Document:

Exhibit 10.10

		
			TWELFTH LEASE AMENDMENT
		

		
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			This AGREEMENT (this "Amendment") made as of this 20th day of November 2020,  between I.PARK EAST FISHKILL LLC,  a Delaware limited liability company,  having an office at 485 West Putnam Avenue ,  Greenwich,  Connecticut 06830 ("Landlord"), and EMAGIN CORPORATION ,  a Delaware corpo ration,  having an address at 2070 Route 52,  Hopewell Junction, New York 12533 ("Tenant").
		

		
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			RECITALS
		

		
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			WHEREAS,  Landlord and Tenant are parties to an Agreement of Lease dated May 28,  1999, as amended  by First Amendment dated July 9,  1999, Second Amendment dated January 29, 2001,  Third Amendment dated May 8,  2002, Fourth Amendment dated November 29,  2004,
		

		
			Fifth Amendment dated September 1,  2006,  Sixth Amendment dated May 27, 2009,  Seventh Amendment dated May 2,  2014,  Eighth Amendment dated March 21,  2016 ,  Ninth Amendment dated December 7,  2017,  Tenth Amendment  dated June 25,  2018 and Eleventh Amendment dated January 2019 (collective ly,  the "Lease");
		

		
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			WHEREAS ,  Landlord and Tenant desire to amend the Lease to provide for,  among other matters,  the expansion of  the Premises (as defined in the Lease) and to modif y  certain other terms and provisions of the Lease; and
		

		
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			NOW,  THEREFORE, in consideration of the foregoing and for other good and valuable consideration,  the receipt and sufficiency  of which is acknowledged by the parties hereto, Landlord and Tenant agree as follows:
		

		
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			1.    Undefined Capitalized Terms.   All capitalized terms used in this Amendment but not defined herein shall have the same meanings ascribed to such terms in the Lease.
		

		
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			2.    Expansion.  The Premises are hereby further expanded to include (i) the approximately 7,910 rentable square feet of space,  as identified as "Clean Room 7,910 Rentable Square Feet"  on Exhibit A attached hereto and made a part hereof (the "Clean Room Expansion Space")  located in Building 755,  (ii) the approximately 1,977 rentable square feet of space,  as identified as "Storage 1,977 Rentable Square Feet" on Exhibit A attached hereto and made a part hereof (the "Storage Expansion Space IV")  located in Building 755, (iii) the approximately 2,464 rentable square feet of space,  as identified as "Storage 2,464 Rentable Square Feet"  on Exhibit A attached hereto and made a part hereof (the "Storage Expansion Space V")  located in Building 755 and (iv) the approximatel y  384 rentable square feet of  space,  as identified as "Office 384 Rentable Square Feet"  on Exhibit A attached hereto and made a part hereof (the "Office Expansion Space II ") located in Building 755;  and,  together with the Clean Room Expansion Space,  the Storage Expansion Space IV and the Storage Expansion Space V,  the "Expansion Space")  located in the Building,  under  all of the terms contained in the Lease ,  as amended herein.  The use  of the Clean Room Expansion Space shall be clean room only, the use of the Storage Expansion Space IV and the Storage Expansion Space V shall be storage only and the Office Expansion Space II shall be administrative offices only. The definition of "Premises" in the Lease is hereby amended to include the Expansion Space.
		

		

		

		 

 

		
		

		
			3.    Landlord's Work. Tenant shall accept possession of the Clean Room Expansion Space,  the Storage Expansion Space IV,  the Storage Expansion Space V and the  Office Expansion Space II in its then "  AS IS" condition "  WITH ALL FAULTS"  and Landlord shall have no obligation to alter,  improve,  decorate or otherwise prepare the Clean Room Expansion Space,  the Storage Expansion Space IV,  the Storage Expansion Space V and the  Office Expansion Space II for Tenant's occupancy except that Landlord shall perform the work to the Clean Room Expansion Space, the Storage Expansion  Space IV and the Storage Expansion Space V described in Exhibit B attached hereto and made a part hereof (the "Landlord Expansion Space Work") and shall also perform the work described  in Exhibit C attached hereto and made a part hereof (the "Landlord Refurbishment Work"). Landlord's Work shall be prosecuted to completion with due diligence and will be done at Landlord's sole cost and expense. Landlord shall cooperate with Tenant, at no cost or expense to Tenant, to cause certificates of occupancy and/or completion for the Expansion Space to be issued once Tenant completes its work in the Expansion Space.
		

		
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			4.    Tenant’s Work. Tenant shall perform, at its cost,  all other work required for the Expansion Space to be used by Tenant in accordance herewith (collectively, the "Initial Tenant Expansion Space Work").
		

		
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			5.    Date of Delivery. Landlord will use commercially reasonable efforts to substantially complete Landlord's Work by  the following dates:
		

		
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			a.    The Landlord Expansion Space Work by March 1,  2021; and
		

		
			b.    The Landlord Refurbishment Work by July 1,  2021.
		

