretations

 

1.1 Definitions. The following terms used in this Agreement have the meanings specified in this Section 1.1. Capitalized terms used in this Agreement that are not defined in this Section 1.1 shall have the meanings ascribed to them in the NPA.

 

(a)“Action” shall have the meaning specified in the recitals.

 

(b)“Affiliate” means, in relation to a Person, a Subsidiary of that Person, any entity of which that Person is a Subsidiary and any other Subsidiaries of that entity, and shall include any investment fund or account managed or controlled, directly or indirectly, by a common entity or Person, and such common entity or Person.

 

(c)“Agreement” shall have the meaning specified in the preamble.

 

(d)“Business Day” means any day other than a Saturday, a Sunday or a legal holiday for commercial banks in the People’s Republic of China and New York, New York.

 

(e)“CA Code” has the meaning specified in Section 8.1(f).

 

 

 

(f)“Claim” means, with respect to a Person, a claim, demand, counterclaim, cause of action, right, interest, sum of money, controversy, action, agreement, promise, cost, expense (including attorneys’ fees), responsibility, obligation, covenant, damages, loss, suit, mediation, arbitration, judgment and liability of any nature whatsoever, in law or in equity, whether known or unknown, claimed or unclaimed, developed or undeveloped, anticipated or unanticipated, whether brought by such Person or on behalf of or through such Person, including, without limitation, by each of such Person’s parents, subsidiaries, Affiliates, directors, officers, members, member representatives, agents, past and present employees, shareholders, independent contractors, heirs, partners, joint venturers, predecessors, successors, assigns, attorneys, or insurers.

 

(g)“Closing” shall have the meaning specified in Section 6.1.

 

(h)“Closing Date” means the date on which each of the conditions to the Closing set forth in Section 6.1 is or has been either satisfied or expressly waived in writing by each of the Parties.

 

(i)“Closing Statement of Net Working Capital” means the statement of Net Working Capital of each of the Equity Conversion Project Companies to be prepared pursuant to Section 13.1(c), which shall be dated as of the Closing Date and reflect the Net Working Capital as of the Closing Date.

 

(j)“Control” means the direct or indirect ownership of the majority of the voting share capital of any Person or the right or ability to determine the composition of a majority of the board of directors (or like board) of such Person, in each case whether by virtue of ownership of share capital, contract or otherwise.

 

(k)“Cutoff Date” means September 30, 2019.

 

(l)“Definitive Agreements” means each of the Equity Conversion Definitive Agreements, the Majority Acquisitions Definitive Agreements, and the Japanese Project Companies Agreements, and any other necessary agreements or documents to effectuate and close the Transactions.

 

(m)“ECI” shall have the meaning specified in the recitals.

 

(n)“EPC Contract” means that certain the Contrato de Construcción “Llave en Mano” Para Un Parque Fotovoltaico, dated October 17, 2017, between SEMI, SEMI USA Corporation, an the Uruguay Project Companies, as amended from time to time.

 

(o)“Equity Conversion Definitive Agreements” shall have the meaning specified in Section 4.1.

 

(p)“Equity Conversion Project Companies” shall have the meaning specified in Section 4.1(e).

 

(q)“Equity Conversion Transactions” shall have the meaning specified in Section 4.1.

 

(r)“Estimated Statement of Net Working Capital” means the statement of Net Working Capital of each of the Equity Conversion Project Companies to be delivered by the 

 

 

Sky Solar Parties pursuant to Section 13.1(b) no later than five (5) Business Days prior to the day scheduled by the Parties as the Closing Date and prepared as of the Closing Date.

 

(a)“Expense Reimbursement Payment” shall have the meaning specified in Section 3.1.

 

(b)“Final Acceptance Date” means the date upon which the agreed set of conditions precedent set forth in Section 9.6 of the EPC Contract (Certificado de Aceptación Definitiva) have been satisfied with respect to all Projects as it pertains to the Uruguay Project Companies.

 

(c)“Financial Model” means the financial model identified as “Settlement-Financial Model11.04.2019.xlsx” delivered via email by Hao Wu to Joseph Slamm on November 4, 2019, at 10.49 a.m. New York time (a copy of which is attached for reference in portable document format (PDF) as Exhibit 1), which model reflects the Parties’ agreed assumptions and methodologies for the purpose of determining the conversion amounts and payment amounts reflected in Section 4 and Section 5 as of the Cutoff Date.

 

(d)“Funds Flow Memorandum” shall have the meaning specified in Section 15.15.

 

(e)“Governmental Authority” means any government, or any authority, agency, regulatory body, listing agency or exchange, commission, court, official or other instrumentality of any government, of any nation, or any state, county, parish or city, or any other local or other political subdivision thereof.

 

(f)“Guaranty” shall have the meaning specified in the recitals.

 

(g)“HS Japanese Holding Company” shall have the meaning specified in Section 12.1(c).

 

(h)“HS Japanese Costs Holdback Amount” means an amount equal in Japanese Yen equal to 8% of the annual gross revenue of the Schedule V Project Companies, multiplied by 49.9%.

 

(i)“HSBC” means HSBC Bank (Uruguay) S.A.

 

(j)“HSBC LC” means that certain standby letter of credit issued by HSBC in favor of IDB as required under the Sponsor Support and Share Retention Agreement dated as of November 22, 2016, which letter of credit has been procured by Jeylaw on behalf of and as an accommodation to RCI 2 and is secured by the LC Funds.

 

(k)“Hudson Global Finance” shall have the meaning specified in the recitals.

 

(l)“Hudson Parties” shall have the meaning specified in the preamble.

 

 

 

(m)“Hudson Releasees” subject to additional released parties included in the Definitive Agreements, means each of the Hudson Parties and each such Party’s current, former, or future Affiliates general and limited partners, parent companies, subsidiaries, shareholders, and “controlling persons” (within the meaning of the U.S. federal securities laws), together with their respective predecessors, successors, assigns and current and former officers, directors, employees, agents, attorneys, representatives, advisors, and any other person or entity acting or purporting to act on behalf of any of the foregoing Persons; provided further that, solely for the purposes of receiving the releases in Section 8.1 and without prejudice to any Claims that the Sky Solar Parties may hold against one or more of the Hudson Parties in the event the Closing does not occur, each of ECI, RCI 2, the Uruguay Project Companies, the Schedule II Project Companies, the Schedule III Project Companies, and the Schedule IV Project Companies shall be a Hudson Releasee.

 

(n)“Hudson Releasors” means each Hudson Party and each of such Party’s current, former, and future Affiliates, general and limited partners, parent companies, subsidiaries, shareholders, and “controlling persons” (within the meaning of the U.S. federal securities laws), together with their respective predecessors, successors, assigns, and current and former officers, directors, employees, agents, attorneys, representatives, advisors, and any other person or entity acting or purporting to act on behalf of any of the foregoing Persons; provided further that, solely for the purposes of giving the releases in Section 8.3 and without prejudice to any Claims that the Sky Solar Parties may hold against one or more of the Hudson Parties in the event the Closing does not occur, each of ECI, RCI 2, the Uruguay Project Companies, the Schedule II Project Companies, the Schedule III Project Companies, and the Schedule IV Project Companies shall be a Hudson Releasor.

 

(o)“Hudson Solar” shall have the meaning specified in the preamble.

 

(p)“IDB” means the Inter-American Development Bank.

 

(q)“Japanese Financing Terms” shall have the meaning specified in Section 12.1(a)(i).

 

(r)“Japanese NWC Adjustment Agreement” shall have the meaning specified in Section 13(e)(iii).

 

(s)“Japanese Operating Costs” shall have the meaning specified in Section 12.1(b).

 

(t)“Japanese Project Companies Agreements” shall have the meaning specified in Section 12.1.

 

(u)“Jeylaw” means Jeylaw S.A.

 

(v)“Lafemir” means Lafemir S.A.

 

(w)“Law” means any applicable constitutional provision, statute, act, code, law, regulation, rule, ordinance, order, decree, ruling, proclamation, resolution, judgment, decision, declaration, treaty or interpretive or advisory opinion of a Governmental Authority.

 

 

 

(x)“LC Funds” means the $2,000,000 held by HSBC and securing the HSBC LC, which funds are the property of RCI 2.

 

(y)“Longstop Date” means December 16, 2019.

 

(z)“Lumens 1” shall have the meaning specified in the recitals.

 

(aa)“Majority Acquisitions” shall have the meaning specified in Section 5.1.

 

(bb)“Majority Acquisitions Consideration” shall have the meaning specified in Section 5.1.

 

(cc)“Majority Acquisitions Definitive Agreements” shall have the meaning specified in Section 5.1.

 

(dd)“Net Working Capital” means, in respect of each of the Equity Conversion Project Companies, the net working capital for each such entity as calculated using the assumptions and methodologies reflected in the Financial Model.

 

(ee)“Net Working Capital Adjustment” shall have the meaning specified in Section 13.1.

 

(ff)“Non-Japanese Assets Conversion Amount” shall have the meaning specified in Section 4.1(d).

 

(gg)“NPA” shall have the meaning specified in the recitals.

 

(hh)“Order” means any order, writ, judgment, injunction, ruling or decree of any Governmental Authority or arbitration tribunal or arbitrator.

 

(ii)“Other Obligors” shall have the meaning specified in the preamble.

 

(jj)“Outstanding Note Balance” shall have the meaning specified in Section 4.1(a).

 

(kk)“Person” means (i) any natural person, (ii) any corporation, company, voluntary association, partnership, joint venture, trust, limited liability company, unincorporated organization or any other form of organization or entity that has a legal existence under the Laws of its jurisdiction of formation which is separate from its owner or owners and (iii) any Governmental Authority.

 

(ll)“Proceeding” means any civil, criminal, or administrative action, suit, litigation, Claim, cause of action, investigation, arbitration, mediation, or other proceeding.

 

(mm)“RCI 2” shall have the meaning specified in the recitals.

 

(nn)“Schedule II Project Companies” shall have the meaning specified in Section 4.1(a).

 

(oo)“Schedule II Project Companies Conversion Amount” shall have the meaning specified in Section 4.1(a).

 

 

 

(pp)“Schedule III Project Companies” shall have the meaning specified in Section 4.1(c).

 

(qq)“Schedule III Project Companies Conversion Amount” shall have the meaning specified in Section 4.1(c).

 

(rr)“Schedule IV Project Companies” shall have the meaning specified in Section 4.1(d).

 

(ss)“Schedule IV Project Companies Conversion Amount” shall have the meaning specified in Section 4.1(d).

 

(tt)“Schedule V Project Companies” shall have the meaning specified in Section 4.1(e).

 

(uu)“Settlement Payment” shall have the meaning specified in Section 3.2

 

(vv)“SEMI” means Semiur Montajes Industriales S.A.

 

(ww)“SEMI Claim” means any and all Claims of the Uruguay Project Companies or any of their Affiliated companies against SEMI.

 

(xx)“Shortfall Amount” shall have the meaning specified in Section 4.1(e).

 

(yy)“SIE” shall have the meaning specified in the preamble.

 

(zz)“SSH” shall have the meaning specified in the preamble.

 

(aaa)“Sky Solar Defendants” shall have the meaning specified in the recitals.

 

(bbb)“Sky Solar Japan” means Sky Solar Japan, KK.

 

(ccc)“Sky Solar Japanese Costs Party” shall have the meaning specified in Section 12.1(b).

 

(ddd)Sky Solar Parties” shall have the meaning specified in the preamble.

 

(eee)“Sky Solar Releasees” subject to additional released parties included in the Definitive Agreements, means each of the Sky Solar Parties and each of their current or former Affiliates (including, for the avoidance of doubt, Lumens 1 and the Schedule II Project Companies), general and limited partners, parent companies, subsidiaries, shareholders, and “controlling persons” (within the meaning of the U.S. federal securities laws), together with their respective predecessors, successors, assigns and current and former officers, directors, employees, agents, attorneys, representatives, advisors, and any other person or entity acting or purporting to act on behalf of any of the foregoing Persons; provided however, ECI, RCI 2, the Uruguay Project Companies, the Schedule II Project Companies, the Schedule III Project Companies, and the Schedule IV Project Companies shall not be and shall not be deemed to be Sky Solar Releasees.

 

 

 

(fff)“Sky Solar Releasors” subject to additional released parties included in the Definitive Agreements, means each of the Hudson Parties and each of their current or former Affiliates, general and limited partners, parent companies, subsidiaries, shareholders, and “controlling persons” (within the meaning of the U.S. federal securities laws), together with their respective predecessors, successors, assigns, and current and former officers, directors, employees, agents, attorneys, representatives, advisors, and any other person or entity acting or purporting to act on behalf of any of the foregoing Persons; Persons; provided however, ECI, RCI 2, the Uruguay Project Companies, the Schedule II Project Companies, the Schedule III Project Companies, and the Schedule IV Project Companies shall not be and shall not be deemed to be Sky Solar Releasors.

 

(ggg)“Sponsor Support and Share Retention Agreement” means that certain Sponsor Support and Share Retention Agreement dated as of November 22, 2016, among SSH, the Uruguay Project Companies, and IDB

 

(hhh)“Subsidiary” means, in relation to any Person, any entity which is Controlled directly or indirectly by that Person.

 

(iii)“Transactions” means the transactions contemplated by this Agreement and each of the Transaction Documents.

 

(jjj)“Transaction Documents” means this Agreement and each of the Definitive Agreements.

 

(kkk)“Uruguay Project Companies Conversion Amount” shall have the meaning specified in Section 4.1(b).

 

(lll)“Uruguay Project Companies” means each of Giacote S.A., Dicano S.A., Fenima S.A., Petilcoran S.A., and Raditon S.A.

 

(mmm)“Uruguay Project Companies Payment” shall have the meaning specified in Section 5.2(a).

 

1.2Rules  of  Interpretation.Unless  expressly  provided  for  elsewhere  in  this Agreement, this Agreement shall be interpreted in accordance with the following provisions:

 

(a)the words “this Agreement,” “herein,” “hereby,” “hereunder,” “hereof,” and other equivalent words shall refer to this Agreement as an entirety and not solely to the particular portion, article, section, subsection or other subdivision of this Agreement in which any such word is used;

 

(b)examples are not to be construed to limit, expressly or by implication, the matter they illustrate;

 

(c)the word “including” and its derivatives means “including without limitation” and is a term of illustration and not of limitation;

 

(d)all definitions set forth herein shall be deemed applicable whether the words defined are used herein in the singular or in the plural and correlative forms of defined terms shall have corresponding meanings;

 

 

 

(e)the word “or” is not exclusive, and has the inclusive meaning represented by the phrase “and/or”;

 

(f)a defined term has its defined meaning throughout this Agreement and each exhibit and schedule to this Agreement, regardless of whether it appears before or after the place where it is defined;

 

(g)all references to prices, values, or monetary amounts refer to United States dollars;

 

(h)wherever used herein, any pronoun or pronouns shall be deemed to include both the singular and plural and to cover all genders;

 

(i)the captions of the articles, sections or subsections appearing in this Agreement are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or extent of such section, or in any way affect this Agreement;

 

(j)any references herein to a particular section, exhibit, or schedule means a section of, or an exhibit or schedule to, this Agreement unless otherwise expressly stated herein;

 

(k)the exhibits and schedules attached hereto are incorporated herein by reference and shall be considered part of this Agreement;

 

(l)unless otherwise specified herein, all accounting terms used herein shall be interpreted, and all determinations with respect to accounting matters hereunder shall be made, in accordance with GAAP, applied on a consistent basis;

 

(m)all references to days shall mean calendar days unless otherwise provided;

 

(n)all references to time shall mean New York City time; and

 

(o)references to any Person shall include such Person’s successors and permitted assigns.

 

Section 2.Representations, Warranties, Stipulations

 

2.1 Representations and Warranties. Each of the Parties to this Agreement severally for itself alone hereby makes the following representations and warranties; provided, however, the representation and warranty set forth in Section 2.1(c) hereof is made by each of the Sky Solar Parties severally for itself alone and is not made by Hudson Solar:

 

(a)It is duly organized, existing and in good standing, under the laws of the jurisdiction of its formation or incorporation.

 

(b)It has full power and authority to conduct its business and to enter into and perform each of the Transaction Documents to which it is a party. This Agreement has been, and each of the other Transaction Documents to which it is a party will be, duly executed and delivered by its duly authorized officers, and, for the avoidance of any doubt, the Sky Solar Parties’ entry into this Agreement shall have been approved by the board of directors of SSH. Each of the Transaction Documents to which such Party is a party constitutes and will constitute a valid and legally binding obligation of it, enforceable against it in accordance with their 

 

 

respective terms (except to the extent that enforcement may be affected by laws relating to bankruptcy, reorganization, insolvency and creditors’ rights and by the availability of injunctive relief, specific performance, and other equitable remedies). All actions on the part of it and its officers, directors, partners, members and shareholders, as applicable, which are necessary to authorize and approve this Agreement, the other Transaction Documents, and the Transactions, including, without limitation, any actions required by Law, including federal and state securities laws, have been or will be taken, including components of the Transactions occurring on the Closing Date, and no other or further act or Proceeding on its part or other act of or by its officers, directors, partners, members or shareholders is necessary to authorize or approve this Agreement, any other Transaction Document, the Transactions, or any component thereof.

 

(c)All documents, reports or other factual information (taken as a whole) furnished by or on behalf of any Sky Solar Party, or any Affiliate of a Sky Solar Party, in writing to Hudson Solar or HSM in respect of the Equity Conversion Project Companies are true, accurate and complete (or, in the case of the Uruguay Project Companies, are, to the knowledge of the Sky Solar Parties after due inquiry, true, accurate and complete) in all material respects as of the date on which such information is dated or certified and do not contain (or, in the case of the Uruguay Project Companies, to the knowledge of the Sky Solar Parties after due inquiry, true, accurate and complete, do not contain) any untrue statement or omit any factual information that would be necessary to make such information (taken as a whole) not misleading in any material respect at such time. Nothing has occurred since the delivery of such information that renders all or any part of such factual information untrue, inaccurate, or incomplete in a manner that would be reasonably likely to materially and adversely affect the decision of a Person considering whether to enter in to this Agreement and the transactions contemplated hereby and in the Definitive Agreements.

 

(d)No consent, authorization, Order or approval of, or filing or registration with, any Governmental Authority or other person is required for the execution and delivery of the Transaction Documents by it or the consummation by it of the transactions contemplated by the Transaction Documents.

 

(e)Neither the execution or delivery of the Transaction Documents by it, nor the consummation by it of the Transactions, will conflict with or result in a breach of (i) any of the terms, conditions or provisions of such ‘Person’s articles or certificate of incorporation, by-laws or other applicable organizational documents, if any, (ii) of Law, (iii) any Order, or (iv) any agreement or instrument between it and any third party or any Party.

 

(f)There does not now exist any fact, event, or circumstance which would make any of the representations and warranties contained herein or in the other Transaction Documents untrue or incorrect on and as of the date hereof. Each of the Parties hereby agrees and acknowledges that all such representations and warranties, as applicable to such Party, set forth in the other Transaction Documents, are by this reference deemed to have been incorporated in and made a part of this Agreement, as fully as though such representations and warranties were set forth herein and shall be deemed made to each of the Parties hereto.

 

Section 3.Payments to Hudson Solar

 

3.1 Expense Reimbursement. At Closing the Sky Solar Parties shall pay or cause to be paid to Hudson Solar $ 4,912,822 (the “Expense Reimbursement Payment”), which amount shall be subject to netting and set off as provided in Section 15.15. Prior to the Closing the Sky 

 

 

Solar Parties shall be entitled to review evidence (with such redactions or summaries as may be required to preserve attorney client privilege) of the amounts included within the Expense Reimbursement Payment. For the avoidance of doubt, the Expense Reimbursement Payment is subject to satisfaction of the conditions contained in Section 6 of this Agreement and the occurrence of the Closing.

 

3.2 Settlement Payment . At Closing the Sky Solar Parties shall pay or cause to be paid to Hudson Solar $14,897,271 (the “Settlement Payment”), which amount shall be subject to netting and set off as provided in Section 15.15. For the avoidance of doubt, the Settlement Payment is subject to the satisfaction of the conditions contained in Section 6 of this Agreement and the occurrence of the Closing.

 

Section 4.Equity Conversion

 

4.1 Equity Conversion Transactions. On the Closing Date, the Parties shall consummate the following transactions (the “Equity Conversion Transactions”) consistent with the definitive agreement or agreements (the “Equity Conversion Definitive Agreements”) to be entered into between the Parties or Affiliates of the Parties in respect of such transactions:

 

(a)$6,834,146, subject to the Net Working Capital Adjustment (the “Schedule II Project Companies Conversion Amount”) of the total outstanding principal amount of the Notes issued to Hudson Solar pursuant to the NPA, which as of the date hereof is $54,629,006 (the “Outstanding Note Balance”), will convert into direct or indirect 49.9% equity interests in project companies (or one or more holding companies owning such project companies) in the so-called “Sunpeak” portfolio as set forth in the schedule attached hereto as Schedule II (the “Schedule II Project Companies”), in accordance with a procedure to be set forth in greater detail in the Equity Conversion Definitive Agreements;

 

(b)$15,947,502 subject to the Net Working Capital Adjustment (the “Uruguay Project Companies Conversion Amount”), of the Outstanding Note Balance, representing 49.9% direct or indirect interest of the agreed equity value of the Uruguay Project Companies, shall be deemed fully and irrevocably discharged by Hudson Solar, and Hudson Solar shall in respect of such discharge retain direct or indirect 49.9% equity interests the Uruguay Project Companies;

 

(c)$4,547,160, subject to the Net Working Capital Adjustment (the “Schedule III Project Companies Conversion Amount”), of the Outstanding Note Balance shall be converted into direct or indirect 49.9% equity interests in project companies (or one or more holding companies owning such project companies) located in the Czech Republic as set forth in the schedule attached hereto as Schedule III (the “Schedule III Project Companies”), in accordance with a procedure to be set forth in greater detail in the Equity Conversion Definitive Agreements;

 

 

 

(d)$3,156,190, subject to the Net Working Capital Adjustment (the “Schedule IV Project Companies Conversion Amount”, and together with the Schedule II Project Companies Conversion Amount, the Uruguay Project Companies Conversion Amount, the Schedule III Project Companies Conversion Amount, the “Non-Japanese Assets Conversion Amount”), of the Outstanding Note Balance shall be converted into direct or indirect 49.9% equity interests in project companies (or one or more holding companies owning such project companies) located in Chile as set forth in the schedule attached hereto as Schedule IV (the “Schedule IV Project Companies”), in accordance with a procedure to be set forth in greater detail in the Equity Conversion Definitive Agreements;

 

(e)the remaining Outstanding Note Balance after such amount is reduced by the Schedule II Project Companies Conversion Amount, the Uruguay Companies Conversion Amount, the Schedule III Project Companies Conversion Amount, and the Schedule IV Project Companies Conversion Amount, which outstanding balance totals $24,144,008 subject to the Net Working Capital Adjustments in (a) - (d) above (the “Shortfall Amount”), shall be converted into direct or indirect equity interests with a value corresponding to the Shortfall Amount and representing no more than 49.9% of the equity interests in project companies (or one or more holding companies owning such project companies) located in Japan that own the Japanese project assets indicated in the schedule attached hereto as Schedule V, and in accordance with a procedure to be set forth in greater detail in the Equity Conversion Definitive Agreements (such project companies, the “Schedule V Project Companies” together with the Schedule II Project Companies, the Schedule III Project Companies, the Schedule IV Project Companies, and the Uruguay Project Companies, the “Equity Conversion Project Companies”).

 

4.2 Negotiation. The Parties agree to negotiate the Equity Conversion Definitive Agreements and all other Definitive Agreements in good faith and use their best efforts, including by providing reasonable and timely access to relevant individuals, information, and documents in their possession or control, to finalize such agreements on or prior to the Longstop Date.

 

Section 5.Majority Acquisitions by HSM

 

5.1 Majority Acquisitions of the Equity Conversion Project Companies. On the Closing Date, HSM or an Affiliate of HSM will acquire, pursuant to definitive agreements to be reached between HSM and the Sky Solar Parties (the “Majority Acquisitions Definitive Agreements”), equity interests in the Equity Conversion Project Companies listed in (a) - (c) below (the “Majority Acquisitions”) for the anticipated total purchase price of $16,628,134 (the “Majority Acquisitions Consideration”) subject to the Net Working Capital Adjustment in the following percentages of the total equity of such companies:

 

(a)the Schedule II Project Companies: 50.1%;

 

(b)the Schedule III Project Companies: 50.1%; and

 

(c)the Schedule IV Project Companies: 50.1%.

 

 

 

The amount of Majority Acquisitions Consideration attributable to each group of Equity Conversion Project Companies listed in (a) – (c) above is set forth on Exhibit 2.

 

5.2Uruguay Project Companies.

 

(a)On the Closing Date, HSM shall cause $21,060,280, subject to the Net Working Capital Adjustment (the “Uruguay Project Companies Payment”) to be paid to SSH or its designee, which amount is the sum of: (i) the parties’ agreed value of 36.83% of the equity interests in the Uruguay Project Companies; (ii) 86.73% of $4,625,003, representing the present value, using an annual discount rate of 9.5% for a period of one year, of $5,064,379 to be received upon the Final Acceptance Date; (iii) $2,000,000, representing the value of the LC Funds under the HSBC LC; and (iv) 36.83% of 60.0% of an assumed $1,700,000 of recovery from the SEMI Claim. The amount of the Uruguay Project Companies Payment attributable to the Uruguay Project Companies is set forth on Exhibit 2.

 

5.3 Minimum Transaction Consideration . Notwithstanding anything to the contrary in this Agreement, the Definitive Agreements and the Funds Flow Memorandum, at Closing HSM or an Affiliate of HSM shall pay or cause to be paid to the Sky Solar Parties the greater of the Majority Acquisitions Consideration or the total consideration amount (after all netting and setting off) due to the Sky Solar Parties outlined in the Funds Flow Memorandum for the Majority Acquisitions in immediately available funds by wire transfer to an account designated by the Sky Solar Parties no later than three (3) Business Days prior to the Closing Date to consummate the Transactions; provided, however, that the value of the equity interests in the Equity Conversion Project Companies transferred to HSM pursuant to the Majority Acquisitions Definitive Agreements shall be, as confirmed by HSM by the confirmatory due diligence on the Equity Conversion Project Companies to be performed between the execution of this Agreement and the Closing, equal to or greater than the Majority Acquisitions Consideration.

 

5.4 Negotiation. The Parties agree to negotiate the Majority Acquisitions Definitive Agreements and all other Definitive Agreements in good faith and use their best efforts, including by providing reasonable and timely access to relevant individuals, information, and documents in their possession or control, to finalize such agreements on or prior to the Longstop Date.

 

Section 6.Conditions

 

6.1 Conditions to Closing. The obligations of each Party to effect the closing of the Transactions (the “Closing”) are subject to the satisfaction or express written waiver by each of the Parties of the following conditions:

 

(a)this Agreement and each of the other Transaction Documents has been executed and delivered to the Parties to this Agreement and all required approvals have been received;

 

(b)all conditions precedent to the closing of the Equity Conversion Transactions have been either satisfied or waived consistent with the Equity Conversion Definitive Agreements;

 

 

 

(c)all conditions precedent to the closing of the Majority Acquisitions have been either satisfied or waived consistent with the Majority Acquisitions Definitive Agreements;

 

(d)Hudson Solar or Hudson Global Finance shall have procured the issuance of a replacement letter of credit acceptable to IDB and shall have procured that the LC Funds have been returned to RCI 2 or, alternatively, if no such replacement letter of credit has been issued by the Closing Date, RCI 2 and Jeylaw shall have entered into such agreement or agreements as necessary and appropriate (which agreement or agreements shall be in form and substance acceptable to RCI 2) to ensure that the LC Funds when released are either transferred directly to RCI 2 or otherwise held in trust for RCI 2 and promptly transferred to RCI 2 and no other party;

 

(e)HSM (or an Affiliate of HSM) shall have successfully closed on financing sufficient to fund the Uruguay Project Companies Payment;

 

(f)Hudson Solar shall have completed its legal, tax, accounting and business due diligence on the Equity Conversion Project Companies (including for the avoidance of doubt due diligence necessary to confirm the accuracy of the assumptions used to arrive at an agreed value of 49.9% of the Schedule V Project Companies that is greater or equal to the Shortfall Amount) and the structure of the Equity Conversion Transactions and the results thereof shall be satisfactory to Hudson Solar;

 

(g)each of the representations and warranties of the parties set forth in this Agreement shall continue to be true and correct in all material respects;

 

(h)no Order restraining or prohibiting the consummation of the Transactions contemplated hereby or contemplated by the other Transaction Documents shall be in effect;

 

(i)from September 30, 2019, to the Closing Date, none of the Equity Conversion Project Companies shall have made any dividend, distribution, or other payment to any Sky Solar Party or any Affiliate of a Sky Solar Party or to any other third-party outside of the ordinary course of business;

 

(j)no Proceedings which would reasonably be expected to restrain or prohibit the consummation of the transactions contemplated hereby or by the other Transaction Documents;

 

(k)no Law shall have been promulgated or enacted that would prevent or make illegal the consummation of the transactions contemplated hereby or by the other Transaction Documents;

 

(l)the Parties have not commenced any Proceedings whatsoever against each other and there are no outstanding Proceedings against each other;

 

(m)the Parties shall have executed an Uruguay earn-out agreement, which shall set forth, among other things, the manner in which the Sky Solar Parties will be compensated by the Hudson Parties for the Uruguay Project Companies achieving certain performance metrics and which agreement shall be finalized subject to the agreed principles set forth in Exhibit 3 hereto.

 

 

 

(n)Hudson Solar shall have withdrawn or dismissed the Action and shall have withdrawn or cancelled the Lumens Auction.

 

Section 7.Tax Matters

 

7.1 The Parties agree to work together in good faith from the date hereof, together with their respective tax and legal advisors, to ensure that the Equity Conversion Transactions and the Majority Acquisitions are structured in a manner to maximize tax efficiencies for all Parties.

 

Section 8.Releases

 

8.1Sky Solar Releases; Covenants Not to Sue

 

(a)The effectiveness of Sections 8.1(a) – (g) is subject to the satisfaction of the conditions contained in Section 6 of this Agreement and the occurrence of the Closing.

 

(b)In exchange for good and valuable consideration set forth herein and in the other Transaction Documents, each of the Sky Solar Releasors, upon the occurrence of the Closing, releases, acquits, and forever discharges each of the Hudson Releasees of and from any and all Claims against the Hudson Releasees based in whole or in part on facts and events arising up to and including the Closing Date; provided, however, nothing in this Agreement shall be construed to constitute a release of, or a covenant not to sue in respect of any Claims arising from breach of, or with respect to enforcement of, this Agreement or any of the other Transaction Documents. For the avoidance of any doubt, and without limitation, the release contained in this Section 8.1 includes a release of any and all Claims allegedly held by SIE against ECI on account of the Alleged Payable (as defined in the Affidavit of Neil Z. Auerbach in Support of Motion for Summary Judgment in Lieu of Complaint sworn to on February 8, 2019, and filed in the Action).

 

(c)Each of the Sky Solar Parties, on behalf of itself and each of the other Sky Solar Releasors, hereby agree and covenant that each of the Sky Solar Releasors will forever refrain and forbear from commencing, instituting, or prosecuting any Proceeding against any Hudson Releasee based on, arising out of, or connected with any of the Claims released pursuant to this Agreement. Each of the Sky Solar Parties, on behalf of themselves and each of their other Sky Solar Releasors further agree that if any Sky Solar Releasor hereafter commences, joins in, or in any manner seeks relief through any suit arising out of, based upon, or relating to any Claim released hereunder, or in any manner asserts against any Hudson Releasee any Claim released hereunder, then the Sky Solar Releasor shall pay to the applicable Hudson Releasee, in addition to any other damages caused to that Party thereby, all reasonable attorneys’ fees incurred by the applicable Hudson Releasee in defending or otherwise responding to such a suit or such assertion of any Claim released hereunder. Notwithstanding the foregoing or anything to the contrary herein or in Section 11, the Sky Solar Releasors shall not be obligated to pay damages or attorneys’ fees of Hudson Releasees in connection with responding to any document production request, deposition notice, request by a Governmental Authority, subpoena or Order as required by Law (so long as no such request, notice, subpoena or Order results from a breach of or failure to comply with Section 8 hereof by such Sky Solar Releasor). Should any Sky Solar Releasor receive notice of a document production request, deposition notice, request by a Governmental Authority, subpoena or Order calling for disclosure of information or testimony relating to any Claim released hereunder, each of them agrees, to the extent permitted by Law, to notify each 

 

 

Hudson Party in writing pursuant to the notice provisions of Section 15.5 hereof, and to provide to such Parties a copy of such document production request, deposition notice, request by a Governmental Authority, subpoena or Order, within five (5) Business Days of receipt of such notice.

 

(d)Each Sky Solar Party, on behalf of itself and each of the other Sky Solar Releasors, represents and warrants that, as of the date hereof through to and including the Closing Date, it has no knowledge of any Claims, potential or otherwise, that they or any third party claiming by, through, or under them, may have against any Hudson Releasee except those Claims released hereunder by the Releasors.

 

(e)Each Sky Solar Party, on behalf of itself and each of the other Sky Solar Releasors, acknowledges and agrees that the releases contained in this Agreement extend to Claims that the Sky Solar Releasors do not know or suspect to exist at the time of the Closing Date, which, if known, might have affected their decision to enter into this Agreement.

 

(f)Each Sky Solar Party, on behalf of itself and each of the other Sky Solar Releasors, acknowledges and agrees that the Releasors are giving up any rights otherwise available to them under the provisions of Section 1542 of the California Civil Code (the “CA Code”), which provides:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

(g)Each Sky Solar Party, on behalf of itself and each of the other Sky Solar Releasors, represents that it understands, and has had the opportunity to consult with counsel regarding the importance, meaning and legal effect of Section 1542 of the CA Code, this Agreement, and each of the Transaction Documents.

 

8.2 Sky Solar Indemnity. The Sky Solar Parties each hereby agree that they are jointly and severally obligated to indemnify and hold each of the Hudson Releasees harmless with respect to any and all liabilities, obligations, losses, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever incurred by the Hudson Releasees, or any of them, whether direct, indirect or consequential, as a result of or arising from or relating to any Proceeding by or on behalf of any Sky Solar Releasor in respect of any Claim released pursuant to Section 8.1; provided, however, the Sky Solar Parties shall not have any obligation to indemnify or hold harmless any Hudson Releasee hereunder with respect to liabilities to the extent they result from the gross negligence or willful misconduct of that Hudson Releasee as finally determined by a court of competent jurisdiction. If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Sky Solar Parties agree to make the maximum contribution to the payment and satisfaction thereof that is permissible under applicable law. The effectiveness of this Section 8.2 is subject to the satisfaction of the conditions contained in Section 6 of this Agreement and the occurrence of the Closing. The foregoing indemnity shall survive the Closing.

 

 

 

8.3Hudson Releases; Covenants Not to Sue

 

(a)The effectiveness of Sections 8.3(a) – (g) is subject to the satisfaction of the conditions contained in Section 6 of this Agreement and the occurrence of the Closing.

 

(b)In exchange for good and valuable consideration set forth herein and in the other Transaction Documents, each of the Hudson Releasors, upon the occurrence of the Closing, releases, acquits, and forever discharges each of the Sky Solar Releasees of and from any and all Claims against the Sky Solar Releasees based in whole or in part on facts and events arising up to and including the Closing Date; provided, however, nothing in this Agreement shall be construed to constitute a release of, or a covenant not to sue in respect of any Claims arising from breach of, or with respect to enforcement of, this Agreement or any of the other Transaction Documents. For the avoidance of doubt, the effectiveness of this Section 8.2 is subject to the satisfaction of the conditions contained in Section 6 of this Agreement and the occurrence of the Closing.

 

(c)Each of the Hudson Parties, on behalf of itself and each of the other Hudson Releasors, hereby agree and covenant that each of the Hudson Releasors will forever refrain and forbear from commencing, instituting, or prosecuting any Proceeding against any Sky Solar Releasee based on, arising out of, or connected with any of the Claims released pursuant to this Agreement. Each of the Hudson Parties, on behalf of itself and each of their other Hudson Releasors, further agree that if any Hudson Releasor hereafter commences, joins in, or in any manner seeks relief through any suit arising out of, based upon, or relating to any Claim released hereunder, or in any manner asserts against any Sky Solar Releasee any Claim released hereunder, then such Hudson Releasors shall pay to the applicable Sky Solar Releasee, in addition to any other damages caused to that Party thereby, all reasonable attorneys’ fees incurred by the applicable Sky Solar Releasee in defending or otherwise responding to such a suit or such assertion of any Claim released hereunder. Notwithstanding the foregoing or anything to the contrary herein or in Section 11, the Hudson Releasors shall not be obligated to pay damages or attorneys’ fees of Sky Solar Releasees in connection with responding to any document production request, deposition notice, request by a Governmental Authority, subpoena or Order as required by Law (so long as no such request, notice, subpoena or Order results from a breach of or failure to comply with Section 8 hereof by such Hudson Releasor). Should any Hudson Releasor receive notice of a document production request, deposition notice, request by a Governmental Authority, subpoena or Order calling for disclosure of information or testimony relating to any Claim released hereunder, each of them agrees, to the extent permitted by Law, to notify each Sky Solar Party in writing pursuant to the notice provisions of Section 15.5 hereof, and to provide to such Parties a copy of such document production request, deposition notice, request by a Governmental Authority, subpoena or Order, within five (5) Business Days of receipt of such notice.

 

(d)Each Hudson Party, on behalf of itself and each of the other Hudson Releasors, represents and warrants that, as of the date hereof through to and including the Closing Date, it has no knowledge of any Claims, potential or otherwise, that they or any third party claiming by, through, or under them, may have against any Sky Solar Releasee except those Claims released hereunder by the Hudson Releasors.

 

 

 

(e)Each Hudson Party, on behalf of itself and each of the other Hudson Releasors, acknowledges and agrees that the releases contained in this Agreement extend to Claims that the Hudson Releasors do not know or suspect to exist at the time of the Closing Date, which, if known, might have affected their decision to enter into this Agreement.

 

(f)Each Hudson Party, on behalf of itself and each of the other Hudson Releasors, acknowledges and agrees that the Hudson Releasors are giving up any rights otherwise available to them under the provisions of Section 1542 of the CA Code, which provides:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

(g)Each Hudson Party, on behalf of itself and each of the other Hudson Releasors, represents that it understands, and has had the opportunity to consult with counsel regarding the importance, meaning and legal effect of Section 1542 of the CA Code, this Agreement, and each of the Transaction Documents.

 

8.4 Hudson Indemnity. Each Hudson Party hereby agrees that they are jointly and severally obligated to indemnify and hold each of the Sky Solar Releasees harmless with respect to any and all liabilities, obligations, losses, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever incurred by the Sky Solar Releasees, or any of them, whether direct, indirect or consequential, as a result of or arising from or relating to any proceeding by or on behalf of any Hudson Releasor in respect of any Claim released pursuant to section 8.3; provided, however, no Hudson Party shall have any obligation to indemnify or hold harmless any Sky Solar Releasee hereunder with respect to liabilities to the extent they result from the gross negligence or willful misconduct of that Sky Solar Releasee as finally determined by a court of competent jurisdiction. If and to the extent that the foregoing undertaking may be unenforceable for any reason, each Hudson Party agrees to make the maximum contribution to the payment and satisfaction thereof that is permissible under applicable law. The effectiveness of this Section 8.4 is subject to the satisfaction of the conditions contained in Section 6 of this Agreement and the occurrence of the Closing. The foregoing indemnity shall survive the Closing.

 

Section 9.New York State Litigation

 

9.1 Without Prejudice Dismissal of Litigation . No later than the next Business Day following the date of this Agreement, Hudson Solar and the Sky Solar Defendants shall jointly and voluntarily discontinue the Action without prejudice pursuant to NY C.P.L.R. 3217(a)(2).

 

 

 

Section 10.Termination

 

10.1 Termination and Effect Thereof. If any condition to the occurrence of the Closing set forth in Section 6 has not been satisfied or waived in accordance with this Agreement on or prior to the Longstop Date, this Agreement shall automatically terminate and have no further force or effect (the date of any such termination, the “Termination Date”), provided that, any such termination shall not affect this Section 10.1, 11, 15.2, 15.3, 15.4, 15.5, 15.7, 15.10, 15.11, 15.12 and 15.16, which provisions shall continue in force after such termination. The termination of this Agreement shall otherwise result in the Agreement being no longer effective and the rights of all Parties, including all rights of the Parties to further prosecute or defend the Action, shall be restored to the status quo ante. Specifically, but without limitation, on and after the Termination Date, Hudson Solar shall be entitled to pursue any and all Claims against the Sky Solar Parties, including for payment of any and all Obligations under the Notes and the other Note Purchase Documents, and the Sky Solar Parties shall be entitled to pursue any and all Claims against Hudson Solar, Hudson Global Finance, or HSM, in one or more Proceedings in any jurisdiction, including by commencing a new action against each other in the New York Court or take any other action available to the Parties in law or equity.

 

Section 11.Confidentiality; No Admission

 

11.1 Confidentiality. Except to the extent that disclosure is required to implement the terms of this Agreement or to comply with legal or regulatory requirements binding on a Party, or to the extent SSH or Hudson Solar as applicable gives its prior written consent that the relevant Party may disclose the existence or contents of this Agreement, the Parties agree to keep the existence and contents of this Agreement strictly confidential.

 

11.2 No Admission. This Agreement and the terms of settlement and release contained herein represent a compromise of disputed claims, and the negotiations, discussions, and communications in connection with or leading up to an including this Agreement are not and shall not be construed as admissions or concession by any Party, either as to any liability or wrongdoing or as to the merits or quantum of any Claim. Neither the existence of this Agreement nor any of its provisions shall be offered into evidence by any Party hereto in any Proceeding as an admission or concession of liability or wrongdoing.

 

Section 12.Agreements Related to Schedule V Project Companies

 

12.1 Japanese Project Companies Agreements. At the Closing, the Schedule V Project Companies shall enter into such agreements (the “Japanese Project Companies Agreements”) as necessary to reflect, among other things, the following agreements among the Parties:

 

(a)From and after the Closing Date:

 

(i)Hudson Solar shall have full power and authority to investigate and procure proposals for new project finance debt or the re-financing of existing project finance debt in respect of each of the Schedule V Project Companies with, in each case, a debt service coverage ratio of 1.35x or less and a Japanese Yen interest rate of <2.00% (the “Japanese Financing Terms”).

 

 

 

(ii)Hudson Solar shall promptly notify the Sky Solar Parties (or its Affiliates, as applicable) of its investigating and/or procuring of any proposals for new project finance debt or the re-financing of existing project finance debt in respect of each of the Schedule V Project Companies under (i) above and Hudson Solar shall provide information in connection with (i) above as may be requested by the Sky Solar Parties (or its Affiliates).

 

(iii)The Sky Solar Parties shall undertake to provide Hudson Solar with prompt access to all financial and operational diligence required for the purpose of identifying such financing proposals under (i) above.

 

(iv)Subject to the Sky Solar Parties’ (or its Affiliates’, as applicable) consent (not to be unreasonably withheld), if Hudson Solar presents one or more financing proposals to the Sky Solar Parties (or its Affiliates, as applicable) that incorporate the Japanese Financing Terms, or such other terms that result in materially similar economics, for the relevant Schedule V Project Companies, the Parties shall cause the relevant Schedule V Project Companies to take all actions necessary to authorize and consummate such financing proposals.

 

(b)At Closing, each of the Schedule V Project Companies shall enter into agreements, which shall be in form and substance acceptable to Hudson Solar and the Sky Solar Parties (and its Japan Affiliates), pursuant to which Sky Solar Japan (or an Affiliate of Sky Solar Japan) (in such capacity, the “Sky Solar Japanese Costs Party”) shall undertake to pay directly and on behalf of each of the Schedule V Project Companies all of the operations and maintenance, asset management, and special purpose company costs of each such company (collectively, the “Japanese Operating Costs”).

 

(c)Hudson Solar or its designated Affiliate holding the equity interests of the Schedule V Project Companies following the equity conversion contemplated by Section 4.1(e) (the “HS Japanese Holding Company”) shall enter into one or more agreements with the Sky Solar Parties (or Japan Affiliate(s) of the Sky Solar Parties) providing that any dividend to be paid to the HS Japanese Holding Company on account of interests in the Schedule V Project Companies shall be subject to one or more holdbacks equal in the aggregate to the HS Japanese Costs Holdback Amount . Dividends held back as contemplated by this Section 12.1(c) shall be paid directly or indirectly to the Sky Solar Japanese Costs Party in consideration of its payment of the Japanese Operating Costs; provided, however, the Sky Solar Japanese Costs Party shall only be entitled to receive an amount equal to the HS Japanese Costs Holdback Amount once each 365-day period from and following the Closing Date and no holdback shall be made on dividends to the HS Japanese Holding Company once sufficient holdbacks have been made to satisfy the obligation to pay an amount equal to the HS Japanese Costs Holdback Amount for a given 365-day period.

 

Section 13.Post-Closing Adjustments

 

13.1 Net Working Capital Adjustment. Each of the conversion amounts and payment amounts set forth in Section 4 and Section 5 hereof shall be subject to the following adjustment mechanism after the Closing (the “Net Working Capital Adjustment”):

 

(a)The Parties acknowledge and agree that the conversion amounts and payment amounts set forth in Section 4 and Section 5 are based on the Financial Model, which 

 

 

model is based on financial statements provided by the Sky Solar Parties as of August 31, 2019. The Parties’ further acknowledge and agree that the foregoing conversion amounts and payment amounts are intended to reflect the Net Working Capital of each of the Equity Conversion Project Companies as of the Cutoff Date but that financial statements as of the Cutoff Date were not made available to the Hudson Parties prior to the execution of this Agreement. Promptly following the execution of this Agreement, but no later than seven (7) Business Days following the date hereof, the Sky Solar Parties shall deliver financial statements for each of the Equity Conversion Project Companies as of the Cutoff Date. Promptly thereafter, the Financial Model and the conversion amounts and payment amounts set forth in Section 4 and Section 5 of this Agreement shall be modified to reflect the updated financial information set forth in the Cutoff Date balance sheets.

 

(b)No later than five (5) Business Days prior to the date that is scheduled by the Parties as the Closing Date, the Sky Solar Parties shall deliver to the Hudson Parties the Estimated Statement of Net Working Capital, which will include their estimates of Net Working Capital for each of the Equity Conversion Project Companies as of the Closing Date. In the event that the Net Working Capital reflected in the Financial Model exceeds the Net Working Capital reflected in the Estimated Statement of Net Working Capital, then the relevant conversion amounts or payment amounts, as applicable, will be adjusted upward in an amount equal to such excess. In the event that the Net Working Capital reflected on the Estimated Statement of Net Working Capital exceeds the Net Working Capital reflected on the Financial Model, then the relevant conversion amounts or payment amounts, as applicable, will be adjusted downward in an amount equal to such excess. Such adjustments will be reflected in the Funds Flow Memorandum, which shall be agreed by the Parties at least two (2) Business Days prior to the Closing Date.

 

(c)As promptly as practicable, but in any event within ninety (90) days following the Closing, the Hudson Parties will deliver to the Sky Solar Parties the Closing Statement of Net Working Capital. The Hudson Parties will also allow the Sky Solar Parties and any of their representatives, full access to the books and records of the Equity Conversion Project Companies, the personnel of, and work papers prepared by, the Hudson Parties or their representatives, in each case, to the extent that they relate to the Closing Statement of Net Working Capital; provided, that such access will be in a manner that does not interfere with the normal business operations of the Hudson Parties or the Equity Conversion Project Companies.

 

(d)The Sky Solar Parties may dispute any amounts reflected on the Closing Statement of Net Working Capital by notice to the Hudson Parties in writing of each disputed item, within ninety (90) days of the Hudson Parties’ delivery of the Closing Statement of Net Working Capital. In the event of such a dispute, the Sky Solar Parties and the Hudson Parties will attempt to reconcile their differences. If the Sky Solar Parties and the Hudson Parties are unable to reach a resolution with such effect within thirty (30) days after the receipt by the Hudson Parties of the Sky Solar Parties’ written notice of dispute, the Sky Solar Parties and the Hudson Parties will submit the items remaining in dispute for resolution to an internationally recognized independent accounting firm mutually selected by the Parties (the “Independent Accounting Firm”), which will, within sixty (60) days after such submission, determine and report to the Sky Solar Parties and the Hudson Parties upon such remaining disputed items, and such report will be final, conclusive, and binding on the Sky Solar Parties and the Hudson Parties. The fees and disbursements of the Independent Accounting Firm will be allocated between the Sky Solar Parties and the Hudson Parties in the same proportion that the aggregate amount of such remaining disputed items so submitted to the Independent Accounting Firm that 

 

 

is unsuccessfully disputed by each such Party (as finally determined by the Independent Accounting Firm) bears to the total amount of such remaining disputed items so submitted. The Parties agree to execute, if requested by the Independent Accounting Firm, a reasonable engagement letter that is consistent with the terms of this Agreement.

 

(e)The Closing Statement of Net Working Capital will be deemed final for the purposes of this Section 13.1 upon the earliest of (x) the failure of the Sky Solar Parties to notify the Hudson Parties of a dispute within ninety (90) days of the Hudson Parties’ delivery of the Closing Statement of Net Working Capital; or (y) the resolution of all disputes, pursuant to Section 13.1(d), by the Sky Solar Parties and the Hudson Parties, or by the Independent Accounting Firm. Within three (3) Business Days of the Closing Statement of Net Working Capital being deemed final, an adjustment, which will be the net effect of the following adjustments, will be made:

 

(i)In the event that the Net Working Capital reflected on the Estimated Statement of Net Working Capital exceeds the Net Working Capital reflected on the Closing Statement of Net Working Capital as finally determined in accordance with this Section 13.1, then the Sky Solar Parties shall pay an amount equal to such excess (and in a pro-rated amount with respect to the portion of such amount attributable to the Schedule V Project Companies) to Hudson Solar or HSM (as applicable) by wire transfer in immediately available funds.

 

(ii)In the event that the Net Working Capital of the Uruguay Project Companies Schedule II Project Companies, the Schedule III project Companies, and the Schedule IV Project Companies reflected on the Closing Statement of Net Working Capital exceeds the Net Working Capital for those entities reflected on the Estimated Statement of Net Working Capital, then Hudson Solar or HSM (as applicable) shall pay the Sky Solar Parties an amount equal to such excess by wire transfer in immediately available funds; provided, however, to the extent any amount of excess Net Working Capital is attributable to accounts receivable, Hudson Solar’s obligation to pay the Sky Solar Parties as set forth in this Section 13.1(e)(ii) shall reflect that Hudson Solar is only obligated to make a cash payment on account the excess Net Work Capital attributable to such receivable or receivables upon their collection.

 

(iii)In the event that the Net Working Capital of the Schedule V Project Companies reflected on the Closing Statement of Net Working Capital exceeds the Net Working Capital of those entities reflected on the Estimated Statement of Net Working Capital, then, subject to a mechanism to be agreed and documented promptly between the Parties (the “Japanese NWC Adjustment Agreement”), the Sky Solar Parties shall be entitled to a priority distribution or right of payment from the relevant Schedule V Project Companies equal to the amount of such excess.

 

Section 14.Hudson Covenants

 

14.1 Highly Confident Letter. HSM (or an Affiliate of HSM) shall deliver to SSH in connection with the execution of this Agreement a highly confident letter (which may be redacted by HSM to protect against disclosure of any sensitive commercial information) from a reputable financial institution committing to provide financing sufficient to fund payment of the Majority Acquisitions Consideration.

 

14.2Lafemir Claim.

 

 

 

(a)To the extent that any of ECI, RCI 2, the Uruguay Project Companies or their respective Affiliates recover any funds on account of Claims held by such entities or held by the Sky Solar Parites against Lafemir (or any of its Affiliates) (such Claims, the “Lafemir Claims”), including, without limitation, pursuant to a consummated settlement of the Lafemir Claims or a final and unappealable order of a court of competent jurisdiction or arbitration tribunal, the relevant Uruguay Project Company or RCI 2 shall pay or cause to be paid to the Sky Solar Parties an amount equal to 70% of the net amount of any such recovery (after all reasonable and documented costs incurred in connection with the settlement or prosecution of the Lafemir Claims).

 

(b)If ECI, RCI 2, or any Hudson Party acquires Lafemir’s interests in the Uruguay Project Companies, such parties shall utilize a valid setoff mechanism in connection with such acquisition. ECI, RCI 2, or the purchasing Hudson Party shall exercise its valid rights of setoff, offset, or recoupment arising from the Lafemir Claims against the purchase price for such acquisition and, promptly upon the closing of such acquisition, or if such closing occurs prior to the Closing, on the Closing Date, ECI, RCI 2, or the Hudson Solar Party that effects the setoff, offset, or recoupment shall pay an amount in cash to the Sky Solar Parties equal to 70% of the amount of any such setoff, offset, or recoupment that had the effect of reducing the purchase price for Lafemir’s interests in the Uruguay Project Companies.

 

(c)For the avoidance of doubt, the obligation to make any payments contemplated by this Section 14.2 is subject to satisfaction of the conditions contained in Section 6 of this Agreement and the occurrence of the Closing. For the further avoidance of doubt, this Section 14.2 shall be excluded from the releases contained in Section 8 of this Agreement.

 

Section 15.Miscellaneous

 

15.1 Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

 

15.2 Governing Law. THIS AGREEMENT, THE RELATIONSHIP BETWEEN THE PARTIES HERETO AND ANY CLAIM OR DISPUTE (WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE) RELATING TO THIS AGREEMENT OR SUCH RELATIONSHIP SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW BUT EXCLUDING ANY OTHER CONFLICT OF LAW RULES THAT WOULD LEAD TO THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION.

 

15.3 Consent to Jurisdiction. By execution and delivery of this Agreement, the Parties irrevocably and unconditionally:

 

(a)submit to the exclusive jurisdiction of the New York State or U.S. Federal courts sitting in the Borough of Manhattan, City and County of New York, with respect any dispute arising out of or relating to this Agreement; and

 

(b)waives any objection to the courts referred to in paragraph (a) above on the grounds of inconvenient forum or otherwise with respect to any dispute arising out of or relating to this Agreement.

 

 

 

15.4 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDING BASED ON, RELATING TO, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY RELATING HERETO OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.

 

 

15.5 Notices. All notices and communications under this Agreement shall be in writing and delivered (i) in person, or (ii) by e-mail (delivery receipt requested) or (iii) by overnight express carrier, addressed as follows:

 

If to the Sky Solar Parties:

 

Sky Solar Holdings, Ltd.

Unit 417, 4th Floor, Tower Two Lippo Centre

89 Queensway, Admiralty, Hong Kong

Attn: Hao Wu

Email: hao.wu@skysolarholdings.com

 

With copy to:

 

Kirkland & Ellis LLP

26th Floor, Gloucester Tower, The Landmark

15 Queen’s Road Central, Hong Kong

Attn: Neil McDonald; Christopher Kochman

Email: neil.mcdonald@kirkland.com; Christopher.kochman@kirkland.com

 

Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

Attn: Josh Greenblatt, P.C.

Email: josh.greenblatt@kirkland.com

 

If to the Hudson Parties:

 

c/o Hudson Sustainable Investments, LLC

850 Third Avenue

Suite 1306

New York, NY 10003

Attn: Joseph Slamm

Email: joseph.slamm@hudsonsi.com

 

With copy to:

 

Allen & Overy LLP

1221 Avenue of the Americas

New York, New York 10020

Attn: Ken Coleman; Jillian Ashley

Email: ken.coleman@allenovery.com; jillian.ashley@allenovery.com

 

or to any other address or telecopy number, as to any of the Parties hereto, as such Party shall designate in a written notice to the other Parties hereto.

 

15.6 No Fiduciary Relationship. By executing and performing under this Agreement, neither Hudson nor HSM or any of their Affiliates shall have, nor be deemed to have, any fiduciary duties or other duties or responsibilities to the Sky Solar Parties, any of their Affiliates, or any of their other creditors or stakeholders.

 

 

15.7 Entire Agreement . This Agreement, the Transaction Documents, and the documents and instruments to be delivered by the Parties pursuant to the provisions hereof and thereof constitute the entire agreement between the Parties with respect to the subject matter hereof and thereof, provided that, prior to the Closing, nothing contained herein shall limit or modify any other existing written agreement by, between, or among the Parties. Unless the Closing occurs, the agreements and conditional agreements set forth in this Agreement shall not be admissible in any court for any reason, whether pursuant to Federal Rule of Evidence 408 or any similar state rule of law. Any amendments, or alternative or supplementary provisions to this Agreement or the Transaction Documents, must be made in writing and duly executed by an authorized representative or agent of each of the Parties. No Party has relied or can rely on any representation not contained in this Agreement or the Transaction Documents as an inducement to enter this Agreement or the Transaction Documents.

 

15.8 Survival; Non-Waiver. All representations, warranties, statements, covenants and agreements of the Parties under this Agreement and the other Transaction Documents shall survive the Closing regardless of any investigation or lack of investigation by any of the Parties hereto. The failure of a Party in any one or more instances to insist upon performance of any of the terms, covenants, or conditions of this Agreement or the Transaction Documents, to exercise any right or privilege conferred in this Agreement or the Transaction Documents, or the waiver by said party of any breach of any of the terms, covenants, or conditions of this Agreement or the Transaction Documents, shall not be construed as a waiver of any subsequent breach of such terms, covenants, conditions, right, or privileges, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving Party.

 

15.9 Severability. In case any one or more of the provisions contained in this Agreement should be invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and the Parties shall enter into good faith negotiations to replace the invalid, illegal, or unenforceable provision.

 

15.10 Counterparts. This Agreement may be executed in any number of counterparts and by different Parties hereto in separate counterparts, each of which when so executed and delivered (including delivery by email or facsimile) shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

 

15.11 Amendments; Waivers. No term of this Agreement (or any exhibits and schedules attached hereto) may be waived, modified, or amended except in a writing signed by each of the Parties to this Agreement; provided, however , that any Transaction Document attached to this Agreement may be modified after the Closing Date pursuant to the terms thereof. No waiver, and no modification or amendment of any provision of this Agreement, shall be effective unless specifically made in writing and duly signed by the Party purportedly making such waiver.

 

15.12 Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns. This Agreement shall not be assignable by any Sky Solar Party without the prior written consent of Hudson Solar, nor by any Hudson Party without the prior written consent of SSH.

 

 

 

15.13 Advice of Counsel. Each of the Parties represents to each other Party hereto that it has either (a) discussed this Agreement with its counsel or (b) after having read this Agreement and fully understanding the contents hereof, determined not to seek the advice of counsel despite having a full and fair opportunity to do so and being aware that each of the other Parties hereto has been advised by counsel.

 

15.14 Further Assurances. The Parties hereto agree to take all further actions and execute all further documents as the Parties may from time to time reasonably request to carry out the transactions contemplated by this Agreement.

 

15.15 Netting and Set Off. All payment obligations between the Hudson Parties on the one hand, and the Sky Solar Parties on the other hand, either pursuant to this Agreement or any of the Definitive Agreements shall be netted and set off against one another in accordance with a funds flow memorandum (the “Funds Flow Memorandum”) to be agreed between the Parties prior to the Closing.

 

15.16 No Strict Construction. This Agreement and all other agreements and documents executed and/or delivered in connection herewith have been prepared through the joint efforts of all of the Parties hereto or thereto. Neither the provisions of this Agreement or any such other agreements and documents nor any alleged ambiguity therein shall be interpreted or resolved against any party on the ground that such Party or such Party’s counsel drafted this Agreement or such other agreements and documents, or based on any other rule of strict construction. Each of the Parties hereto represents and declares that such Party has carefully read this Agreement and all other agreements and documents executed in connection herewith, and that such party knows the contents thereof and signs the same freely and voluntarily. The Parties hereto acknowledge that they have been represented by legal counsel of their own choosing in negotiations for and preparation of this Agreement and all other agreements and documents executed in connection herewith and that each of them has read the same and had their contents fully explained by such counsel and is fully aware of their contents and legal effect.

[Signature Pages Follow]NX Clear Skies II, LLC By: Name: Title: Signature Page 1 of 3 to Settlement Agreement 

 

 

 

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

	
Hudson Solar Cayman, LP
	
 
	
Sky Solar Holdings Ltd.

	
 
	
 
	
 
	
 
	
 

	
By:
	
/s/ Neil Z. Auerbach
	
 
	
By:
	
/s/ Hao Wu

	
 
	
Name: Neil Z. Auerbach
	
 
	
 
	
Name: Hao Wu

	
 
	
Title: Authorized Signatory
	
 
	
 
	
Title: Authorized Signatory

 

	
Hudson Sustainable Management, LLC
	
 
	
Sky Solar Power Ltd.

	
 
	
 
	
 
	
 
	
 

	
By:
	
/s/ Neil Z. Auerbach
	
 
	
By:
	
/s/ Hao Wu

	
 
	
Name: Neil Z. Auerbach
	
 
	
 
	
Name: Hao Wu

	
 
	
Title: Authorized Signatory
	
 
	
 
	
Title: Authorized Signatory

 

	
Hudson Global Finance DE, LLC
	
 
	
Sky International Enterprise Group Limited

	
 
	
 
	
 
	
 
	
 

	
By:
	
/s/ Neil Z. Auerbach
	
 
	
By:
	
/s/ Hao Wu

	
 
	
Name: Neil Z. Auerbach
	
 
	
 
	
Name: Hao Wu

	
 
	
Title: Authorized Signatory
	
 
	
 
	
Title: Authorized Signatory

 

	
 
	
 
	
Sky Capital America Inc.

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Peter Liu

	
 
	
 
	
 
	
 
	
Name: Peter Liu

	
 
	
 
	
 
	
 
	
Title: Authorized Signatory

 

	
 
	
 
	
Lumens Holdings 1, LLC

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Peter Liu

	
 
	
 
	
 
	
 
	
Name: Peter Liu

	
 
	
 
	
 
	
 
	
Title: Authorized Signatory

 

	
 
	
 
	
Greenleaf-TNX Clear Skies I, LLC

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Peter Liu

	
 
	
 
	
 
	
 
	
Name: Peter Liu

	
 
	
 
	
 
	
 
	
Title: Authorized Signatory

 

Signature Page 1 of 3 to Settlement Agreement

 

 

	
 
	
 
	
Greenleaf-TNX Clear Skies II, LLC

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Peter Liu

	
 
	
 
	
 
	
 
	
Name: Peter Liu

	
 
	
 
	
 
	
 
	
Title: Authorized Signatory

 

	
 
	
 
	
GLT Comm1 Solar, LLC

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Peter Liu

	
 
	
 
	
 
	
 
	
Name: Peter Liu

	
 
	
 
	
 
	
 
	
Title: Authorized Signatory

 

	
 
	
 
	
GLT SC1 Solar, LLC

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Peter Liu

	
 
	
 
	
 
	
 
	
Name: Peter Liu

	
 
	
 
	
 
	
 
	
Title: Authorized Signatory

 

	
 
	
 
	
NLH1 Solar, LLC

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Peter Liu

	
 
	
 
	
 
	
 
	
Name: Peter Liu

	
 
	
 
	
 
	
 
	
Title: Authorized Signatory

 

	
 
	
 
	
SunE GLT Ironwood Solar, LLC

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Peter Liu

	
 
	
 
	
 
	
 
	
Name: Peter Liu

	
 
	
 
	
 
	
 
	
Title: Authorized Signatory

 

	
 
	
 
	
SunE GLT Patton Solar, LLC

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Peter Liu

	
 
	
 
	
 
	
 
	
Name: Peter Liu

	
 
	
 
	
 
	
 
	
Title: Authorized Signatory

 

	
 
	
 
	
SunE GLT Chuckawalla Solar, LLC

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Peter Liu

	
 
	
 
	
 
	
 
	
Name: Peter Liu

	
 
	
 
	
 
	
 
	
Title: Authorized Signatory

 

	
 
	
 
	
GLT SLO Solar, LLC

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Peter Liu

	
 
	
 
	
 
	
 
	
Name: Peter Liu

	
 
	
 
	
 
	
 
	
Title: Authorized Signatory

 

Signature Page 2 of 3 to Settlement Agreement

 

 

	
 
	
 
	
Sun Harvest Solar, LLC

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Peter Liu

	
 
	
 
	
 
	
 
	
Name: Peter Liu

	
 
	
 
	
 
	
 
	
Title: Authorized Signatory

 

	
 
	
 
	
GLT NLH2 Solar, LLC

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Peter Liu

	
 
	
 
	
 
	
 
	
Name: Peter Liu

	
 
	
 
	
 
	
 
	
Title: Authorized Signatory

 

 

 

Signature Page 3 of 3 to Settlement Agreement

 

Schedule 1

 

Other Obligors

 

 

	
1.
	
SKY CAPITAL AMERICA INC.

 

	
2.
	
LUMENS HOLDINGS 1, LLC

 

	
3.
	
GREENLEAF-TNX CLEAR SKIES I, LLC

 

	
4.
	
GREENLEAF-TNX CLEAR SKIES II, LLC

 

	
5.
	
GLT COMM1 SOLAR, LLC

 

	
6.
	
GLT SC1 SOLAR, LLC

 

	
7.
	
NLH1 SOLAR, LLC

 

	
8.
	
SUNE GLT IRONWOOD SOLAR, LLC

 

	
9.
	
SUNE GLT PATTON SOLAR, LLC

 

	
10.
	
SUNE GLT CHUCKAWALLA SOLAR, LLC

 

	
11.
	
GLT SLO SOLAR, LLC

 

	
12.
	
SUN HARVEST SOLAR, LLC

 

	
13.
	
GLT NLH2 SOLAR, LLC

 

 

Schedule I to Settlement Agreement

 

 

Schedule II

 

Schedule II Project Companies

 

	
Schedule II Project Companies

	
GLT Pioneer Solar, LLC

	
Greenfield PV Hodings, LLC

	
Pioneer Valley Solar LLC

	
Axio Green LLC

	
GLT Cloverdale Solar, LLC

	
Cloverdale Solar 1, LLC

	
GLT SC1 Solar LLC

	
SunE GLT Ironwood Solar, LLC

	
GLT SLO Solar, LLC

	
SunE GLT Patton Solar, LLC

	
GLT Comm1 Solar, LLC

	
SunE GLT Chuckawalla Solar, LLC

	
NLH1 Solar, LLC

	
GLT NLH2 Solar, LLC

	
Sun Harvest Solar, LLC

 

 

 

Schedule II to Settlement Agreement

 

 

Schedule III

 

Schedule III Project Companies

 

	
Schedule III Project Companies

	
DANONI LN s.r.o.

	
Sky Solar Bolešiny s.r.o., člen koncernu

	
Solar Holýšov s.r.o.

 

 

 

 

Schedule III to Settlement Agreement

 

Schedule IV

 

Schedule IV Project Companies

 

	
Schedule IV Project Company Names

	
Fotovoltaica Jaururo SpA

	
Fotovoltaica San Isidro SpA

 

 

 

Schedule IV to Settlement Agreement

 

 

Schedule V

 

Schedule V Project Companies

 

	
Schedule V Project Assets Names1

	
Kyushu-017

	
Tokyo-010

	
Tokyo-007

	
Tokyo-008

	
Kyushu-007

	
Hokkaido-111

	
Kyushu-151

 

 

	
1
	
The Japanese project asset names listed herein use project identifiers supplied by the Sky Solar Parties to the Hudson Parties prior to the execution of this Agreement.

 

Schedule V to Settlement Agreement

 

Exhibit 1

 

Financial Model

 

Attached Under Separate File Entitled

 

“Settlement-Financial Model11.04.2019”

 

 

Exhibit 1 to Settlement Agreement

 

Exhibit 2

 

Majority Acquisition Consideration Breakdown

 

	
Section 5.1   Majority Acquisitions of the Equity Conversion Project Companies

	
 
	
% Ownership
	
Value
	
NWC(1)
	
Total Price

	
Schedule II Project Companies
	
50.1%
	
$7,258,718
	
$556,869
	
$7,815,586

	
Schedule III Project Companies
	
50.1%
	
$3,821,643
	
$1,216,655
	
$5,038,299

	
Schedule IV Project Companies
	
50.1%
	
$3,168,840
	
$605,409
	
$3,774,249

	
Total
	
 
	
$14,249,201
	
$2,378,933
	
$16,628,134

 

(1)Net Working Capital as described in the Financial Model is as of August 31, 2019, and is subject to modification to reflect balance sheets to be delivered as of the Cutoff Date pursuant to Section 13.1(a).

 

	
Section 5.2   Uruguay Project Companies
	
 
	
 

	
 
	
 
	
 
	
NWC(1)
	
Additional
	
 
	
 

	
 
	
% Ownership
	
Value
	
Adjustment
	
Total Price
	
 

	
Uruguay Project Companies
	
36.83%
	
$19,893,480
	
$843,178
	
$323,622
	
$21,060,280
	
 

	
Total
	
 
	
$19,893,480
	
$843,178
	
$323,622
	
$21,060,280
	
 

 

(1)Net Working Capital as described in the Financial Model is as of August 31, 2019, and is subject to modification to reflect balance sheets to be delivered as of the Cutoff Date pursuant to Section 13.1(a).

 

 

Exhibit 2 to Settlement Agreement

 

Exhibit 3

 

Uruguay Earn-Out Agreement Principles

 

(a)Any recovery on the SEMI Claim, based on a year 2nd year PR claim, if resulting in compensation greater than $1.7M, 36.83% multiplied by 60% of the portion that exceeds the $1.7MM shall be paid to the Sky Solar Parites;

 

(b)Both the Sky Solar Parties and the Hudson Parties shall agree on a financial model which details the discount to the Sky Solar Parties’ PR measurement, which was agreed upon by the recent PR study commissioned by the Sky Solar Parties. For a period of three (3) years, commencing from October 1, 2019, and concluding on October 1, 2022, Hudson shall make annual payments to the Sky Solar Parties if the actual PR is greater than the estimated PR for each year in the period.

 

(c)Both the Sky Solar Parties and the Hudson Parties, along with their technical advisors, shall agree on a common methodology to measure and calculate annual PR, before the closing.

 

(d)At the end of year 3, the average PR from the last three years shall form the basis to revalue the projects, over their remainder of their PPA term, using the agreed upon financial model and Hudson shall make a one time true up payment based on the difference between the project valuation using Hudson PR discount and the 3 year average PR during the measurement period. During the 3rd year, both parties will conduct an irridation study, from an acceptable 3rd party technical consulting firm, which will form the basis for the new irradiation forecast in the valuation model.

 

(e)To facilitate this PR measurement, execute the earnout mechanism, and help optimize project performance both parties will agree to change the monitoring system and in the case that Sky is not appointed as the asset manager of Project co’s in the future Sky will stay involved in an advisory role to make sure that all future measurements are done correctly.

Exhibit 3 to Settlement AgreementExhibit 4.1

 

 

 

 

  

NEW YORK CITY REIT, INC.

 

and

 

COMPUTERSHARE TRUST COMPANY, N.A.

 

(Rights Agent)

 

Rights Agreement

 

Dated as of May 18, 2020

 

 

 

 

 

 

    	 	 	 

     

    

 

TABLE OF CONTENTS

 

	1.	Definitions	1
	 	 	 
	2.	Appointment of Rights Agent	9
	 	 	 
	3.	Issue of Right Certificates.	10
	 	 	 
	4.	Form of Right Certificates	12
	 	 	 
	5.	Countersignature and Registration	13
	 	 	 
	6.	Transfer, Split-Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.	13
	 	 	 
	7.	Exercise of Rights; Purchase Price; Expiration Date of Rights.	14
	 	 	 
	8.	Cancellation and Destruction of Right Certificates	16
	 	 	 
	9.	Status and Availability of Common Shares.	16
	 	 	 
	10.	Common Shares Record Date	18
	 	 	 
	11.	Adjustment of Purchase Price, Number of Shares or Number of Rights.	18
	 	 	 
	12.	Certificate of Adjustment	24
	 	 	 
	13.	Consolidation, Merger, Sale or Transfer of Assets or Earning Power.	24
	 	 	 
	14.	Fractional Rights and Fractional Shares.	26
	 	 	 
	15.	Rights of Action	27
	 	 	 
	16.	Agreement of Right Holders	27
	 	 	 
	17.	Right Holder Not Deemed a Stockholder	28
	 	 	 
	18.	Concerning the Rights Agent	28
	 	 	 
	19.	Merger or Consolidation or Change of Name of Rights Agent	29
	 	 	 
	20.	Duties of Rights Agent	29
	 	 	 
	21.	Change of Rights Agent	32
	 	 	 
	22.	Issuance of New Right Certificates	33
	 	 	 
	23.	Redemption.	33
	 	 	 
	24.	Exchange.	34
	 	 	 
	25.	Notice of Certain Events.	35
	 	 	 
	26.	Notices	36
	 	 	 
	27.	Supplements and Amendments	37
	 	 	 
	28.	Successors	37
	 	 	 
	29.	Benefits of This Agreement	37
	 	 	 
	30.	Severability	38

 

    	 	i	 

     

    

 

	31.	Governing Law	38
	 	 	 
	32.	Counterparts	38
	 	 	 
	33.	Descriptive Headings	38
	 	 	 
	34.	Administration	38
	 	 	 
	35.	Force Majeure	38
	 	 	 
	36.	REIT Status	39
	 	 	 
	37.	Further Assurance by Company	39
	 	 	 
	EXHIBIT A – Form of Right Certificate	A-1
	 	 
	EXHIBIT B – Summary of Rights to Purchase Preferred Shares	B-1

 

    	 	ii	 

     

    

 

RIGHTS AGREEMENT

 

This Rights Agreement
(this “Agreement”), dated as of May 18, 2020, is made between New York City REIT, Inc., a Maryland corporation
(the “Company”), and Computershare Trust Company, N.A., a federally chartered trust company (the “Rights
Agent”).

 

The Board of Directors
of the Company intends to (a) authorize and declare a dividend of one common share purchase right (a “Right”)
for and on each share of common stock, par value $0.01 per share, of the Company (“Common Share”) outstanding
on the Close of Business (as defined below) on a date to be set by the Board of Directors in its discretion (the “Record
Date”) and (b) authorize the issuance of one Right (subject to adjustment) with respect to (A) each additional Common
Share issued by the Company between the Record Date and the earliest of (i) the Close of Business on the Distribution Date, (ii)
the Close of Business on the Redemption Date or (iii) the Close of Business on the Final Expiration Date (as all are defined below),
and (B) additional Common Shares that shall become outstanding after the Distribution Date as provided in Section 22 of this Agreement,
each Right initially representing the right to purchase one Common Share, subject to adjustment, upon the terms and subject to
the conditions below.

 

Accordingly, in consideration
of the premises and the mutual agreements herein set forth, the parties agree as follows:

 

		1.	Definitions.  For purposes of this Agreement, the following terms have the meanings indicated:

 

1.1             
“Acquiring Person” means any Person (other than an Exempt Person or a Passive Investor) who or which,
together with all Affiliates and Associates of the Person, is or becomes on or after the execution of this Agreement the Beneficial
Owner of 2.25% or more of the Common Shares then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or any Subsidiary of the Company or the Company’s advisor, New York
City Advisors, LLC (the “Advisor”), (iv) any entity or trustee holding (or acting in a fiduciary capacity in
respect of) Common Shares for or pursuant to the terms of any employee benefit plan or for the purpose of funding any plan or funding
other employee benefits for employees of the Company, any Subsidiary of the Company or the Advisor, (v) any Person who has been
permitted by the Board of Directors, or a committee thereof, to Beneficially Own 2.25% or more of the Common Shares then outstanding
by means of a written waiver or agreement, provided, that (x) the Person does not Beneficially Own Common Shares above the
permitted percentage and complies in all material respects with the terms and the conditions of the waiver or agreement, and (y)
the waiver or agreement remains in full force and effect, and (vi) any Person who or which, upon the execution of this Agreement,
is a Beneficial Owner of 2.25% or more of the Common Shares then outstanding, other than a Person who or which is not an Affiliate
or Associate of the Beneficial Owner upon the execution of this Agreement and who or which subsequently becomes an Affiliate or
Associate of the Beneficial Owner without the prior written approval of the Board of Directors (a “Grandfathered Stockholder”);
provided, however, that if a Grandfathered Stockholder becomes, after execution of this Agreement, the Beneficial
Owner of any additional Common Shares (in the case of any Person in clause (v), any additional Common Shares above the percentage
permitted by the Board of Directors, or a committee thereof) (other than Common Shares acquired solely as a result of corporate
action of the Company not caused, directly or indirectly, by the Person) at any time such that the Grandfathered Stockholder is
or thereby becomes the Beneficial Owner of 2.25% or more of the Common Shares then outstanding (or any other percentage as would
otherwise result in the Person becoming an Acquiring Person), then the Grandfathered Stockholder shall be deemed an Acquiring Person;
provided, further, that upon the first decrease of a Grandfathered Stockholder’s Beneficial Ownership below 2.25%,
the Grandfathered Stockholder shall no longer be considered a Grandfathered Stockholder and this clause (vi) shall have no further
force or effect with respect to the Grandfathered Stockholder; and provided, further, that for the purposes of calculating
an Acquiring Person’s Beneficial Ownership percentage, Common Shares that the Acquiring Person, its Affiliate(s) or Associate(s)
acquire(s) or attempt(s) to acquire in violation of Section 5.7 of the Charter, even if transferred to a trust, shall be included
in the numerator for purposes of the calculation and deemed as Beneficially Owned by the Acquiring Person or its Affiliate(s) or
Associate(s).

 

    	 	1	 

     

    

 

Notwithstanding the
foregoing, no Person shall become an Acquiring Person as the result of the Company acquiring Common Shares by repurchase, tender
or otherwise which, by reducing the number of shares outstanding, increases the proportionate number of Common Shares Beneficially
Owned by the Person to 2.25% or more of the then outstanding Common Shares (or any other percentage as would otherwise result in
the Person becoming an Acquiring Person); provided, however, that if a Person would, but for the provisions of this
paragraph, become an Acquiring Person by reason of an acquisition of Common Shares by the Company and shall, after the share acquisition
by the Company, become the Beneficial Owner of any additional Common Shares at any time such that the Person is or thereby becomes
the Beneficial Owner of 2.25% or more of the Common Shares then outstanding (or any other percentage as would otherwise result
in the Person becoming an Acquiring Person) (other than Common Shares acquired solely as a result of corporate action of the Company
not caused, directly or indirectly, by the Person), then the Person shall be deemed to be an Acquiring Person.

 

In the event the Common
Shares are listed on NYSE or NASDAQ, notwithstanding the foregoing paragraphs, effective upon the commencement of trading, all
references to the 2.25% threshold set forth in this Section 1.1 shall be deemed thereafter to refer to an increased threshold of
4.9% and the Beneficial Ownership of securities of the Company at the commencement of trading shall be used to determine whether
a Person is a Grandfathered Stockholder under the increased threshold.

 

Notwithstanding the
foregoing paragraphs of this Section 1.1, if the Board of Directors, or a committee thereof, determines that a Person who would
otherwise be an Acquiring Person, has become an Acquiring Person inadvertently (including, without limitation, because (A) the
Person establishes that it was unaware that it Beneficially Owned that number of Common Shares that would otherwise cause the Person
to be an “Acquiring Person” or (B) the Person establishes that it was aware of the extent of its Beneficial
Ownership of Common Shares but had no actual knowledge of the consequences of its Beneficial Ownership under this Agreement) and
without any intention of obtaining, changing or influencing control of the Company, and the Person divests as promptly as practicable,
as determined by the Board of Directors, or a committee thereof, a sufficient number of Common Shares so that the Person would
no longer be an Acquiring Person, then the Person shall not be deemed to have become an Acquiring Person for any purpose of this
Agreement. Notwithstanding the foregoing, if a bona fide swaps or derivatives dealer who would otherwise be an “Acquiring
Person” has become an Acquiring Person as a result of its actions in the ordinary course of its business that the Board of
Directors, or a committee thereof, determines, in its sole discretion, were taken without the intent or effect of evading or assisting
any other Person to evade the purposes and intent of this Agreement, or otherwise seeking to control or influence the management
or policies of the Company, then, and unless and until the Board of Directors shall otherwise determine, the Person shall not be
deemed to be an “Acquiring Person” for any purpose of this Agreement.

 

    	 	2	 

     

    

 

1.2             
A Person shall be deemed to be “Acting in Concert” with another Person if the Person acts (whether or
not pursuant to an express agreement, arrangement or understanding) in concert or in parallel with another Person, or towards a
common goal with another Person, relating to (i) acquiring, holding, voting or disposing of voting securities of the Company or
(ii) changing or influencing the control of the Company or in connection with or as a participant in any transaction having that
purpose or effect, where (x) each Person knows of the other Person’s conduct or intent and (y) at least one additional factor
supports a determination by the Board of Directors that the Persons intended to act in concert or in parallel, including, without
limitation, exchanging information, attending meetings, conducting discussions, or making or soliciting invitations to act in concert
or in parallel. A Person who is Acting in Concert with another Person shall also be deemed to be Acting in Concert with any third
Person who is also Acting in Concert with the other Person. Notwithstanding the foregoing, no Person shall be deemed to be Acting
in Concert with another Person solely as a result of (i) making or receiving a solicitation of, or granting or receiving, revocable
proxies or consents given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, Section
14(a) of the Exchange Act by means of a proxy or solicitation statement filed on Schedule 14A, or (ii) soliciting or being solicited
for, or tendering or receiving tenders of securities in a public tender or exchange offer made pursuant to, and in accordance with,
Section 14(d) of the Exchange Act by means of a tender offer statement filed on Schedule TO.

 

1.3             
“Adjustment Shares” shall have the meaning set forth in Section 11.1.2 hereof.

 

1.4             
“Affiliate” shall mean a Person that directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, the Person specified.

 

1.5             
“Associate” shall mean, when used to indicate a relationship with any Person, (i) any corporation or
organization (other than the registrant or a majority-owned subsidiary of the Person) of which the Person is an officer or partner
or is, directly or indirectly, the Beneficial Owner of 5.0% or more of any class of equity securities, (ii) any trust or other
estate in which the Person has a substantial beneficial interest or as to which the Person serves as trustee or in a similar fiduciary
capacity, and (iii) any relative or spouse of the Person, or any relative of the spouse, who has the same home as the Person or
who is a director or officer of the Person or any of its parents or subsidiaries.

 

1.6             
A Person shall be deemed the “Beneficial Owner” of, shall be deemed to have “Beneficial Ownership”
of and shall be deemed to “Beneficially Own” any securities:

 

    	 	3	 

     

    

 

1.6.1       
which the Person or any of the Person’s Affiliates or Associates beneficially owns, directly or indirectly, within
the meaning of Rule 13d-3 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement;

 

1.6.2       
which the Person or any of the Person’s Affiliates or Associates has (i) the right or the obligation to acquire (whether
the right is exercisable, or the obligation is required to be performed, immediately or only after the passage of time or upon
the satisfaction of conditions) pursuant to any agreement, arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide public offering of securities), written or otherwise,
or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed to be the Beneficial Owner of, or to Beneficially Own, (w) securities
tendered pursuant to a tender or exchange offer made pursuant to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act by or on behalf of the Person or any of the Person’s Affiliates or Associates until the
tendered securities are accepted for purchase or exchange, (x) securities which the Person has a right to acquire upon the exercise
of Rights at any time prior to the time that any Person becomes an Acquiring Person, (y) securities issuable upon the exercise
of Rights from and after the time that any other Person becomes an Acquiring Person if the Rights were acquired by the first Person
or any of the first Person’s Affiliates or Associates prior to the Distribution Date or pursuant to Section 3.1 or Section
22 hereof (“Original Rights”) or pursuant to Section 11.9 or Section 11.14 with respect to an adjustment to
Original Rights, or (z) securities which the Person or any of the Person’s Affiliates or Associates may acquire, does or
do acquire or may be deemed to have the right to acquire, pursuant to any merger or other acquisition agreement between the Company
and the Person (or one or more of the Person’s Affiliates or Associates) if the acquisition agreement has been approved by
the Board of Directors prior to the Person’s becoming an Acquiring Person; or (ii) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to
Beneficially Own, any security if the agreement, arrangement or understanding to vote the security (A) arises solely from a revocable
proxy or consent given to the Person in response to a public proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations promulgated under the Exchange Act and (B) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor report);

 

1.6.3       
which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate of the other Person)
with which the first Person or any of the first Person’s Affiliates or Associates or any other Person (or any Affiliate or
Associate of the other Person) with whom the first Person (or any Affiliates or Associates of the first Person) is Acting in Concert,
has any agreement, arrangement or understanding, whether or not in writing, for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in clause (ii) of Section 1.6.2) or disposing of any voting securities of the Company;
and

 

1.6.4       
which are the subject of, or the reference securities for, or that underlie, any Derivative Interest of the Person or any
of the Person’s Affiliates or Associates, with the number of Common Shares deemed Beneficially Owned being the notional or
other number of Common Shares specified in the documents evidencing the Derivative Interest as being subject to be acquired upon
the exercise or settlement of the Derivative Interest or as the basis upon which the value or settlement amount of the Derivative
Interest is to be calculated in whole or in part or, if the number of Common Shares is not specified in the applicable documents,
or as determined by the Board of Directors; provided, that a Unitholder shall not be deemed the Beneficial Owner of, or
to Beneficially Own, securities which may be issued to the Unitholder upon redemption of the Unitholder’s Partnership Units
pursuant to the terms and conditions of the Operating Partnership Agreement, unless the Unitholder actually receives the securities
in exchange therefor.

 

    	 	4	 

     

    

 

Notwithstanding anything in this definition
of Beneficial Owner to the contrary, the phrase “then outstanding,” when used with reference to a Person’s
beneficial ownership of securities of the Company, means the number of securities then issued and outstanding together with the
number of securities not then actually issued and outstanding which the Person would be deemed to beneficially own hereunder, but
the number of securities not outstanding that the Person is otherwise deemed to beneficially own for purposes of this Agreement
shall not be included for the purpose of computing the percentage of the outstanding securities beneficially owned by any other
Person (unless the other Person is also deemed to beneficially own for purposes of this Agreement the securities not outstanding).

 

1.7             
“Board of Directors” means the members of the Company’s board of directors.

 

1.8             
“Book Entry” shall mean an uncertificated share of Common Stock registered in book entry form by notation
in accounts reflecting the ownership of the Common Shares.

 

1.9             
“Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in
the state of New York are authorized or obligated by law or executive order to close.

 

1.10         
“Bylaws” means the Company’s Amended and Restated Bylaws, dated as of August 13, 2018, as amended
or restated from time to time.

 

1.11         
“Cash Consideration” means the “Cash Amount” as defined in the Operating Partnership Agreement.

 

1.12         
“Charter” means the charter of the Company.

 

1.13         
“Close of Business” means 5:00 p.m., New York time, on any given date; provided, however,
that if the applicable date is not a Business Day, it means 5:00 p.m., New York time, on the next succeeding Business Day.

 

1.14         
“Common Shares” has the meaning set forth in the second introductory paragraph of this Agreement.

 

1.15         
“Common Stock” means common stock, par value $0.01 per share, of the Company. “Common Stock”
when used with reference to any Person other than the Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.

 

    	 	5	 

     

    

 

1.16         
“Common Stock Equivalents” has the meaning set forth in Section 11.1.3.

 

1.17         
“Company” has the meaning set forth in the introductory paragraph of this Agreement.

 

1.18         
“Continuing Director” means any member of the Board of Directors (while the Person is a member of the
Board of Directors) who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative or
nominee of an Acquiring Person or of any Affiliate or Associate of an Acquiring Person, and who either (i) was a member of the
Board of Directors immediately prior to the date of this Agreement or (ii) on or subsequent to the date of this Agreement became
a member of the Board and whose nomination for election or election to the Board of Directors is recommended or approved by a majority
of the Continuing Directors.

 

1.19         
“Current Per Share Market Price” has the meaning set forth in Sections 11.4.1 and 11.4.2.

 

1.20         
“Current Value” has the meaning set forth in Section 11.1.3.

 

1.21         
“Derivative Interest” shall mean any derivative securities (as defined under Rule 16a-1 under the Exchange
Act) that increase in value as the value of the underlying equity increases, including, but not limited to, a long convertible
security, a long call option and a short put option position, in each case, regardless of whether (x) the interest conveys any
voting rights in the underlying security, (y) the interest is required to be, or is capable of being, settled through delivery
of the underlying security or (z) transactions hedge the economic effect of the interest.

 

1.22         
“Distribution Date” has the meaning set forth in Section 3.1.

 

1.23         
“Earning Power” has the meaning set forth in Section 13.4.

 

1.24         
“Equivalent Common Shares” has the meaning set forth in Section 11.2.

 

1.25         
“Estimated Per-Share NAV of Common Stock” has the meaning set forth in Section 11.4.2.

 

1.26         
“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

1.27         
“Exchange Factor” has the meaning ascribed to it in the Operating Partnership Agreement.

 

1.28         
“Exchange Property” has the meaning set forth in Section 24.6.

 

1.29         
“Exchange Ratio” has the meaning set forth in Section 24.1.

 

1.30         
“Exchange Recipients” has the meaning set forth in Section 24.6.

 

1.31         
“Exempt Person” shall mean any Person that the Board of Directors, or a committee thereof, determines
is exempt from this Agreement; provided that no Person shall qualify as an Exempt Person unless the determination is made,
prior to the time any Person becomes an Acquiring Person; provided further that any Person will cease to be an Exempt Person
if the Board of Directors, or a committee thereof, makes a contrary determination with respect to the Person.

 

    	 	6	 

     

    

 

1.32         
“Expiration Date” has the meaning set forth in Section 7.1.

 

1.33         
“Final Expiration Date” means the date upon which the Rights expire, which is, unless the Rights are
previously redeemed, exchanged or terminated, the earlier of May 18, 2023 or, if the Common Shares are listed on NYSE or NASDAQ,
364 days from the commencement of trading. The Rights Agent will not be deemed to have any knowledge of the Final Expiration Date
unless and until it has been notified that the Final Expiration Date has occurred.

 

1.34         
“Independent Directors” shall mean members of the Board who are not officers of the Company or any of
its Subsidiaries and who are not Acquiring Persons or representatives, nominees, Affiliates or Associates of Acquiring Persons.

 

1.35         
“MGCL” means the Maryland General Corporation Law.

 

1.36         
“NASDAQ” means The NASDAQ Stock Market LLC.

 

1.37         
“NYSE” means the New York Stock Exchange, Inc.

 

1.38         
“Operating Partnership” means New York City Operating Partnership, L.P., a Delaware limited partnership.

 

1.39         
“Operating Partnership Agreement” means the Agreement of Limited Partnership of the Operating Partnership,
dated as of April 24, 2014, as amended from time to time.

 

1.40         
“Ownership Statements” means, with respect to any Book Entry Common Share, current ownership statements
issued to the record holders thereof in lieu of a certificate representing the Common Shares.

 

1.41         
“Partnership Unit” has the meaning set forth in Section 3.4 hereof.

 

1.42         
“Partnership Unit Redemption Rights” means the rights that a Unitholder has to require the Operating
Partnership to redeem from time to time part or all of the Unitholder’s Partnership Units for the consideration set forth
in the Operating Partnership Agreement.

 

1.43         
“Passive Investor” shall mean a Person, excluding any Person who makes a tender offer, mini or otherwise,
who (i) is the Beneficial Owner of Common Shares and either (a) has a Schedule 13G on file with the Securities and Exchange Commission
pursuant to the requirements of Rule 13d-1(b) or (c) under the Exchange Act with respect to its holdings (and does not subsequently
convert such filing to a Schedule 13D) or (b) has a Schedule 13D on file with the Securities and Exchange Commission and either
has stated in its filing that it has no plan or proposal that relates to or would result in any of the actions or events set forth
in Item 4 of Schedule 13D or otherwise has no intent to seek control of the Company or has certified to the Company that it has
no such plan, proposal or intent (other than by voting the shares of the Common Stock over which such Person has voting power),
(ii) acquires Beneficial Ownership of Common Shares pursuant to trading activities undertaken in the ordinary course of the Person’s
business and not with the purpose or the effect, either alone or Acting in Concert with any Person, of exercising the power to
direct or cause the direction of the management and policies of the Company or of otherwise changing or influencing the control
of the Company, nor in connection with or as a participant in any transaction having such purpose or effect, including any transaction
subject to Rule 13d-3(b) of the Exchange Act, and (iii) in the case of clause (i)(b) only, does not amend either its Schedule 13D
on file or its certification to the Company in a manner inconsistent with its representation that it has no plan or proposal that
relates to or would result in any of the actions or events set forth in Item 4 of Schedule 13D or otherwise has no intent to seek
control of the Company (other than by voting the Common Shares over which such Person has voting power). For the avoidance of any
doubt, in the event a Person ceases to be a Passive Investor, the Person will be an “Acquiring Person” if the
Person, together with its Affiliates and Associates, Beneficial Ownership exceeds the threshold set forth in Section 1.1 above
regardless of whether the Person acquired Common Shares while the Person was a Passive Investor.

 

    	 	7	 

     

    

 

1.44         
“Permitted Offer” shall mean a tender or exchange offer that is for all outstanding Common Shares at
a price and on terms determined, prior to the purchase of shares under such tender or exchange offer, by at least a majority of
the Board of Directors, to be (i) fair to the Company’s stockholders and not inadequate (taking into account all factors
that such Board of Directors deems relevant, including, without limitation, prices which could reasonably be achieved if the Company
or its assets were sold on an orderly basis designed to realize maximum value) and (ii) otherwise in the best interests of the
Company.

 

1.45         
“Person” means any individual, firm, corporation, partnership, limited partnership, limited liability
partnership, business trust, limited liability company, unincorporated association or other entity, and shall include any successor
(by merger or otherwise) of the applicable entity.

 

1.46         
“Purchase Price” has the meaning set forth in Section 7.2.

 

1.47         
“Record Date” has the meaning set forth in the second introductory paragraph of this Agreement.

 

1.48         
“Redemption Date” has the meaning set forth in Section 23.2.

 

1.49         
“Redemption Price” has the meaning set forth in Section 23.1.

 

1.50         
“REIT” shall mean a real estate investment trust under the Internal Revenue Code of 1986, as amended.

 

1.51         
“Right” has the meaning set forth in the second introductory paragraph of this Agreement.

 

1.52         
“Right Certificate” means a certificate representing a Right in substantially the form of Exhibit
A hereto.

 

    	 	8	 

     

    

 

1.53         
“Rights Agent” has the meaning set forth in the introductory paragraph of this Agreement.

 

1.54         
“Section 11.1.2 Event” has the meaning set forth in Section 11.1.2 hereof.

 

1.55         
“Section 13 Event” means any event described in Section 13.1 hereof.

 

1.56         
“Section 23.1 Event” means the event described in Section 23.3 hereof.

 

1.57         
“Securities Act” means the Securities Act of 1933, as amended.

 

1.58         
“Share Consideration” means “Common Stock Amount” as defined in the Operating Partnership
Agreement.

 

1.59         
“Spread” has the meaning set forth in Section 11.1.3.

 

1.60         
“Stock Acquisition Date” means the earlier of (i) the date of the public announcement (which, for purposes
of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the Company
or a Person that results in the Person being an Acquiring Person hereunder or (ii) the date that a majority of the Board of Directors
shall become aware of the existence of an Acquiring Person.

 

1.61         
“Subsidiary” of any Person means any corporation or other entity of which securities or other ownership
interest having ordinary voting power sufficient to elect a majority of the board of directors or other person or body performing
similar functions are beneficially owned, directly or indirectly, by the Person and any corporation or other entity that is otherwise
controlled by the Person.

 

1.62         
“Summary of Rights” means the Summary of Rights to Purchase Common Shares in substantially the form of
Exhibit B hereto.

 

1.63         
“Trading Day” means a day on which the principal national securities exchange on which a security is
listed or admitted to trading is open for the transaction of business or, if a security is not listed or admitted to trading on
any national securities exchange, a Business Day.

 

1.64         
“Triggering Event” shall mean any Section 11.1.2 Event or any Section 13 Event.

 

1.65         
“Unitholders” has the meaning set forth in Section 3.4 hereof.

 

 2.            Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the express terms and conditions hereof (and no implied terms or conditions), and the Rights Agent hereby accepts the Company’s appointment. The Company may from time to time appoint any co-Rights Agents as it may deem necessary or desirable, upon ten (10) calendar days’ prior written notice to the Rights Agent. In the event the Company appoints one or more co-Rights Agents, the respective duties of the Rights Agent and any co-Rights Agents under the provisions of this Agreement shall be as the Company shall reasonably determine and the Company shall notify in writing, the Rights Agent and any co-Rights Agent of their respective duties. The Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or omissions of any co-Rights Agent.

 

    	 	9	 

     

    

 

		3.	Issue of Right Certificates.

 

3.1             
Until the Close of Business on the tenth (10th) Business Day after the Stock Acquisition Date or, in the event
the Board of Directors determines on or before the tenth (10th) Business Day to effect an exchange in accordance with
Section 24 and determines in accordance with Section 24.6 that a later date is advisable, then the later date determined by the
Board (including any date which is after the date of this Agreement and prior to the issuance of the Rights; the date being herein
referred to as the “Distribution Date,” provided, however, that the Distribution Date shall in
no event be prior to the Record Date; provided, further, that the Board of Directors may determine to delay the occurrence
of the Distribution Date until the Board of Directors determines based on the advice of counsel that the exercise or exercisability
of the Right would not result in the Company failing to qualify as a REIT), (x) the Rights will be represented (subject to the
provisions of Section 3.2) by the certificates for Common Shares (or by Book Entry Common Shares) registered in the names of the
holders thereof (which certificates shall also be deemed to be Right Certificates) and not by separate Right Certificates, and
(y) the Rights Certificates and the right to receive Right Certificates will be transferable only in connection with the transfer
of Common Shares. As soon as practicable after the Distribution Date, the Company will prepare and execute, and, at the request
of the Company, the Rights Agent will countersign, and the Company will send or cause to be sent (and the Rights Agent will, if
so requested and provided with all necessary information and documents, will, at the expense of the Company, send) by first-class,
insured, postage-prepaid mail, to each record holder of Common Stock as of the Close of Business on the Distribution Date (other
than any Acquiring Person or any Associate or Affiliate of an Acquiring Person), at the address of each record holder shown on
the records of the Company, a Right Certificate, in substantially the form of Exhibit A hereto, representing one Right for
each Common Share so held, subject to adjustment as provided herein; provided, however, that notwithstanding anything to the contrary
herein, the Company may choose to use book entry in lieu of physical certificates, in which case “Rights Certificates”
shall be deemed to mean the uncertificated book entry representing the related Rights. In the event that an adjustment in the number
of Rights per Common Share has been made pursuant to Section 11.9 hereof, at the time of distribution of the Rights Certificates,
the Company shall make the necessary and appropriate rounding adjustments (in accordance with Section 14.1 hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. As of
and after the Distribution Date, the Rights will be represented solely by the Right Certificates. The Company shall promptly notify
the Rights Agent in writing upon the occurrence of the Distribution Date. Until the written notice is received by the Rights Agent,
the Rights Agent may presume conclusively for all purposes that the Distribution Date has not occurred.

 

    	 	10	 

     

    

 

3.2             
After the Record Date, or as soon as practicable thereafter, and before the Expiration Date, the Company will (directly
or, at the expense of the Company, through the Rights Agent or its transfer agent if the Rights Agent or transfer agent is so directed
by the Company and provided with all necessary information and documents) make available a copy of the Summary of Rights to any
Rights holder who so requests. With respect to certificates representing Common Shares (or Book Entry Common Shares) outstanding
as of the Record Date, until the Distribution Date, the Rights will be represented by these certificates (or such Book Entry Common
Shares) registered in the names of the holders thereof together with the Summary of Rights. Until the Distribution Date (or if
earlier, the Expiration Date), the surrender for transfer of any certificate representing Common Shares (or the transfer of any
Book Entry Common Shares) outstanding on the Record Date, with or without a copy of the Summary of Rights, shall also constitute
the transfer of the Rights associated with the Common Shares represented thereby. With respect to Book Entry Common Shares outstanding
as of the Record Date, until the Distribution Date, the Rights shall be represented by the balances indicated in the Book Entry
account system of the transfer agent for the Common Shares.

 

3.3             
If certificates for Common Shares are issued (including, without limitation, Common Shares acquired by the Company as noted
in this Section 3.3) after the Record Date but prior to the earliest of (i) the Close of Business on the Distribution Date, (ii)
the Redemption Date or (iii) the Close of Business on the Final Expiration Date, these certificates shall have impressed on, printed
on, written on or otherwise affixed to them, in addition to any legend required by the MGCL, Charter or Bylaws, a legend in substantially
the following form:

 

This certificate also represents
and entitles the holder hereof to certain Rights as set forth in a Rights Agreement between New York City REIT, Inc. and Computershare
Trust Company, N.A., as Rights Agent (or any successor Rights Agent), dated as of May 18, 2020, as it may from time to time be
amended or supplemented pursuant to its terms (the “Rights Agreement”), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal executive offices of New York City REIT, Inc. Under certain
circumstances, as set forth in the Rights Agreement, the Rights will be represented by separate certificates and will no longer
be represented by this certificate. New York City REIT, Inc. will mail to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. Under certain circumstances, as set forth in the Rights Agreement,
Rights that are or were acquired or Beneficially Owned (as defined in the Rights Agreement) by any Person (as defined in the Rights
Agreement) who becomes an Acquiring Person (as defined in the Rights Agreement) or an Associate or Affiliate (each as defined in
the Rights Agreement) thereof, among others, become null and void and will no longer be transferable.

 

With respect to any Book Entry Common Shares,
the foregoing legend shall be included in the Ownership Statement in respect of the Common Stock or in a notice to the record holder
of these shares in accordance with applicable law. With respect to certificates containing the foregoing legend, or any Ownership
Statement or notice containing the foregoing legend delivered to holders of Book Entry Common Shares, until the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date, the Rights associated with the Common Stock represented by
the certificates or Book Entry Common Shares shall be represented by the certificates or Book Entry Common Shares (including any
Ownership Statement) alone, and the surrender for transfer of any such certificate or the transfer of any Book Entry Common Shares
shall also constitute the transfer of the Rights associated with the Common Stock represented thereby. If the Company purchases
or acquires any Common Shares after the Record Date but prior to the Close of Business on the Distribution Date, any Rights associated
with these Common Shares shall be deemed canceled and retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.

 

    	 	11	 

     

    

 

Notwithstanding this Section 3.3, neither
the omission of a legend nor the failure to deliver the notice of legend required hereby shall affect the enforceability of any
part of this Agreement or the rights of any holder of the Rights.

 

3.4             
Prior to the Distribution Date, holders (other than the Company) (“Unitholders”) of partnership units
of the Operating Partnership designated as “OP Units” (“Partnership Units”) shall not be deemed
as holding any Rights solely by reason of the Unitholders holding any Partnership Unit. On the Distribution Date, proper provision
shall be made by the Company in order to provide each Unitholder with the number of Rights, represented by Right Certificates,
as would be issued to the applicable Unitholder as if (i) the Unitholder had exercised its Partnership Unit Redemption Rights with
respect to all Partnership Units held by the Unitholder immediately prior to the Distribution Date and (ii) the Company had elected
to satisfy the Partnership Unit Redemption Rights by paying the Unitholder the Share Consideration (rather than the Cash Consideration)
(applying an Exchange Factor unaffected by the issuance, exercise or exchange of any Rights) immediately prior to the Distribution
Date pursuant to the terms and conditions of the Partnership Agreement. Each Unitholder shall thereafter have all of the rights,
privileges, benefits and obligations with respect to the Rights as are provided for herein with respect to holders of Common Shares.

 

		4.	Form of Right Certificates.

 

4.1             
The Right Certificates (and the forms of election to purchase Common Shares and of assignment to be printed on the reverse
thereof) shall be substantially the same as set forth on Exhibit A hereto and may have any marks of identification or designation
and any legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement (but which do not affect the rights, duties, liabilities or responsibilities of the Rights Agent),
or as may be required to comply with any applicable law or with any applicable rule or regulation made pursuant thereto or with
any applicable rule or regulation of any stock exchange or quotation system on which the Rights may from time to time be listed
or the Financial Industry Regulatory Authority, or to conform to usage. Subject to the other provisions of this Agreement, the
Right Certificates, whenever distributed, shall be dated as of the Record Date and shall entitle the holders thereof to purchase
the number of Common Shares as shall be set forth therein at the Purchase Price, but the amount and type of securities issuable
upon exercise and payment of the Purchase Price shall be subject to adjustment as provided herein.

 

4.2             
Any Rights Certificate issued pursuant to Section 3.1 or Section 22 hereof that represents Rights which are null and void
pursuant to Section 7.6 hereof and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this sentence, shall contain (to the extent feasible)
the following legend:

 

The Rights represented by this
Rights Certificate are or were beneficially owned by a Person who was or became an Acquiring Person or an Affiliate or Associate
of an Acquiring Person (as such terms are defined in the Rights Agreement). Accordingly, this Rights Certificate and the Rights
represented hereby are null and void in the circumstances specified in Section 7.6 of the Rights Agreement.

 

    	 	12	 

     

    

 

The provisions of Section 7.6 hereof shall
be operative whether or not the foregoing legend is contained on any Rights Certificate.

 

 5.             Countersignature and Registration. The Right Certificates shall be executed on behalf of the Company by the chief executive officer or the chief financial officer of the Company or by any person authorized thereby, either manually or by facsimile signature; and shall be attested by the secretary or any assistant secretary of the Company or the treasurer or any assistant treasurer of the Company, either manually or by facsimile signature. The Right Certificates shall be countersigned by the Rights Agent and shall not be valid for any purpose unless so countersigned, either manually or by facsimile. If any officer of the Company who shall have executed or attested any of the Right Certificates shall cease to be an officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, the Right Certificates nevertheless may be countersigned by the Rights Agent and issued and delivered by the Company with the same force and effect as though the Person who signed the Right Certificates had not ceased to be an officer of the Company. Any Right Certificate may be executed or attested on behalf of the Company by any Person who, at the actual date of the execution or attestation of the Right Certificate, is a proper officer of the Company to execute or attest the Right Certificate, even if at the date of the execution of this Agreement the Person was not a proper officer.

 

Following the Distribution
Date, and receipt by the Rights Agent of written notice to that effect and other relevant and necessary information referred to
in Section 3.1, the Rights Agent will keep or cause to be kept, at its principal office, books for registration of the transfer
of the Right Certificates issued hereunder. These books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights represented on its face by each of the Right Certificates, and the date of issuance of each
of the Right Certificates.

 

		6.	Transfer, Split-Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates.

 

6.1             
Subject to the provisions of Section 14, at any time after the Close of Business on the Distribution Date, and prior to
the earlier of the Redemption Date or the Close of Business on the Final Expiration Date, any Right Certificate (other than a Right
Certificate representing Rights that have become null and void pursuant to Section 7.6 or that have been exchanged pursuant to
Section 24) may be transferred, split up, combined or exchanged for another Right Certificate, entitling the registered holder
to purchase a like number of Common Shares (or, following a Triggering Event, other securities, cash or other assets, as the case
may be) as the Right Certificate surrendered theretofore entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate shall make a request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate to be transferred, split up, combined or exchanged at the office of the Rights Agent designated for such
purpose accompanied by signature guarantee (a “Signature Guarantee”) from an eligible guarantor institution participating
in a signature guarantee program approved by the Securities Transfer Association, and any other reasonable evidence of authority
that may be reasonably required by the Rights Agent. Thereupon, the Rights Agent shall countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so requested. The Company may require payment of a sum
sufficient for any tax or charge that may be imposed in connection with any transfer, split-up, combination or exchange of Right
Certificates. If and to the extent the Company does require payment of any taxes or charges, the Company shall give the Rights
Agent prompt written notice thereof and the Rights Agent shall not have any duty to deliver any Rights Certificate unless and until
the Rights Agent is satisfied that the required payments have been made, and the Rights Agent shall forward any sum collected by
it to the Company or to a Person or Persons specified by the Company in a written notice. The Rights Agent shall have no duty or
obligation to take any action with respect to a Rights holder under any Section of this Agreement which requires the payment by
the Rights holder of applicable taxes and charges unless and until the Rights Agent is reasonably satisfied that the required taxes
and charges have been paid.

 

    	 	13	 

     

    

 

6.2             
Subject to the provisions of Section 14, at any time after the Close of Business on the Distribution Date, and prior to
the earlier of the Redemption Date or the Close of Business on the Final Expiration Date, upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the Company’s or Rights
Agent’s request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and, in
case of mutilation, upon surrender to the Rights Agent and cancellation of the Right Certificate, the Company will make and deliver
a new Right Certificate of like tenor to the Rights Agent for delivery to the registered holder in lieu of the Right Certificate
so lost, stolen, destroyed or mutilated.

 

6.3             
Notwithstanding any other provisions hereof, the Company and the Rights Agent may amend this Rights Agreement to provide
for uncertificated Rights in addition to or in place of Rights represented by Rights Certificates, to the extent permitted by applicable
law.

 

		7.	Exercise of Rights; Purchase Price; Expiration Date of Rights.

 

7.1             
Except as otherwise provided herein, the Rights shall become exercisable on the Distribution Date, and thereafter the registered
holder of any Right Certificate (other than a holder whose Rights have become null and void pursuant to Section 7.6 or have been
exchanged pursuant to Section 24) may, subject to Section 11.1.2 and except as otherwise provided herein, exercise the Rights represented
thereby, in whole or in part, at any time after the Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof properly completed and duly executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with payment of the Purchase Price for each Common Share represented by a Right
that is exercised and an amount equal to any applicable tax or charge required to be paid pursuant to Section 9.3, prior to the
time (the “Expiration Date”) that is the earliest of (i) the Close of Business on the Final Expiration Date,
(ii) the time at which the Rights are redeemed pursuant to Section 23, (iii) the time at which the Rights are exchanged pursuant
to Section 24 or (iv) the Closing of any merger or other acquisition transaction involving the Company pursuant to an agreement
described in Section 13.3 at which time the Rights are terminated.

 

7.2             
The purchase price to be paid upon the exercise of each Right to purchase one Common Share represented by a Right shall
initially be $40.52 (the “Purchase Price”) and shall be payable in lawful money of the United States of America
in accordance with Section 7.3. Each Right shall initially entitle the holder to acquire one Common Share upon exercise of the
Right. The Purchase Price and the number of Common Shares or other securities for which a Right is exercisable shall be subject
to adjustment from time to time as provided in Sections 11 and 13.

 

    	 	14	 

     

    

 

7.3             
Except as otherwise provided herein, upon receipt of a Right Certificate representing exercisable Rights, with the form
of election to purchase properly completed and duly executed, accompanied by a Signature Guarantee and payment of the Purchase
Price for the number of Rights exercised and an amount equal to any applicable tax or charge required to be paid by the holder
of the applicable Right Certificate in accordance with Section 9.3 by cash, certified check, cashier’s check or money order
payable to the order of the Company, the Rights Agent shall thereupon promptly (i)(A) requisition from any transfer agent of the
Common Shares (or make available, if the Rights Agent is the transfer agent for the shares) certificates for the number of Common
Shares to be purchased (or, in the case of Book Entry Common Shares or other uncertificated securities, requisition from a transfer
agent a notice setting forth the number of shares or other securities to be purchased for which registration will be made on the
stock transfer books of the Company), and the Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) requisition from any depositary agent for the Common Shares depositary receipts representing the number of Common
Shares to be purchased (in which case certificates for the Common Shares represented by the depositary receipts shall be deposited
by the transfer agent with the depositary agent), and the Company hereby directs the depositary agent to comply with such request;
(ii) when necessary to comply with this Agreement, requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional Common Shares in accordance with Section 14; (iii) after receipt of the certificates or depositary receipts, cause
the same to be delivered to the registered holder of the applicable Right Certificate or, upon the order of the registered holder,
in the name or names as may be designated by the holder; and (iv) when necessary to comply with this Agreement, after receipt,
deliver cash to the registered holder of the applicable Right Certificate or, upon the order of the registered holder, the Person
or Persons as may be designated by the holder. The Company reserves the right to require that, upon any exercise of Rights, a number
of Rights be exercised so that only whole Common Shares would be issued.

 

7.4             
Except as otherwise provided herein, if the registered holder of any Right Certificate shall exercise less than all the
Rights represented thereby, a new Right Certificate representing Rights equivalent to the exercisable Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of the Right Certificate or to the holder’s duly authorized
assigns, subject to the provisions of Section 14.

 

7.5             
Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder of Rights upon the occurrence of any purported transfer or exercise
of Rights as set forth in Section 6 or this Section 7 unless the registered holder shall have (i) properly completed and signed
the certificate contained in the form of assignment or form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for transfer or exercise, (ii) tendered the Purchase Price (and an amount equal to any applicable transfer
tax required to be paid by the holder of such Right Certificate in accordance with Section 9) to the Company in the manner set
forth in Section 7.3 and (iii) provided any additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company and the Rights Agent shall reasonably request.

 

    	 	15	 

     

    

 

7.6             
Notwithstanding anything in this Agreement to the contrary, from and after a Person becomes an Acquiring Person, any Rights
that are or were acquired or Beneficially Owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any Associate or Affiliate thereof) who becomes a transferee after the Acquiring
Person became such, or (iii) a transferee of an Acquiring Person (or of any Associate or Affiliate thereof) who becomes a transferee
prior to or concurrently with the Acquiring Person’s becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any
Person with whom the Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights,
(B) a transfer which the Continuing Directors have determined, within one hundred and eighty (180) days for limiting the power
of future directors to vote in this regard following a Section 23.1 Event, by a majority of the Continuing Directors, or if such
determination is not made until after such period expires, by a majority of the Board, is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 7.6 or (C) a transfer pursuant to Section 5.7 of the Charter
to a trust, shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall use all reasonable efforts
to insure that the provisions of this Section 7.6 and Section 4.2 hereof are complied with, but the Company and the Rights Agent
shall have no liability to any holder of Rights Certificates or other Person as a result of the Company’s failure to make
any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. For the avoidance
of any doubt, on and after the Distribution Date, any Right, the exercise or exchange of which would cause a Person to become an
Acquiring Person, shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or otherwise.

 

 8.           Cancellation and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of exercise, transfer, split-up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate representing Rights purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all canceled Right Certificates to the Company, or shall, at the written request of the Company, destroy the canceled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.

 

    	 	16	 

     

    

 

 9.            Status and Availability of Common Shares.

 

9.1             
The Company covenants and agrees that it will cause to be kept available out of its authorized and unissued Common Shares,
the number of Common Shares that will be sufficient to permit the exercise in full of all outstanding Rights in accordance with
Section 7.

 

9.2             
The Company shall take all action as may be reasonably necessary to ensure that all Common Shares (or other securities of
the Company) delivered upon exercise of Rights shall, at the time of delivery of the certificates (or by Book Entry) for the Common
Shares (or other securities of the Company), subject to payment of the Purchase Price, be duly and validly authorized and issued
and fully paid and non-assessable shares.

 

9.3             
The Company shall pay when due and payable any and all federal and state transfer taxes and charges which may be payable
in respect of the issuance or delivery of the Right Certificates or the issuance and delivery of any certificates or depository
receipts or entries in the Book Entry account system of the transfer agent for the Common Shares (or other securities of the Company)
upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax or charges which may be payable
in respect of any transfer or delivery of Right Certificates to a Person other than, or the issuance or delivery of certificates
or depositary receipts for the Common Shares (or other securities of the Company) in a name other than that of, the registered
holder of the Right Certificate representing Rights surrendered for exercise, and shall not be required to issue or deliver any
certificates or depositary receipts for Common Shares (or other securities of the Company) upon the exercise of any Rights until
any required tax or charge shall have been paid (any required tax or charge being payable by the holder of the Right Certificate
at the time of surrender) or until it has been established to the Company’s or Rights Agent’s reasonable satisfaction
that no transfer tax or charge is due.

 

9.4             
If the Common Shares (and, after the occurrence of a Section 11.1.2 Event, any other securities) issuable upon the exercise
of the Rights are listed on any national securities exchange, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such issuance to be listed on an exchange upon official notice of
issuance upon exercise of the Rights.

 

9.5             
The Company shall use all reasonable efforts to: (i) file, as soon as practicable following the earliest date after the
first occurrence of a Section 11.1.2 Event in which the consideration to be delivered by the Company upon exercise of the Rights
has been determined in accordance with this Agreement, a registration statement under the Securities Act with respect to the Rights
and the securities issuable upon exercise of the Rights on an appropriate form, (ii) cause the registration statement to become
effective as soon as practicable after filing the registration statement, (iii) cause the registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for securities or (B) the Expiration Date.  The Company will also take any action as may
be appropriate under, or to ensure compliance with, the securities or “blue sky” laws of the various jurisdictions
in connection with the exercise of the Rights.  The Company may, acting by resolution of the Board of Directors, temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set forth in clause (i) of the first sentence of this
Section 9.5, the exercise of the Rights in order to prepare and file the registration statement stating that exercise of the Rights
has been temporarily suspended, as well as a public announcement at the time the suspension is no longer in effect.  In addition,
if the Company shall determine that a registration statement is required in other circumstances following the Distribution Date,
the Company may similarly temporarily suspend exercise of the Rights until such time as a registration statement has been declared
effective.  Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercised in any jurisdiction
if the requisite qualification in the applicable jurisdiction shall not have been obtained, the exercise thereof shall not otherwise
be permitted under applicable law or a registration statement shall not have been declared effective.

 

    	 	17	 

     

    

 

 10.          Common Shares Record Date. Each Person in whose name any certificate or entry in the Book Entry account system of the transfer agent for the Common Shares is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Common Shares (or other securities of the Company) represented thereby on, and the certificate (or Book Entry) shall be dated, the date upon which the Right Certificate representing the Rights was duly surrendered and payment of the Purchase Price (and any applicable taxes and charges) was made; provided, however, that, if the date of surrender and payment is a date upon which the Common Shares transfer books of the Company are closed, the Person shall be deemed to have become the record holder of the Common Shares on, and the certificate shall be dated, the next succeeding Business Day on which the Common Shares transfer books of the Company are open. Prior to the exercise of the Rights represented thereby, the holder of a Right Certificate shall not be entitled to any rights of a holder of Common Shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions, or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein.

 

		11.	Adjustment of Purchase Price, Number of Shares or Number of Rights.

 

11.1         
General. The Purchase Price, the number of Common Shares covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 11.

 

11.1.1   
In the event the Company shall at any time after the date of this Agreement (i) declare a dividend on the Common Shares
payable in Common Shares, (ii) subdivide the outstanding Common Shares into a larger number of Common Shares, (iii) combine the
outstanding Common Shares into a smaller number of Common Shares or (iv) issue any shares of its capital stock in a reclassification
of the Common Shares (including any reclassification in connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this Section 11.1 and Section 7.6, the Purchase Price in effect, and
the number and kind of shares of capital stock issuable upon the exercise of each Right, after the record date for the dividend
or the effective date of the subdivision, combination or reclassification, as applicable, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if the Right had been exercised immediately prior to such date and at a time when the Common Shares transfer
books of the Company were open, the holder would have owned upon exercise of the Right and been entitled to receive by virtue of
the dividend, subdivision, combination or reclassification, as applicable; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. If an event occurs which would require an adjustment under both Section 11.1.1
and Section 11.1.2 hereof, the adjustment provided for in this Section 11.1.1 shall be in addition to, and shall be made prior
to any adjustment required pursuant to Section 11.1.2 hereof.

 

    	 	18	 

     

    

 

11.1.2   
Subject to Section 7.6 and Section 24, in the event any Person becomes an Acquiring Person (other than by means of a Permitted
Offer or a Section 13 Event) and the Board of Directors authorizes the Company to issue Rights Certificates under Section 3.1 (the
 “Section 11.1.2 Event”), then, each holder of a Right (except as provided below and in Section 7.6 hereof) shall
thereafter have a right to receive (subject to the last sentence of Section 23.1 hereof), upon exercise thereof at a price equal
to the then current Purchase Price, in accordance with the terms of this Agreement and in lieu of the Common Shares issuable under
Section 7.1, a number of Common Shares equal to the result obtained by (x) multiplying the then current Purchase Price by the number
of Common Shares for which a Right was exercisable immediately prior to the first occurrence of a Section 11.1.2 Event, and (y)
dividing that product (which, following the first occurrence, shall thereafter be referred to as the “Purchase Price”
for each Right and for all purposes of this Agreement) by 50% of the then Current Per Share Market Price of the Common Shares (determined
pursuant to Section 11.4.2) on the date of the first occurrence (the number of shares of stock being referred to as the “Adjustment
Shares”); provided, however, that if the transaction that would otherwise give rise to the foregoing adjustment
is also subject to the provisions of Section 13 hereof, then only the provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11.1.2.

 

11.1.3   
In the event that the number of Common Shares authorized by the Charter (as the same may be amended and restated from time
to time) but not outstanding or reserved for issuance for purposes other than exercise of the Rights is not sufficient to permit
the exercise in full of the Rights in accordance with the foregoing Section 11.1.2 and the Board of Directors determines not to
amend the Charter to authorize additional Common Shares, the Company, acting by resolution of the Board of Directors, shall, to
the extent permitted by applicable law and any material agreements then in effect to which the Company is a party, (A) determine
the value of the Adjustment Shares issuable upon the exercise of a Right in accordance with the foregoing Section 11.1.2 (the “Current
Value”) and the amount by which it exceeds the Purchase Price attributable to each Right (the excess being referred to
as the “Spread”), and (B) with respect to each Right (other than Rights that have become void pursuant to Section
7.6), make adequate provision to substitute for the Adjustment Shares, upon the exercise of the Right and payment of the applicable
Purchase Price, (1) cash, (2) a reduction in Purchase Price, (3) equity securities of the Company other than Common Shares (including,
without limitation, shares, or units of shares, of preferred stock which the Board of Directors has deemed to have essentially
the same value or economic rights as Common Shares (“Common Stock Equivalents”), (4) debt securities of the
Company, (5) other assets or (6) any combination of any or all of the foregoing which, when added to the value of the Common Shares
issued upon exercise of the Right, have an aggregate value equal to the Current Value (less the amount of any reduction in the
Purchase Price), where the aggregate value has been determined by the Board of Directors; provided, however, if the Company
shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following the later
of (x) the first occurrence of a Section 11.1.2 Event and (y) the date on which the Company’s right of redemption pursuant
to Section 23.1 hereof, as the date may be amended by Section 27 hereof, expires, then the Company shall be obligated to deliver,
to the extent permitted by applicable law and any material agreements then in effect to which the Company is a party, upon the
surrender for exercise of a Right and without requiring payment of the Purchase Price, Common Shares (to the extent available)
and then, if necessary, cash, which shares and/or cash have an aggregate value equal to the Spread.

 

    	 	19	 

     

    

 

11.2         
If the Board of Directors fixes a record date for the issuance of rights, options or warrants to all holders of Common Shares
entitling them (for a period expiring within forty-five (45) calendar days after the record date) to subscribe for or purchase
Common Shares, or shares having the same rights, privileges and preferences as the Common Shares (“Equivalent Common Shares”),
or securities convertible into Common Shares or Equivalent Common Shares at a price per Common Share or Equivalent Common Share
(or having a conversion price per share, if a security convertible into Common Shares or Equivalent Common Shares) less than the
then Current Per Share Market Price of the Common Shares (as determined pursuant to Section 11.4.2) on the record date, the Purchase
Price to be in effect after the record date shall be adjusted by multiplying the Purchase Price in effect immediately prior to
the record date by a fraction, (i) the numerator of which shall be (A) the number of Common Shares outstanding on the record date
plus (B) the number of Common Shares which the aggregate offering price of the total number of Common Shares or Equivalent Common
Shares to be offered (or the aggregate initial conversion price of the convertible securities to be offered) would purchase at
the then Current Per Share Market Price and (ii) the denominator of which shall be (A) the number of Common Shares outstanding
on the record date plus (B) the number of additional Common Shares or Equivalent Common Shares to be offered for subscription or
purchase (or into which the convertible securities to be offered are initially convertible); provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of one Right. If such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such consideration shall be as determined by the Board of
Directors, whose determination shall be described in a statement filed with the Rights Agent. Common Shares owned by or held for
the account of the Company or any Subsidiary of the Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever a record date is fixed. If such rights, options or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price that would then be in effect if the record date had not been fixed.

 

11.3         
If the Board of Directors fixes a record date for the making of a distribution to all holders of the Common Shares (including
any distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation)
of evidences of indebtedness or assets (other than a regular periodic cash dividend, if any, or a dividend payable in Common Shares)
or subscription rights or warrants (excluding those referred to in Section 11.2), the Purchase Price to be in effect after the
record date shall be determined by multiplying the Purchase Price in effect immediately prior to the record date by a fraction,
(i) the numerator of which shall be the then Current Per Share Market Price of the Common Shares (as determined pursuant to Section
11.4.2) on the record date, less the fair market value (as determined by the Board of Directors, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights Agent) of the portion of the assets or evidences
of indebtedness to be distributed or of such subscription rights or warrants applicable to one Common Share and (ii) the denominator
of which shall be the then Current Per Share Market Price of the Common Shares; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital
stock of the Company to be issued upon exercise of one Right. These adjustments shall be made successively whenever a record date
is fixed. If a distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price that would then
be in effect if the record date had not been fixed.

 

    	 	20	 

     

    

 

11.4         
Current Per Share Market Price.

 

11.4.1   
Except as otherwise provided herein, for the purpose of any computation hereunder, the “Current Per Share Market
Price” of any security (a “Security” for the purpose of this Section 11.4.1) on any date shall be
deemed to be the average of the daily closing prices per share of the Security for the thirty (30) consecutive Trading Days immediately
prior to but not including such date; provided, however, that if the Current Per Share Market Price of the Security
is determined during a period (i) following the announcement by the issuer of the Security of (A) a dividend or distribution on
the Security payable in shares of the Security or other securities convertible into shares of the Security, or (B) any subdivision,
combination or reclassification of the Security of other securities convertible into the Security, and (ii) prior to the expiration
of thirty (30) Trading Days after (but not including) the ex-dividend date for a dividend or distribution, or the record date for
a subdivision, combination or reclassification, then, and in each case, the Current Per Share Market Price shall be appropriately
adjusted to reflect the current market price per share equivalent of the Security. The closing
price for each day shall be the last sale price, regular way, or, in case no sale takes place on the applicable day, the average
of the closing bid and asked prices, regular way, in either case as reported by the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the NYSE or NASDAQ or, if the Security is not listed or admitted
to trading on the NYSE or NASDAQ, as reported in the principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is listed or admitted to trading or, if the Security
is not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average
of the high and low asked prices in the over-the-counter market as reported by any system then in use, or, if not so quoted, the
average of the closing bid and asked prices as furnished by a professional market maker making a market in the Security selected
by the Board of Directors. If no market maker is making a market in the Security, the fair value of the Security on the
applicable date as determined by the Board of Directors shall be used.

 

11.4.2   
For the purpose of any computation hereunder, the “Current Per Share Market Price” of the Common Shares,
if the Common Shares are not listed on a national securities exchange, shall be conclusively deemed to be the Company’s estimated
net asset value per share of its Common Stock (the “Estimated Per-Share NAV of Common Stock”) in effect as of
the applicable date, calculated pursuant to the valuation guidelines adopted by the Board of Directors and published by the Company
(appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof and not
otherwise reflected in the Estimated Per-Share NAV of Common Stock as of the applicable date); provided, however, that,
if the Board of Directors believes that the Estimated Per-Share NAV of Common Stock is not representative of the fair value per
Common Share, the “Current Per Share Market Price” of the Common Shares shall be the fair value per share as
determined by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent. If the Common Shares are listed on a national securities exchange, the “Current Per Share
Market Price” of the Common Shares shall be determined in accordance with the method set forth in Section 11.4.1.

 

    	 	21	 

     

    

 

11.5         
Notwithstanding anything herein to the contrary, no adjustment in the Purchase Price shall be required unless an adjustment
would require an increase or decrease of at least 1% in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11.5 are not required to be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest one ten-thousandth of any
share or security as the case may be. Notwithstanding the first sentence of this Section 11.5, any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years from the date of the transaction which requires an adjustment
and (ii) the date of the expiration of the right to exercise any Rights.

 

11.6         
If, as a result of an adjustment made pursuant to Section 11.1 or Section 13.1, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company other than Common Shares, the Purchase Price and number
of any other shares so receivable upon exercise of any Right shall thereafter be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect to the Common Shares contained in Sections 11.1,
11.2, 11.3, 11.5, 11.8, 11.9, 11.10, 11.11, 11.12, 11.13 and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the
Common Shares shall apply on like terms to any other shares; provided, however, that the Company shall not be liable for its inability
to keep available for issuance upon exercise of the Rights pursuant to Section 11.1.2 a number of Common Shares greater than the
number then authorized by the Charter but not outstanding or reserved for any other purpose.

 

11.7         
All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of Common Shares purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.

 

11.8         
Unless the Company exercises its election as provided in Section 11.9, upon each adjustment of the Purchase Price as a result
of the calculations made in Sections 11.2 and 11.3, each Right outstanding immediately prior to the making of any adjustment shall
thereafter constitute the right to purchase, at the adjusted Purchase Price, that number of Common Shares (calculated to the nearest
one ten-thousandth of a Common Share) obtained by (i) multiplying the number of Common Shares into which the Right is exercisable
immediately prior to this adjustment by the Purchase Price in effect immediately prior to adjusting the Purchase Price and (ii)
dividing the product by the Purchase Price in effect immediately after adjusting the Purchase Price.

 

    	 	22	 

     

    

 

11.9         
The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights in substitution
for any adjustment in the number of Common Shares issuable upon the exercise of a Right. Each of the Rights outstanding after adjusting
the number of Rights shall be exercisable for the number of Common Shares for which a Right was exercisable immediately prior to
the adjustment. Each Right held of record prior to adjusting the number of Rights shall become that number of Rights (calculated
to the nearest one one-hundredth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement
of its election to adjust the number of Rights (with written notice thereof to the Rights Agent), indicating the record date for
the adjustment and, if known at the time, the amount of the adjustment to be made. The record date may be the date on which the
Purchase Price is adjusted or any day thereafter but, if the Right Certificates have been distributed, shall be at least ten (10)
days after the date of the public announcement. If Right Certificates have been distributed, upon each adjustment of the number
of Rights pursuant to this Section 11.9, the Company shall, as promptly as practicable, cause to be distributed to holders of record
of Rights on the applicable record date Right Certificates representing, subject to Section 14, the additional Rights to which
these holders shall be entitled as a result of the adjustment or, at the option of the Company, shall cause to be distributed to
the holders of record in substitution and replacement for the Right Certificates held by these holders prior to the date of adjustment,
and upon surrender thereof if required by the Company, new Right Certificates representing all the Rights to which these holders
shall be entitled after the adjustment. Right Certificates to be so distributed shall be issued, executed and delivered by the
Company, and countersigned and delivered by the Rights Agent, in the manner provided for herein and shall be registered in the
names of the holders of record of Rights on the record date specified in the public announcement.

 

11.10     
Irrespective of any adjustment or change in the Purchase Price or the number of Common Shares issuable upon the exercise
of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price and the number
of Common Shares which were expressed in the initial Right Certificates issued hereunder.

 

11.11     
Before taking any action that would cause an adjustment reducing the Purchase Price below the then par value of the fraction
of Common Shares or other shares of capital stock issuable upon exercise of the Rights, the Company shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and non-assessable
Common Shares or any other shares at the adjusted Purchase Price.

 

11.12     
If this Section 11 requires that an adjustment in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer (with notice thereof to the Rights Agent), until the occurrence of the specified event,
issuing to the holder of any Right exercised after the record date of the number of Common Shares and other capital stock or securities
of the Company, if any, issuable upon the exercise over and above the number of Common Shares and other capital stock or securities
of the Company, if any, issuable upon the exercise on the basis of the Purchase Price in effect prior to the adjustment; provided,
however, that the Company shall deliver to the applicable holder a due bill or other appropriate instrument evidencing
the holder’s right to receive additional securities upon the occurrence of the event requiring an adjustment.

    	 	23	 

     

    

 

11.13     
Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make any adjustments in the
Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that the Board of
Directors, in its sole discretion, shall determine to be advisable in order that any (i) combination, consolidation or subdivision
of the Common Shares, (ii) issuance wholly for cash of any Common Shares at less than the Current Per Share Market Price, (iii)
issuance wholly for cash of Common Shares or securities which by their terms are convertible into or exchangeable for Common Shares,
(iv) dividends on Common Shares payable in Common Shares, or (v) issuance of any rights, options or warrants referred to in Section
11.2 made by the Company after the date of this Agreement to holders of its Common Shares shall not be taxable to these stockholders.

 

11.14     
If, at any time after the date of this Agreement and prior to the Distribution Date, the Company (i) declares or pays any
dividend on the Common Shares payable in Common Shares or (ii) effects a subdivision, combination or consolidation of the Common
Shares (by reclassification or otherwise other than by payment of dividends in Common Shares) into a greater or lesser number of
Common Shares, then (i) the number of Common Shares purchasable after the applicable event upon exercise of each Right shall be
determined by multiplying the number of Common Shares so purchasable immediately prior to the applicable event by a fraction, the
numerator of which is the number of Common Shares outstanding immediately before the applicable event and the denominator of which
is the number of Common Shares outstanding immediately after the applicable event, and (ii) each Common Share outstanding immediately
after the applicable event shall have issued with respect to it that number of Rights which each Common Share outstanding immediately
prior to the applicable event had issued with respect to it. The adjustments provided for in this Section 11.14 shall be made successively
whenever a dividend is declared or paid or a subdivision, combination or consolidation is effected. If an event occurs that would
require an adjustment under Section 11.1.2 and this Section 11.14, the adjustment provided in this Section 11.14 shall be in addition
and prior to any adjustment required pursuant to Section 11.1.2.

 

 12.          Certificate of Adjustment. Whenever an adjustment is made as provided in Section 11 or Section 13, the Company shall promptly (i) prepare a certificate setting forth the adjustment and a brief statement of the facts accounting for the adjustment in reasonable detail, (ii) file with the Rights Agent and with each transfer agent for the Common Shares a copy of the certificate, and (iii) if the adjustment occurs following a Distribution Date, mail a brief summary thereof to each holder of a Right Certificate in accordance with Section 25 (if so required under Section 25) and Section 26. Notwithstanding the foregoing sentence, the failure of the Company to make a certification or give notice shall not affect the validity of an adjustment or the force or effect of the requirement for an adjustment. The Rights Agent shall be fully protected in relying on any certificate of adjustment and on any adjustment therein contained and shall not be obligated or responsible for calculating any adjustment, nor shall the Rights Agent be deemed to have any liability therefor or knowledge of any adjustment, unless and until it shall have received the certificate.

 

    	 	24	 

     

    

 

		13.	Consolidation, Merger, Sale or Transfer of Assets or Earning Power.

 

13.1         
If, at any time after a Stock Acquisition Date, (i) the Company consolidates with, or merges with and into, any other Person;
(ii) any Person consolidates with the Company, or merges with and into the Company, and the Company is the continuing or surviving
corporation of the transaction and, in connection with the transaction, all or part of the Common Shares are or will be changed
into or exchanged for stock or other securities of any other Person (or the Company) or cash or any other property; or (iii) the
Company sells or otherwise transfers (or one or more of its Subsidiaries sell or otherwise transfer), in one or more transactions,
assets or Earning Power aggregating 50% or more of the assets or Earning Power of the Company and its Subsidiaries (taken as a
whole) to any other Person other than the Company or one or more of its wholly owned Subsidiaries (each of the foregoing events,
a “Section 13 Event”), then, upon the first occurrence of any Section 13 Events, proper provision shall be made
so that (A) each holder of a Right (except for Rights which have become null and void pursuant to Section 7.6) shall thereafter
have the right to receive, upon the exercise of a Right, at a price equal to the then current Purchase Price, in accordance with
the terms of this Agreement and in lieu of the Common Shares issuable under Section 7.1, the number of shares of Common Stock of
such other Person (including the Company as successor thereto or as the surviving corporation) equal to the result obtained by
(1) multiplying the then current Purchase Price by the number of Common Shares for which a Right is exercisable immediately prior
to the first occurrence of a Section 13 Event (or, if a Section 11.1.2 Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of Common Shares for which a Right was exercisable prior to the occurrence of a Section 11.1.2
Event by the Purchase Price in effect prior to the occurrence of a Section 11.1.2 Event), and (2) dividing that product (which,
following the occurrence of a Section 13 Event, shall be referred to as the “Purchase Price” for each Right
and for all purposes of this Agreement) by fifty percent (50%) of the then Current Per Share Market Price of the shares of Common
Stock of the other Person (determined pursuant to Section 11.4.1 hereof) on the date of consummation of such Section 13 Event;
(B) the issuer of the shares of Common Stock shall thereafter be liable for, and shall assume, by virtue of the Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (C) the term “Company” shall thereafter be
deemed to refer to the issuer of the shares of Common Stock; and (D) the issuer shall take steps in connection with the consummation
of the applicable transaction as may be necessary to ensure that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to the Common Stock thereafter deliverable upon the exercise of the Rights; provided that, upon
the subsequent occurrence of any consolidation, merger, sale or transfer of assets or other extraordinary transaction in respect
of the issuer, each holder of a Right shall thereupon be entitled to receive, upon exercise of a Right and payment of the Purchase
Price as provided in this Section 13.1, cash, shares, rights, warrants and other property which the holder would have been entitled
to receive had the holder, at the time of the applicable transaction, owned shares of Common Stock of the issuer receivable upon
the exercise of a Right pursuant to this Section 13.1, and the issuer shall take all steps (including, but not limited to, reservation
of shares of stock) necessary to permit the subsequent exercise of the Rights in accordance with the terms hereof for cash, shares,
rights, warrants and other property.

 

13.2         
The Company shall not consummate any consolidation, merger, sale or transfer unless prior thereto the Company and the issuer
of the shares of Common Stock shall have executed and delivered to the Rights Agent a supplemental agreement providing for the
issuer’s compliance with this Section 13. The Company shall not enter into any transaction of the kind referred to in this
Section 13 if, at the time of the applicable transaction, there are any rights, warrants, instruments or securities outstanding
or any agreements or arrangements which, as a result of the consummation of the applicable transaction, would eliminate or substantially
diminish the benefits intended to be afforded by the Rights. The provisions of this Section 13 shall apply to successive mergers,
consolidations or sales or other transfers. In the event that a Section 13 Event shall occur at any time after the occurrence of
a Section 11.1.2 Event, the Rights that have not theretofore been exercised shall thereafter become exercisable in the manner described
in Section 13.1.

 

    	 	25	 

     

    

 

13.3         
Notwithstanding anything contained herein to the contrary, in the event of any merger or other acquisition transaction involving
the Company pursuant to a merger or other acquisition agreement between the Company and any Person (or one or more of the Person’s
Affiliates or Associates) which agreement has been approved by the Board of Directors prior to any Person becoming an Acquiring
Person, this Agreement and the rights of holders of Rights hereunder shall be terminated in accordance with Section 7.1.

 

13.4         
For purposes hereof, the “Earning Power” of the Company and its Subsidiaries shall be determined in good
faith by the Board of Directors on the basis of the operating earnings of each business operated by the Company and its Subsidiaries
during the three fiscal years preceding the date of determination (or, in the case of any business not operated by the Company
or any of its Subsidiaries during three full fiscal years preceding the date of determination, during the period the applicable
business was operated by the Company or any of its Subsidiaries).

 

		14.	Fractional Rights and Fractional Shares.

 

14.1         
The Company shall not be required to issue fractions of Rights or to distribute Right Certificates which represent fractional
Rights. In lieu of issuing fractional Rights, the Company has the option to pay to each registered holder of the Right Certificates
with regard to which the fractional Rights would otherwise be issuable an amount in cash equal to the same fraction of the current
market value of a whole Right. For the purposes of this Section 14.1, the current market value of a whole Right shall be the closing
price (as determined in accordance with Section 11.4.1) of the Rights for the Trading Day immediately prior to the date on which
the fractional Rights would have been otherwise issuable.

 

14.2         
The Company shall not be required to issue fractions of shares of its stock upon the exercise of the Rights or to distribute
certificates which represent fractional shares. In lieu of fractional shares, the Company has the option to pay to each registered
holder of Right Certificates at the time the Rights are exercised or exchanged as herein provided an amount in cash equal to the
same fraction of the current market value of a whole share of its stock. For the purposes of this Section 14.2, the current market
value of a whole share of stock shall be the closing price (as determined in accordance with the second sentence of Section 11.4.1)
of the applicable share of stock for the Trading Day immediately prior to the date of exercise or exchange; provided, however,
that, with respect to the current market value of a Common Share, if the Common Shares are not listed on a national securities
exchange, the current market value shall be the Current Per Share Market Price of Common Stock (as determined in accordance with
the first sentence of Section 11.4.2) for the Business Day immediately prior to the date of exercise or exchange. 

 

14.3         
[Reserved]

 

14.4         
The holder of a Right by the acceptance of the Right expressly waives any right to receive fractional Rights or fractional
shares upon exercise of a Right (except as provided in this Section 14).

 

    	 	26	 

     

    

 

14.5         
Whenever a payment for fractional Rights or fractional shares is to be made by the Rights Agent, the Company shall (i) promptly
prepare and deliver to the Rights Agent a certificate setting forth in reasonable detail the facts related to the payments and
the prices or formulas utilized in calculating the payments, and (ii) provide sufficient monies to the Rights Agent in the form
of fully collected funds to make the payments. The Rights Agent shall be fully protected in relying upon the Company’s certificate
and shall have no duty with respect to, and shall not be deemed to have knowledge of any payment for fractional Rights or fractional
shares under any Section of this Agreement relating to the payment of fractional Rights or fractional shares unless and until the
Rights Agent shall have received the certificate and sufficient monies.

 

 15.          Rights of Action. All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under Section 18, are vested in the respective registered holders of the Rights. Any holder of Right may, without the consent of the Rights Agent or of the holder of any other Right, on the holder’s own behalf and for the holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, the holder’s right to exercise the Rights represented by the Right Certificate in the manner provided in the Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that holders of Rights would not have an adequate remedy at law for any breach by the Company of this Agreement and will be entitled to specific performance of the obligations under, and injunctive relief against any actual or threatened violation by the Company of its obligations under this Agreement.

 

 16.          Agreement of Right Holders. Every holder of a Right, by accepting the same, consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:

 

16.1         
prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Common Shares;

 

16.2         
after the Distribution Date, the Rights are transferable only on the registry books maintained by the Rights Agent if the
Rights Certificate representing the Rights is surrendered at office of the Rights Agent designated for such purpose accompanied
by a Signature Guarantee, duly endorsed or accompanied by a proper instrument of transfer; and

 

16.3         
the Company and the Rights Agent may deem and treat the Person in whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate or Book Entry shares in respect of Common Stock) is registered as the absolute owner
thereof and of the Rights represented thereby (notwithstanding any notations of ownership or writing on the Right Certificates
or the associated Common Stock certificate (or Ownership Statements or notices provided to holders of Book Entry Common Shares)
made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to Section 7.5 hereof, shall be affected by any notice to the contrary.

 

    	 	27	 

     

    

 

16.4         
notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability
to any holder of a Right or other Person as a result of the inability of the Company or the Rights Agent to perform any of its
or their obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree, judgment
or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission,
or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority prohibiting or otherwise
restraining performance of an obligation; provided, however, that the Company must use its best efforts to have any order,
decree, judgment or ruling lifted or otherwise overturned as soon as practicable.

 

 17.           Right Holder Not Deemed a Stockholder. No holder, as such, of any Right shall be entitled to vote or receive dividends, or be deemed for any purpose the holder of the Common Shares or any other securities of the Company that may at any time be issuable on the exercise or exchange of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, to give or withhold consent to any corporate action, to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25), or to receive dividends or subscription rights, or otherwise, until the Rights represented by the Right Certificate shall have been exercised or exchanged in accordance with the provisions hereof.

 

 18.           Concerning the Rights Agent. The Company shall pay to the Rights Agent reasonable compensation for all services rendered by it hereunder in accordance with a mutually agreed upon fee schedule and, from time to time, on demand of the Rights Agent, reimburse the Rights Agent for its reasonable expenses and counsel fees and other disbursements incurred in the preparation, delivery, amendment, administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company shall also indemnify the Rights Agent for, and hold it harmless against, any and all loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or expense (including, without limitation, the reasonable fees and expenses of legal counsel) that may be paid, incurred or suffered by it, or which it may become subject, without gross negligence, bad faith or willful misconduct on the part of the Rights Agent (which gross negligence, bad faith, or willful misconduct must be determined by a final, non-appealable judgment of a court of competent jurisdiction), for any action taken, suffered, or omitted to be taken by the Rights Agent in connection with the execution, acceptance, administration, exercise and performance of its duties under this Agreement, including the costs and expenses of defending against any claim or liability arising therefrom, directly or indirectly, or enforcing its rights hereunder; provided, however, that the Rights Agent shall not settle or dispose of any claims in a manner that affects the Company’s rights or interests without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed.

 

The Rights Agent shall
be protected and shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it in connection
with its administration of this Agreement in reliance upon any Right Certificate or certificate for the Common Shares or any other
securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed in the absence of bad faith by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged by the proper Person or Persons, or otherwise upon the advice of
counsel as set forth in Section 20 hereof. The Rights Agent shall not be deemed to have knowledge of any event of which it was
supposed to receive written notice thereof hereunder, but for which it has not received a written notice, and the Rights Agent
shall be fully protected and shall incur no liability for failing to take action in connection therewith unless and until it has
received a written notice.

 

    	 	28	 

     

    

 

 19.           Merger or Consolidation or Change of Name of Rights Agent. Any entity into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any entity resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any entity succeeding to the shareholder service business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided that such entity would be eligible for appointment as a successor Rights Agent under the provisions of Section 21. If, at the time the successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned. If, at that time, any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign the Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent. In all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.

 

If, at any time, the
name of the Rights Agent changes and any of the Right Certificates have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and deliver Right Certificates so countersigned. If, at that time, any of the
Right Certificates have not been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name
or in its changed name. In all such cases such Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.

 

The provisions of Section
18, this Section 19 and Section 20 below shall survive the termination of this Agreement, the resignation, replacement or removal
of the Rights Agent and the exercise, termination and the expiration of the Rights. In no event shall the Rights Agent be liable
for special, punitive, incidental, indirect or consequential loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damage and regardless of the form of
the action; and the Company shall indemnify the Rights Agent and hold it harmless to the fullest extent permitted by law against
any loss, liability or expense incurred as a result of third party claims for special, punitive, incidental, indirect or consequential
loss or damages of any kind whatsoever.

 

 20.          Duties of Rights Agent. The Rights Agent undertakes the duties and obligations expressly set forth in this Agreement (and no implied duties or obligations). The Rights Agent shall perform those duties and obligations upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound:

 

20.1         
The Rights Agent may consult with legal counsel selected by it (who may be outside legal counsel for the Rights Agent or
the Company), and the advice or opinion of legal counsel shall be full and complete authorization and protection to the Rights
Agent and the Rights Agent will have no liability for or in respect of any action taken, suffered or omitted to be taken by it
in the absence of bad faith and in accordance with the advice or opinion of legal counsel.

  

    	 	29	 

     

    

 

20.2         
Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including the identity of any Acquiring Person and the determination of Current Per Share Market Price) be
proved or established by the Company prior to taking, suffering, or omitting to take any action hereunder, such fact or matter
(unless other evidence in respect thereof is specifically prescribed herein) may be deemed to be conclusively proved and established
by a certificate signed by the chief executive officer or the chief financial officer of the Company or by any person authorized
thereby and delivered to the Rights Agent, and the certificate shall be full and complete authorization and protection to the Rights
Agent and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted to be taken by it,
in the absence of bad faith, under the provisions of this Agreement in reliance upon the certificate.

 

20.3         
The Rights Agent shall be liable to the Company and any other Person hereunder only for its own gross negligence, bad faith
or willful misconduct (which gross negligence, bad faith or willful misconduct must be determined by a final judgment of a court
of competent jurisdiction). Any liability of the Rights Agent under this Agreement shall be limited to the amount of annual fees
(not including reimbursed expenses) paid by the Company to the Rights Agent during the twelve (12) months immediately preceding
the event for which recovery from the Rights Agent is being sought.

 

20.4         
The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement
or in the Right Certificates (except as to its countersignature thereof) or be required to verify the same. All such statements
and recitals are and shall be deemed to have been made by the Company only.

 

20.5         
The Rights Agent shall not have any liability for nor be under any responsibility in respect of the validity of this Agreement
or the execution and delivery hereof (except the due execution and delivery hereof by the Rights Agent) or in respect of the validity
or execution of any Right Certificate (except its countersignature thereof); nor shall it be liable or responsible for any breach
by the Company of any covenant or failure by the Company to satisfy any condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions of Sections 11 or 13 or for the manner, method or
amount of any adjustment or the ascertaining of the existence of facts that would require any adjustment (except with respect to
the exercise of Rights represented by Right Certificates after receipt of a certificate furnished pursuant to Section 12 describing
the adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Shares or other securities to be issued pursuant to this Agreement or any Right Certificate
or as to whether any Common Shares or other securities will, when so issued, be validly authorized and issued, fully paid, and
non-assessable.

 

20.6         
The Company shall perform, execute, acknowledge and deliver, or cause to be performed, executed, acknowledged and delivered,
all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.

 

    	 	30	 

     

    

 

20.7         
The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties
hereunder and certificates delivered pursuant to any provision hereof from the chief executive officer or chief financial officer,
and to apply to these officers for advice or instructions in connection with its duties. The Rights Agent shall not be liable for
any action taken or suffered to be taken by it, in the absence of bad faith, in accordance with instructions of any such officer
and such advice or instruction shall be full authorization and protection to the Rights Agent and the Rights Agent shall incur
no liability for or in respect of any action taken or suffered or omitted to be taken by it, in the absence of bad faith, in accordance
with advice or instructions of any such officer or for any delay in acting while waiting for those instructions.

 

20.8         
Subject to applicable law, rules and regulations, the Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company, or become pecuniarily interested
in any transaction in which the Company may be interested, or contract with or lend money to the Company, or otherwise act as fully
and freely as though it were not the Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.

 

20.9         
The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder
either itself (through its directors, officers and employees) or by or through its attorneys or agents. The Rights Agent shall
not be answerable or accountable for any act, default, neglect, or misconduct of any of its attorneys or agents or for any loss
to the Company resulting from any act, default, neglect or misconduct, absent gross negligence, willful misconduct or bad faith
(each as determined by a final judgment of a court of competent jurisdiction) in the selection and continued employment of its
attorneys or agents.

 

20.10     
No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds
for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured
to it.

 

20.11     
The Rights Agent shall not be required to take notice or be deemed to have notice of any fact, event or determination (including,
without limitation, any dates or events defined in this Agreement or the designation of any Person as an Acquiring Person, Affiliate
or Associate) under this Agreement unless and until the Rights Agent shall be specifically notified in writing by the Company of
such fact, event or determination.

 

20.12     
The Rights Agent shall have no responsibility to the Company, any holders of Rights, any holders of Common Shares or any
other Person for interest or earnings on any moneys held by the Rights Agent pursuant to this Agreement.

 

20.13     
In the event the Rights Agent believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction,
request or other communication, paper or document received by the Rights Agent hereunder, the Rights Agent shall promptly notify
the Company thereof, and the Rights Agent, may, in its sole discretion, refrain from taking any action, and shall be fully protected
and shall not be liable in any way to Company, the holder of any Rights Certificate or Book-Entry shares or any other Person for
refraining from taking such action, unless the Rights Agent receives written instructions signed by the Company which eliminates
such ambiguity or uncertainty to the satisfaction of Rights Agent.

 

    	 	31	 

     

    

 

20.14     
The Rights Agent shall act hereunder solely as agent for the Company. The Rights Agent shall not assume any obligations
or relationship of agency or trust with any of the owners or holders of the Rights or Common Stock.

 

20.15     
The Rights Agent may rely on and be fully authorized and protected in acting or failing to act upon (a) any guaranty of
signature by an "eligible guarantor institution" that is a member or participant in the Securities Transfer Agents Medallion
Program or other comparable "signature guarantee program" or insurance program in addition to, or in substitution for,
the foregoing; or (b) any related law, act, regulation or any interpretation of the same even though such law, act, or regulation
may thereafter have been altered, changed, amended or repealed.

 

 21.          Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days’ prior notice in writing mailed to the Company and, in the event that the Rights Agent or one of its Affiliates is not also the transfer agent for the Company, to the transfer agent of Common Shares by registered or certified mail. In the event the transfer agency relationship in effect between the Company and the Rights Agent terminates, the Rights Agent will be deemed to have resigned automatically and be discharged from its duties under this Agreement as of the effective date of termination, and the Company shall be responsible for sending any required notice. The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days’ prior notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to the transfer agent of Common Shares by registered or certified mail, and, after the Distribution Date, to the holders of the Right Certificates by first class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to appoint a successor within a period of thirty (30) days after giving notice of removal or after it has been notified in writing of the Rights Agent’s resignation or incapacity by the resigning or incapacitated Rights Agent, then the registered holder of any Right Certificate (who shall, with the notice, submit the holder’s Right Certificate for inspection by the Company) may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by a court, shall be a Person organized and doing business under the laws of the United States or of any state of the United States, in good standing, which is authorized under the applicable laws to exercise corporate trust or stock transfer powers, is subject to supervision or examination by federal or state authority, and has, along with its Affiliates, at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed, and the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and shall execute and deliver any further assurance, conveyance, act or deed necessary for the purpose, but such predecessor Rights Agent shall not be required to make any additional expenditure or assume any additional liability in connection with the foregoing. Not later than the effective date of any appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and the transfer agent of Common Shares, and, after the Distribution Date, mail a notice in writing to the registered holders of the Rights. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.

 

    	 	32	 

     

    

 

22.        
Issuance of New Right Certificates. Notwithstanding any of the provisions of this Agreement or of the Right Certificates
to the contrary, the Company may, at its option, issue new Right Certificates representing Rights in such form as may be approved
by its Board of Directors to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares
or other securities or property purchasable under the Right Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of Common Shares following the Distribution Date and prior to the earlier
of the Redemption Date and the Close of Business on the Final Expiration Date, the Company may, with respect to Common Shares
so issued or sold (i) pursuant to the exercise of stock options; (ii) under any employee plan or arrangement; (iii) upon the exercise,
conversion or exchange of securities, notes or debentures issued by the Company, or (iv) pursuant to a contractual obligation
of the Company, in each case existing prior to the Distribution Date, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale; provided, however, that (i) no Right Certificate shall be issued if,
and to the extent that, the Company shall be advised by counsel that the issuance would create a significant risk of material
adverse tax consequences to the Company or the Person to whom the Right Certificate would be issued or would create a significant
risk of or result in such options’ or employee plans’ or arrangements’ failing to qualify for otherwise available
special tax treatment, (ii) no Right Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof and (iii) no Right Certificate shall be issued to an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.

 

		23.	Redemption.

 

23.1         
The Board of Directors may, at its option, at any time prior to the earlier of (i) the Close of Business on the fifth (5th)
Business Day following the Distribution Date, or (ii) the Final Expiration Date, redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.000001 per Right, as appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the “Redemption Price”). The redemption of the Rights by the Company
may be made effective at any time, on any basis and subject to any conditions as the Board of Directors in its sole discretion
may establish. The Company may, at its option, pay the Redemption Price in cash, Common Shares (based on the Current Per Share
Market Price at the time of redemption as determined pursuant to Section 11.4.2 hereof) or any other form of consideration deemed
appropriate by the Board of Directors. Notwithstanding anything contained in this Agreement to the contrary, the Rights shall not
be exercisable after the first occurrence of a Section 11.1.2 Event until such time as the Company's right of redemption set forth
in the first sentence of this Section 23.1 has expired.

 

    	 	33	 

     

    

 

23.2         
Immediately upon the action of the Board of Directors (with, if required, the concurrence of a majority of the Continuing
Directors) ordering the redemption of the Rights pursuant to Section 23.1 (or at a later time as the Board of Directors may establish
for the effectiveness of the redemption) (the “Redemption Date”), evidence of which shall have been filed with
the Rights Agent, and without any further action and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. Promptly after
the action of the Board ordering the redemption of the Rights, the Company shall give notice of redemption to the Rights Agent
and the holders of the then outstanding Rights by mailing such notice to all such holders at each holder’s last address as
it appears upon the registry books of the Rights Agent or, prior to the Distribution Date, the registry books for the Common Stock;
provided, however, that failure to give, or any defect in, any notice shall not affect the validity of the redemption. Any
notice that is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the payment of the Redemption Price will be made. With respect to each
holder of Rights, the Redemption Price shall be rounded to the nearest cent for the aggregate Rights held by the holder.

 

23.3         
Notwithstanding the provisions of Section 23.1 hereof, in the event that a majority of the Board of Directors does not consist
of Continuing Directors (the first occurrence of such an event referred to herein as a “Section 23.1 Event”),
then for a period of one hundred and eighty (180) days following the Section 23.1 Event, the Rights shall not be redeemed unless
there are Continuing Directors and a majority of the Continuing Directors concur with the Board’s decision to redeem the
Rights.

 

		24.	Exchange.

 

24.1         
The Company may, at its option, upon authorization of the Board of Directors, at any time after a Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights (excluding Rights that have become null and void pursuant
to Section 7.6) for Common Shares at an exchange ratio of one Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof (the “Exchange Ratio”). Notwithstanding
the foregoing, to the extent prohibited by Maryland law, the Board of Directors shall not be empowered to authorize an exchange
at any time after an Acquiring Person becomes the Beneficial Owner of a majority of the Common Shares then outstanding. From and
after the occurrence of a Section 13 Event, any Rights that theretofore have not been exchanged pursuant to this Section 24 shall
thereafter be exercisable only in accordance with Section 13 and may not be exchanged pursuant to this Section 24. The Board of
Directors may provide that the exchange of the Rights by the Company may be made effective at a time, on any basis and with any
terms and conditions as the Board of Directors in its sole discretion may establish.

 

24.2         
Immediately upon effectiveness of the action of the Board of Directors authorizing the exchange of any Rights pursuant to
Section 24.1, and without any further action and without any notice, the right to exercise the Rights so exchanged shall terminate
and the only right thereafter of a holder shall be to receive a number of Common Shares equal to the number of the Rights held
by the holder which are exchanged multiplied by the Exchange Ratio. The Company shall promptly give public notice of any exchange
(as well as prompt written notice thereof to the Rights Agent); provided, however, that the failure to give, or any
defect in, an exchange notice shall not affect the validity of the exchange. The Company promptly shall mail a notice of any exchange
to all of the holders of the Rights so exchanged at their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice.
Each notice of exchange will state the method by which the exchange of the Common Shares for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become null and void pursuant to the provisions of Section 7.6) held
by each holder of Rights.

 

    	 	34	 

     

    

 

24.3         
In any exchange pursuant to this Section 24, the Board of Directors may provide, at its option, that the Company may substitute
Common Stock Equivalents for Common Shares exchangeable for Rights.

 

24.4         
If there shall not be sufficient Common Shares or Common Stock Equivalents authorized but unissued to permit any exchange
of Rights as contemplated in accordance with this Section 24, the Company shall take all action as may be necessary to authorize
additional Common Shares or Common Stock Equivalents for issuance upon exchange of the Rights.

 

24.5         
[Reserved] 

 

24.6         
Notwithstanding anything in this Section 24 to the contrary, the exchange of the Rights may be made effective at a time,
on any basis and with any terms and conditions as the Board of Directors in its sole discretion may establish. Without limiting
the preceding sentence, the Board of Directors may (i) in lieu of issuing Common Shares or any other securities contemplated by
this Section 24 to the Persons entitled thereto in connection with the exchange (the Persons, the “Exchange Recipients,”
and the Common Shares and other securities, together with any dividends or distributions made on the Common Shares or other securities,
the “Exchange Property”) issue, transfer or deposit the Exchange Property to or into a trust or other entity
that may hold the Exchange Property for the benefit of the Exchange Recipients (provided that the trust or other entity may not
be controlled by the Company or any of its Affiliates or Associates and provided further that the trustee or similar fiduciary
of the trust or other entity will attempt to distribute the Exchange Property to the Exchange Recipients as promptly as practicable),
(ii) permit the trust or other entity to exercise all of the rights that a stockholder of record would possess with respect to
any shares deposited in the trust or other entity and (iii) impose any procedures necessary to verify that the Exchange Recipients
are not Acquiring Persons or Affiliates or Associates of Acquiring Persons as of any time periods established by the Board of Directors
or the trust or other entity. In the event the Board of Directors determines to issue, transfer or deposit the Exchange Property
to or into a trust or other entity, all stockholders entitled to receive shares pursuant to the exchange shall be entitled to receive
such shares (and any dividends or other distributions made thereon after the date on which such shares are deposited in the trust
or other entity) only from the trust or other entity and solely upon compliance with the relevant terms and provisions of any agreement
between the Company and the trust or other entity. In the event the Board of Directors determines, before the Distribution Date,
to effect an exchange, the Board of Directors may delay the occurrence of the Distribution Date to a time as the Board of Directors
deems advisable.

 

    	 	35	 

     

    

 

		25.	Notice of Certain Events.

 

25.1         
If the Company shall after the Distribution Date propose (i) to pay any dividend payable in stock of any class to the holders
of its Common Shares or to make any other distribution to the holders of its Common Shares (other than a regular periodic cash
dividend, if any); (ii) to offer to the holders of its Common Shares rights or warrants to subscribe for or to purchase any additional
Common Shares or shares of stock of any class or any other securities, rights or options; (iii) to effect any reclassification
of its Common Shares (other than a reclassification involving only the subdivision of outstanding Common Shares); (iv) to effect
any consolidation or merger into or with any other Person, or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or more transactions, of 50% or more of the assets or Earning Power
of the Company and its Subsidiaries (taken as a whole) to any other Person; (v) to effect the liquidation, dissolution or winding
up of the Company; or (vi) to declare or pay any dividend on the Common Shares payable in Common Shares, or to effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or otherwise than by payment of dividends in Common Shares),
then, in each case, the Company shall give to the Rights Agent and to each holder of a Right, in accordance with Section 26, a
notice of the proposed action, which shall specify the record date for the purposes of a stock dividend, or distribution of rights
or warrants, or the date on which a reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding
up is to take place and the date of participation therein by the holders of Common Shares, if any date is to be fixed, and the
notice shall be so given, in the case of any action covered by clause (i) or (ii) above, at least ten (10) days prior to the record
date for determining holders of the Common Shares and, in the case of any action covered by clauses (iii) to (vi) above, at least
ten (10) days prior to the date of the taking of the proposed action or the date of participation therein by the holders of the
Common Shares, whichever shall be the earlier. The failure to give notice required by this Section 25.1 or any defect therein shall
not affect the legality or validity of the action taken by the Company or the vote upon any such action.

 

25.2         
In case any Section 11.1.2 Event shall occur, then the Company shall as soon as practicable thereafter give to each holder
of a Rights Certificate, in accordance with Section 26 hereof, a notice of the occurrence of the event, which notice shall specify
the event and the consequences of the event to holders of Rights under Section 11.1.2 hereof.

 

26.
         Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be in writing and shall be sufficiently given or made if sent by overnight delivery service
or first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows:

 

New York City REIT, Inc.

650 Fifth Avenue – 30th Floor

New York, NY 10019

Attention: Legal Department

 

    	 	36	 

     

    

 

Copy to:

 

Proskauer Rose LLP

70 West Madison #3800

Chicago, Illinois 60602

Attn: Michael J. Choate, Esq.

 

Subject to the provisions of Section 21,
any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate
to or on the Rights Agent shall be in writing and shall be deemed given upon receipt and shall be sufficiently given or made if
sent by overnight delivery service or registered or certified mail addressed (until another address is filed in writing with the
Company) as follows:

 

Computershare Trust Company, N.A.

150 Royall Street

Canton, Massachusetts 02021

Attention: Legal Department

 

Notices or demands authorized by this Agreement
to be given or made by the Company or the Rights Agent to a holder of any Right shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to the holder at the address of the holder as shown on the registry books of the Company.

 

27.         Supplements and Amendments. The Company may from time to time, and the Rights Agent shall if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Rights in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or to make
any change to or delete any provision hereof or to adopt any other provisions with respect to the Rights which the Company may
deem necessary or desirable, including, among other things, to change the Final Expiration Date to either increase or decrease
the term of this Agreement; provided, however, that, from and after the Distribution Date, this Agreement shall
not be amended or supplemented in any manner which would adversely affect the interests of the holders of Rights (other than an
Acquiring Person and its Affiliates and Associates). Any supplement or amendment authorized by this Section 27 will be evidenced
by a writing signed by the Company and the Rights Agent. Upon the delivery of a certificate from the chief executive officer or
chief financial officer that states that the proposed supplement or amendment is in compliance with the terms of this Section
27, an authorized signatory of the Rights Agent shall execute such supplement or amendment; provided, however, that notwithstanding
anything in this Agreement to the contrary, no supplement, modification or amendment will be effective without the execution of
such supplement or amendment by the Rights Agent and the Rights Agent shall have no duty to execute such supplement, amendment
or modification to this Agreement that it has determined would adversely affect its own rights, duties, obligations or immunities
under this Agreement.

 

28.
           Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns hereunder.

 

    	 	37	 

     

    

 

29.
           Benefits of This Agreement. Nothing in this Agreement shall be construed to give to any Person or entity other than the Company,
the Rights Agent and the registered holders of the Rights (and, if prior to the Distribution Date, the holders of Common Shares
and, if on the Distribution Date, the Unitholders) any legal or equitable right, remedy or claim under this Agreement. This Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights (and, if
prior to the Distribution Date, the holders of Common Shares and, if on the Distribution Date, the Unitholders).

 

30.
           Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, null and void or unenforceable, the remainder of the terms, provisions, covenants and restrictions
of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, that
if any excluded terms, provisions, covenants or restrictions shall materially and adversely affect the rights, immunities, liabilities,
duties, responsibilities or obligations of the Rights Agent, the Rights Agent shall be entitled to resign upon ten (10) Business
Days’ written notice to the Company.

 

31.
           Governing Law. This Agreement and each Right Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Maryland and for all purposes shall be governed by and construed in accordance with the laws of such state
applicable to contracts to be made and performed entirely within such state, except that the rights, duties, immunities and obligations
of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts
made and to be performed entirely within the State of New York.

 

32.
           Counterparts. This Agreement may be executed in any number of counterparts, and each counterparts shall for all purposes be
deemed to be an original, and all counterparts shall together constitute but one and the same instrument. A signature to this
Agreement transmitted electronically shall have the same authority, effect and enforceability as an original signature.

 

33.
           Descriptive Headings. Descriptive headings of the sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

 

34.
           Administration. Without limiting any of the rights, duties, immunities and obligations of the
Rights Agent, the Board of Directors shall have the exclusive power and authority to administer and interpret the provisions of
this Agreement and to exercise all rights and powers specifically granted to the Board of Directors or the Company or as may be
necessary or advisable in the administration of this Agreement. Without limiting any of the rights, duties, immunities and obligations
of the Rights Agent, all such actions, calculations, determinations and interpretations which are done or made by the Board of
Directors in good faith shall be final, conclusive and binding on the Company, the Rights Agent, holders of the Rights and all
other parties and shall not subject the Board of Directors to any liability to the holders of the Rights. The Rights Agent shall
always be entitled to assume that the Board of Directors acted in good faith and shall be fully protected and incur no liability
in reliance thereon.

 

    	 	38	 

     

    

 

35.
           Force Majeure. Notwithstanding
anything to the contrary contained herein, the Rights Agent will not have any liability for not performing, or a delay in the
performance of, any act, duty, obligation or responsibility by reason of any occurrence beyond the reasonable control of the Rights
Agent (including, without limitation, any act or provision of any present or future law or regulation or government authority,
any act of God, pandemic, epidemic, war, civil or military disobedience or disorder, riot, terrorism, fire, earthquake, storm,
flood, strike, work stoppage or similar occurrence).

 

 36. 
           REIT Status. Notwithstanding anything in this Agreement to the contrary, no Right shall be exercisable if the exercise or exercisability of the Right could, in the judgment of the Board of Directors based on the advice of counsel, result in the Company failing to qualify as a REIT.

 

 37. 
           Further Assurance by Company. The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.

 

 

 

[Signature Pages Follow] 

 

    	 	39	 

     

    

 

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

  

	 	New York City REIT, Inc. 
	 	 	 
	 	 	 
	 	By: 	 /s/ Edward M. Weil, Jr.  
	 	 	Name: 	Edward M. Weil, Jr. 
	 	 	Title: 	Chief Executive Officer, President and Secretary 
	 	 	 
	 	 	 
	 	Computershare Trust Company, N.A., as Rights Agent
	 	 
	 	 	 
	 	By: 	/s/ Cosmo Zagare 
	 	 	Name: 	 Cosmo Zagare
	 	 	Title: 	 Vice President, Client Services

  

 

[Signature Page to Rights Agreement]

 

    	 	 	 

     

    

 

EXHIBIT A

 

Form of Right Certificate

 

	
        Certificate No. R-
	
        
	
        Rights

 

 

NOT EXERCISABLE AFTER THE FINAL EXPIRATION
DATE (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) OR EARLIER IF REDEMPTION, EXCHANGE OR TERMINATION OCCURS. THE RIGHTS ARE
SUBJECT TO REDEMPTION AT $0.000001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE OR WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY ASSOCIATE
OR AFFILIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL
AND VOID AND WILL NO LONGER BE TRANSFERABLE.

 

Right Certificate

 

New York City REIT, Inc.,

 

a Maryland corporation

 

This certifies that             ,
or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights Agreement dated as of May 18, 2020, as may be amended from time to
time (the “Rights Agreement”), between New York City REIT, Inc., a Maryland corporation (the “Company”),
and Computershare Trust Company, N.A., a federally chartered trust company (and any successor rights agent thereto, the “Rights
Agent”), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to the Final Expiration Date (as such term is defined in the Rights Agreement) or earlier under certain circumstances
set forth in the Rights Agreement, at the office of the Rights Agent designated for such purposes, or at the office of its successor
as Rights Agent, one fully paid non-assessable share of common stock, par value $0.01 per share (the “Common Share”),
of the Company, at a purchase price of $40.52 per Common Share (the “Purchase Price”), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly executed. The number of Rights represented by this
Right Certificate (and the number of Common Shares which may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of May 18, 2020, based on the Common Shares as constituted at such
date. As provided in the Rights Agreement, the Purchase Price and the number of Common Shares (or other securities or property)
which may be purchased upon the exercise of the Rights represented by this Right Certificate are subject to modification and adjustment
upon the happening of certain events.

 

    	 	A-1	 

     

    

 

From and after a person
or entity becomes an Acquiring Person (as such term is defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such terms
are defined in the Rights Agreement), (ii) a transferee of an Acquiring Person (or of any Associate or Affiliate thereof) who becomes
a transferee after the Acquiring Person became such or (iii) under certain circumstances specified in the Rights Agreement, a transferee
of an Acquiring Person (or of any Associate or Affiliate thereof) who becomes a transferee prior to or concurrently with the Acquiring
Person’s becoming such, these Rights shall become null and void and no holder hereof shall have any right with respect to
such Rights. On and after the Distribution Date, any Right, the exercise or exchange of which would cause a Person to become an
Acquiring Person, shall become null and void.

 

This Right Certificate
is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are incorporated
herein by this reference and made a part hereof, and to which Rights Agreement reference is made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of
the Right Certificates. Copies of the Rights Agreement are on file at the principal executive offices of the Company and the offices
of the Rights Agent. The Company will mail to the holder(s) of this Rights Certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor.

 

This Right Certificate,
with or without other Right Certificates, upon surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and date representing Rights entitling the holder to
purchase a like aggregate number of Common Shares as the Rights represented by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Right Certificate or Right Certificates for the number Rights not exercised, subject to
the Section 14 of the Rights Agreement relating to fractional shares.

 

Subject to the provisions
of the Rights Agreement, at the Company’s option, the Rights represented by this Certificate may be redeemed or exchanged
in accordance with Section 23 and Section 24, respectively, of the Rights Agreement.

 

The Company is not required
to issue fractional Common Shares upon the exercise of any Right or Rights represented hereby, and in lieu thereof a cash payment
will be made, as provided in the Rights Agreement.

 

No holder of this Right
Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the Common Shares
or of any other securities of the Company which may at any time be issuable on the exercise or exchange hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or
Rights represented by this Right Certificate shall have been exercised or exchanged as provided in the Rights Agreement.

 

This Right Certificate
shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.

 

    	 	A-2	 

     

    

 

IN WITNESS the facsimile
signature of the proper officers of the Company and its corporate seal. Dated as of , .

 

	
        Attest: 
	New York City REIT, Inc. 
	
         

        
	
         

        

	
         

        
	
         

        

	 	 
	
         

        
	
         

        
	
        By: 
	
         

        
	
        (Seal) 

	
         

        
	
         

        
	
         

        

	
         

        
	
         

        
	
         

        

	 	 	 
	
        Countersigned:

        
	
         

        
	
         

        

	
         

        
	
         

        
	
         

        

	 	 	 
	
         

        
	
         

        
	
         

        
	
         

        

	
        Rights Agent

        
	
         

        
	
         

        

	
         

        
	
         

        
	
         

        

	 	 	 
	
         

        
	
         

        
	
         

        

	
        By:

        
	
         

        
	
         

        
	
         

        
	
         

        

	
         

        
	
        Authorized Signature

        
	
         

        
	
         

        

	 	 	 	 	 	 

  

    	 	A-3	 

     

    

 

Form of Reverse Side of Right Certificate

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder
if such holder desires to transfer the Rights represented by the Rights Certificate.)

 

FOR VALUE RECEIVED, ___________
hereby sells, assigns and transfers unto

 

_____________________________________________________________________

(Please print name and address of transferee)

 

[all] [ ] of the Rights represented by
this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint
__________, Attorney, to transfer said Rights on the books of the within-named Company, with full power of substitution.

 

	
        Date:

        
	
         

        
	
         

        
	
         

        

	
         

        
	
        Signature

        

 

 

Signature Guaranteed:

 

Signatures must be guaranteed
by an eligible guarantor institution (bank, stock broker or savings and loan association with membership in an approved signature
medallion program).

 

 

	
         

        
	
         

        

 

The undersigned hereby
certifies that the Rights represented by this Right Certificate are not beneficially owned by and were not acquired by the undersigned
from, and are not being assigned to, an Acquiring Person or an Affiliate or Associate thereof and are not issued with respect to
notional Common Shares related to a Derivative Interest described in Section 1.6.4 of the definition of Beneficial Owner (as such
terms are defined in the Rights Agreement).

 

	
         

        
	
         

        

	
         

        
	
        Signature

        

 

 

	
         

        
	
         

        

 

 

    	 	A-4	 

     

    

 

Form of Reverse Side of Right Certificate
 — continued

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)

 

To New York City REIT, Inc.:

 

The undersigned hereby
irrevocably elects to exercise Rights represented by this Right Certificate to purchase the Common Shares (or other securities
or property) issuable upon the exercise of such Rights and requests that certificates for such Common Shares (or other securities
or property) be issued in the name of:

 

Please insert Social Security or other identifying number: _______________________________

	
          

         

	
        (Please print name and address)

         

        Exercise of Rights (select applicable provision)

		□	pursuant to Section 7.1 of the Rights Agreement

		□	pursuant to Section 11.1.2 of the Rights Agreement

		□	pursuant to Section 13 of the Rights Agreement

 

If such number of Rights shall not be all
the Rights represented by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered
in the name of and delivered to:

 

Please insert Social Security or other identifying number: _______________________________

	
         

         

	
        (Please print name and address)

         

	 

 

 

	
        Dated: ____________, ___________

         
	 
	 	Signature 

(Signature must conform to the holder specified
on the Right Certificate)

 

Signature Guaranteed:

 

Signatures must be guaranteed
by an eligible guarantor institution (bank, stock broker or savings and loan association with membership in an approved signature
medallion program). 

 

    	 	A-5	 

     

    

 

Form of Reverse Side of Right Certificate
 — continued

 

	
         

         
	
         

         

 

The undersigned hereby
certifies that the Rights represented by this Right Certificate are not beneficially owned by, were not acquired by the undersigned
from and are not being assigned to, an Acquiring Person or an Affiliate or Associate thereof and are not issued with respect to
notional Common Shares related to a Derivative Interest described in Section 1.6.4 of the definition of Beneficial Owner (as such
terms are defined in the Rights Agreement).

 

 

	
         

         
	
        Signature

         

 

	
         

         
	
         

         

 

  

NOTICE

 

The signature in the
foregoing Forms of Assignment and Election to Purchase must conform to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.

 

In the event the certification
set forth above in the Form of Assignment or the Form of Election to Purchase, as the case may be, is not completed, such assignment
or election to purchase will not be honored.

  

    	 	A-6	 

     

    

 

EXHIBIT B

 

UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH
IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE
RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF, AMONG OTHERS, WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

 

SUMMARY OF RIGHTS TO PURCHASE

 

COMMON SHARES

 

On _________, New York
City REIT, Inc., a Maryland corporation (the “Company”), declared a dividend of one common share purchase right
(a “Right”) for each outstanding share of common stock, par value $0.01 per share (the “Common Stock”),
of the Company outstanding on _________ (the “Record Date”) to the holders of record of Common Stock on that
date. Each Right entitles the registered holder to purchase from the Company one share of Common Stock of the Company (the “Common
Share”), at a price of $40.52 per Common Share represented by a Right (the “Purchase Price”), subject
to adjustment. The description and terms of the Rights are set forth in a Rights Agreement (the “Rights Agreement”),
dated as of May 18, 2020, as the same may be amended from time to time, between the Company and Computershare Trust Company, N.A.,
a federally chartered trust company, as Rights Agent.

 

DETACHMENT AND TRANSFER OF RIGHTS

 

Until the close of
business on the 10th business day following a public announcement that a person or group of affiliated or associated persons has
become an “Acquiring Person” (as defined in the Rights Agreement) or when a majority of the Board of Directors
becomes aware of the existence of an Acquiring Person (the earlier of such dates, the “Stock Acquisition Date”),
or, in the event the Board of Directors determines on or before the 10th business day to effect an exchange in accordance
with Section 24 of the Rights Agreement and determines that a later date is advisable, then the later date determined by the Board
of Directors (the “Distribution Date,” provided, however, that the Distribution Date will in no event
be prior to the Record Date; provided, further, that the Board of Directors may determine to delay the occurrence of the
Distribution Date until the Board of Directors determines based on the advice of counsel that the exercise or exercisability of
the Right would not result in the Company failing to qualify as a REIT), the Rights will be represented, with respect to any of
the Common Stock certificates outstanding as of the Record Date, by the Common Stock certificate (or book-entry Common Shares)
with a copy of this Summary of Rights attached thereto. In general, an “Acquiring Person” is a person, the affiliates
or associates of the person, or a group, that has acquired beneficial ownership of 2.25% or more of the outstanding Common Shares,
subject to certain exceptions, including, among other things, that certain “Exempt Persons” and “Passive
Investors,” each as defined in the Rights Agreement, may have greater beneficial ownership without becoming an “Acquiring
Person.” In addition, certain inadvertent acquisitions will not trigger the occurrence of the Distribution Date. In the
event the Common Shares are listed on the New York Stock Exchange, Inc. or The NASDAQ Stock Market LLC, the 2.25% threshold will
increase to a threshold of 4.9% effective upon the commencement of trading.

 

    	 	B-1	 

     

    

 

Securities “Beneficial
Owned” by a person, together with its affiliates and associates, include (i) any securities beneficially owned, directly
or indirectly, within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended, (ii) except under limited circumstances,
securities with respect to which the person, or any of its affiliates or associates, has the right or obligation to acquire or
the right to vote pursuant to any agreement, arrangement or understanding, (iii) any securities which are beneficially owned, directly
or indirectly, by any other person (or any affiliate or associate of the other person) with which the person, or any of its affiliates
or associates, is Acting in Concert (as defined in the Rights Agreement) with or has any agreement, arrangement or understanding,
whether or not in writing, for the purpose of acquiring, holding, voting (subject to certain limited exceptions) or disposing of
any voting securities of the Company, and (iv) any securities which are the subject of, or the reference securities for, or that
underlie, any derivative securities (as defined under Rule 16a-1 under the Exchange Act) that increase in value as the value of
the underlying equity increases.

 

The Rights Agreement
provides that, until the Distribution Date (or earlier expiration of the Rights), the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier redemption or expiration of the Rights), any new Common Stock certificates
issued after the Record Date will contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for transfer of any Common Shares outstanding as of the Record
Date, even without any notation or a copy of this Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Stock. As soon as practicable following the Distribution Date, unless the Company chooses
to use book entry in lieu of physical certificates, separate certificates representing the Rights (“Right Certificates”)
will be mailed to holders of record of the Common Shares as of the close of business on the Distribution Date, and the separate
Right Certificates alone will represent the Rights. If the Company uses book entry in lieu of physical certificates, “Rights
Certificates” will be deemed to mean the uncertificated book entry representing the related Rights.

 

On the Distribution
Date, proper provision will be made by the Company in order to provide each holder (other than the Company) of partnership units
designated as “OP Units” of New York City Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”),
with the number of Rights, represented by Right Certificates, as would be issued to the applicable holder as if the Company had
redeemed all of the holder’s partnership units for Common Shares pursuant to the terms and conditions of the agreement of
limited partnership of the Partnership immediately prior to the Distribution Date.

 

EXERCISABILITY OF RIGHTS

 

The Rights are not
exercisable until the Distribution Date. The Rights will expire, unless the Rights are previously redeemed, exchanged or terminated,
on the earlier of May 18, 2023 or, if the Common Shares are listed on the New York Stock Exchange, Inc. or The NASDAQ Stock Market
LLC, 364 days from the commencement of trading.

 

The Purchase Price
payable, and the number of Common Shares or other securities or property issuable, upon exercise of the Rights is subject to adjustment
from time to time to prevent dilution (i) in the event the Company declares a dividend on the Common Shares payable in Common Shares
or effects a subdivision, combination or reclassification of the Common Shares; (ii) in the event the Board of Directors fixes
a record date for the issuance of rights, options or warrants to all holders of the Common Shares entitling them (for a period
expiring within forty-five (45) calendar days after the record date) to subscribe for or purchase Common Shares, or shares having
the same rights, privileges and preferences as the Common Shares (“Equivalent Common Shares”), at a price, or
securities convertible into Common Shares or Equivalent Common Shares with a conversion price, less than the then current market
price of the Common Shares on the record date; or (iii) in the event the Board of Directors fixes a record date for the making
of a distribution to all holders of the Common Shares of evidences of indebtedness or assets (other than a regular periodic cash
dividends, if any, or dividends payable in Common Shares) or subscription rights or warrants (other than those referred to above).

 

    	 	B-2	 

     

    

 

The number of outstanding
Rights and the number of Common Shares issuable upon exercise of each Right are also subject to adjustment in the event of a stock
split of Common Stock or a stock dividend on the Common Stock payable in Common Shares or subdivisions, consolidations or combinations
of the Common Shares occurring, in any such case, prior to the Distribution Date.

 

TRIGGER OF SECTION 11.1.2 AND SECTION 13 EVENTS

 

In the event that any
person becomes an Acquiring Person, unless the event causing the 2.25% threshold to be crossed is a Permitted Offer (as defined
in the Rights Agreement) or a Section 13 Event described below, and the Board of Directors authorizes the Company to issue Rights
Certificates under Section 3.1 of the Rights Agreement (a “Section 11.1.2 Event”), then, each holder of a Right
(except for Rights which have become null and void pursuant to Section 7.6 of the Rights Agreement) shall thereafter have the right
to receive, upon exercise thereof and in lieu of the Common Shares issuable under Section 7.1 of the Rights Agreement, a number
of Common Shares (or, in certain circumstances, cash, property or other securities of the Company) equal to the exercise price
of the Right divided by fifty percent (50%) of the Current Per Share Market Price (as defined in the Rights Agreement) of the Common
Shares at the date of the first occurrence of a Section 11.1.2 Event. However, these Rights will not be exercisable until the Rights
are no longer redeemable by the Company and are also subject to the Company’s exchange right described below. Notwithstanding
any of the foregoing, from and after a Person becomes an Acquiring Person, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, Beneficially Owned by any Acquiring Person (or by certain related parties) will be null
and void. On and after the Distribution Date, any Right, the exercise or exchange of which would cause a Person to become an Acquiring
Person, shall become null and void.

 

For example, at an
exercise price of $40.52 per Right, each Right not owned by an Acquiring Person (or by certain related parties) following a Section
11.1.2 Event would entitle its holder to purchase for $40.52 a number of Common Shares (or other consideration, as noted above)
equal to $40.52 divided by one-half of the Current Per Share Market Price (as defined in the Rights Agreement) of the Common Shares.
Assuming that the Current Per Share Market Price of Common Stock is $20.26 at the applicable time, the holder of each valid Right
would be entitled to purchase 4 Common Shares, having an estimated market value of 4 x $20.26, or $81.04, for $40.52.

 

    	 	B-3	 

     

    

 

If, at any time after
the Stock Acquisition Date, (i) the Company consolidates with, or merges with and into, any other person; (ii) any person consolidates
with the Company, or merges with and into the Company, and the Company is the continuing or surviving corporation of the transaction
and, in connection with the transaction, all or part of the Common Shares are or will be changed into or exchanged for stock or
other securities of any other person (or the Company) or cash or any other property; or (iii) the Company sells or otherwise transfers
(or one or more of its subsidiaries sell or otherwise transfer), in one or more transactions, assets or Earning Power aggregating
50% or more of the assets or Earning Power (as defined in the Rights Agreement) of the Company and its subsidiaries (taken as a
whole) to any other person other than the Company or one or more of its wholly owned subsidiaries (each of the foregoing events,
a “Section 13 Event”), then upon the first occurrence of any Section 13 Events, proper provision will be made
so that each holder of a Right (except for Rights which have become null and void pursuant to Section 7.6 of the Rights Agreement)
will thereafter have the right to receive, upon the exercise of a Right and in lieu of the Common Shares issuable under Section
7.1 of the Rights Agreement, the number of shares of common stock of the acquiring company (including the Company as successor
thereto or as the surviving corporation) which equals the exercise price of the Right divided by fifty percent (50%) of the Current
Per Share Market Price (as defined in the Rights Agreement) of the shares of common stock of the acquiring company at the date
of the consummation of the Section 13 Event.

 

EXCHANGE AND REDEMPTION OF RIGHTS

 

At any time after any
person becomes an Acquiring Person, the Board of Directors may authorize the Company to exchange the Rights (except for Rights
which have become null and void pursuant to Section 7.6 of the Rights Agreement), in whole or in part, at an exchange ratio of
one Common Share per Right, subject to adjustment. Notwithstanding the foregoing, to the extent prohibited by Maryland law, the
Board of Directors shall not be empowered to authorize an exchange at any time after an Acquiring Person becomes the Beneficial
Owner of a majority of the Common Shares then outstanding.

 

With certain exceptions,
no adjustment in the Purchase Price will be required unless an adjustment would require an increase or decrease of at least 1%
in such Purchase Price. The Company is not required to issue fractional shares of its stock upon the exercise of Rights, and in
lieu thereof, an adjustment in cash will be made based on the market value of the applicable stock as determined pursuant to Section
14 of the Rights Agreement.

 

At any time prior to
the earlier of (i) the close of business on the fifth (5th) business day following the Distribution Date, or (ii) the Final Expiration
Date, the Company may redeem the Rights in whole, but not in part, at a price of $0.000001 per Right, subject to adjustment (payable
in cash, Common Shares or other consideration deemed appropriate by the Board of Directors). In the event that Continuing Directors
no longer comprise a majority of the Board (a “Section 23.1 Event”), then for a period of 180 days following
the first occurrence of a Section 23.1 Event, the Rights cannot be redeemed unless there are Continuing Directors and a majority
of the Continuing Directors concur with the Board of Directors’ decision to redeem the Rights. Immediately upon the action
of the Company’s Board of Directors ordering redemption of the Rights (with, if required, the concurrence of a majority of
the Continuing Directors), or at a later time as the Board of Directors may establish for the effectiveness of the redemption,
the Rights will terminate and the only right of the holders of Rights will be to receive the $0.000001 per Right redemption price.
The term “Continuing Directors” means any member of the Board of Directors who was a member of the Board of
Directors immediately prior to the date of the Rights Agreement, and any person who is subsequently elected to the Board of Directors
if the person is recommended or approved by a majority of the Continuing Directors, but shall not include an Acquiring Person,
or an affiliate or associate of an Acquiring Person, or any representative or nominee of the foregoing entities.

 

    	 	B-4	 

     

    

 

Until a Right is exercised
or exchanged, the holder thereof, as such, will have no rights as a holder of the Common Stock for which the Right is exercisable
or exchangeable, including, without limitation, the right to vote or to receive dividends.

 

AMENDMENT OF RIGHTS

 

The terms of the Rights
Agreement may be amended by the Board of Directors without the consent of the holders of the Rights provided that, from and after
the Distribution Date, the Rights Agreement may not be amended or supplemented in any manner which would adversely affect the interests
of the holders of Rights (other than an Acquiring Person and its affiliates and associates).

 

ADDITIONAL INFORMATION

 

A copy of the Rights
Agreement has been filed with the Securities and Exchange Commission as an Exhibit to a Current Report on Form 8-K dated May 18,
2020. A copy of the Rights Agreement is available free of charge from the Company. This summary description of the Rights does
not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is hereby incorporated
herein by reference.

 

    	 	B-5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00309-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00309-of-00352.parquet"}]]