		
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			6.    Base Rent and Additional Rent.  Tenant shall pay to Landlord  Base Rent for (i) the Clean Room Expansion Space in the amount of $22.50 per square foot per annum, (ii) the Storage Expansion Space IV in the amount of $7.83 per square foot per annum, (iii) the Storage Expansion Space V in the amount of $7.83 per square foot per annum ,  and (iv) the Office Expansion Space II in the amount of $15.14 per square foot per annum,  payable in equal monthly installments in accordance with the Lease. Tenant shall commence paying rent on the Clean Room Expansion Space on the earlier of (i) the date that is one hundred eighty (180) days after Landlord substantially completes the Landlord Expansion Space Work related to the Clean Room Expansion Space (the "Clean Room Expansion Space Rent Commencement Date") and (ii) the date that Tenant occupies the Clean Room Expansion Space.  Depending upon the date to be utilized,  the appropriate party shall provide written notice to the other party and the Clean Room Expansion Space Rent Commencement Date shall be established. Tenant shall commence paying rent on the Storage Expansion Space IV,  the Storage Expansion Space V and the Office Expansion Space II on the earlier of (i) the date that Landlord substantially completes the Landlord Expansion Space Work related to the Storage Expansion Space IV and the Storage Expansion Space V (other than the installation of the acoustical drop ceiling described in Section 3(b)(iv) of Exhibit B attached hereto,  which shall be performed by Landlord contemporaneously with the Initial Tenant Expansion Space Work) and (ii) the date that Tenant occupies the remaining Expansion Space (the "Remaining Expansion Space Rent Commencement Date"). Depending upon the date to be utilized, the appropriate party shall provide written notice to the other party and the Remaining Expansion Space Rent Commencement Date shall be established.
		

		

		

		 

 

		
		

		
			Tenant shall pay to Landlord as additional rent for the Expansion Space the cost of utilities consumed therein,  as set forth in the Lease.  Any delay caused by or on behalf of Tenant shall not impact the Clean Room Expansion Space Rent Commencement Date or the Remaining Expansion Space Rent Commencement Date.
		

		
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			7.    Base Rent Escalations.  Tenant shall pay to Landlord Base Rent for the Premises as set forth in Exhibit E, attached hereto and made a part hereof.  For avoidance of doubt,  the Base Rent reduction set forth in Exhibit E for the 16,316 sf of existing Clean Room space shall commence on the Remaining Expansion Space Rent Commencement Date.
		

		
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			8.    Security Deposit. Provided that no default or event of default has occurred and/or is continuing under the Lease ,  Landlord shall refund to Tenant within thirty (30) days after the execution of this Amendment the security deposit in the amount of $80,000.00 that Tenant has paid Landlord under the Lease.
		

		
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			9.    Term. The expiration date of the Lease is hereby extended to the date that is ten
		

		
			(10)    years from the Clean Room Expansion Space Rent Commencement Date (the "Extended Expiration Date")  as established by notice as set forth in Section 6 hereof.
		

		
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			10.    Renewal Terms.  Provided that no default or event of default has occurred  and/or is occurring under this Lease ,  and further provided that Tenant delivers written notice to Landlord that it wishes to extend the term of this Lease for a Renewal Term ,  a applicable, at least nine (9) months prior to the   beginning of such Renewal Term ,  Tenant shall have the option to renew this Lease with respect to all of the Leased Premises for two (2) additional five (5) year terms,  the first Renewal Term commencing on the day after the Extended Expiration Date (the "First Renewal Term") and the second renewal term commencing on the expiration date of the First Renewal Term (the "Second Renewal Term").  TIME BEING OF THE ESSENCE as to such notice date.
		

		
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			11.    Parking. Tenant shall have the right to use the parking spaces within the area outlined in bold in Exhibit D attached hereto and made a part hereof .
		

		
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			12.    Broker. Landlord and Tenant represent and warrant to each other that it has not dealt with any broker in connection with this Lease.    Landlord  and  Tenant  shall  each indemnify and hold the other harmless from of and from any and all losses,  costs,  damages or expense (including ,  without limitation,  attorneys'  fees and disbursements) incurred by the other  by  reason  of its  breach of the foregoing  representation.  Tenant shall pay,  at its cost,  any consultant or broker advising Tenant, including, but not limited to, David S. Kaminski.
		

		
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			13.    Miscellaneous.
		

		
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			a.    Landlord and Tenant represent and warrant to each other that it has the right ,  power and authority to execute and deliver this Amendment and to perform its obligations hereunder ,  and this Amendment has been duly authorized,  executed and delivered by it and is a valid and binding obligation of it enforceable against it in accordance with the terms hereof.
		

		

		

		 

 

		
		

		
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			a.    Except as amended herein, the Lease shall remain in full force and effect and the parties hereto ratify and reconfirm the Lease. In the event of any conflicts or inconsistencies between the provisions of the Lease and the provisions of this Twelfth Amendment, the provisions of this Amendment shall control.
		

		
			b.    This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, and all such counterparts shall constitute one agreement. This Agreement shall be executed and delivered by electronic copy or via facsimile, to be held in escrow by each party, which such electronic copy or facsimile and delivery shall be valid and binding the same as if original documents were delivered and released to the parties upon the receipt of written Notice (the “Approval l Notice") from Tenant to Landlord of the approval of Tenant's Board of Directors, but not later than November 24,  2020 (the "Last Approval Date"). In the event the Approval Notice is not received by Landlord by 5 PM on the Last Approval Date, this Amendment shall be null and void. Such Approval Notice may be delivered by Tenant to Landlord by electronic copy or via facsimile and receipt must be acknowledged in writing by Landlord.
		

		
			c.    This Amendment sets forth the entire agreement between the parties with respect to the matters set forth herein. There have been no additional oral or written representations or agreements.
		

		
			d.    If any term,  covenant or condition of this Amendment shall be held to be invalid, illegal or unenforceable in any respect, this Amendment shall be construed without such proves ion.
		

		
			e.    This Amendment may not be modified,  amended, waived, changed or terminated orally, but only by an agreement in writing signed by the party against whom enforcement of the modification, amendment, waiver, change or termination is sought.
		

		
			f.    The provisions hereof shall inure to the benefit of, and be binding upon, the parties hereto and their successors and assigns.
		

		
			g.    The captions of the various sections of this Amendment are solely for the purpose of convenience. Such captions are not a part hereof and shall not be deemed in any manner to modify,  explain, enlarge or restrict any of the provisions of this Amendment.
		

		
			1.    Landlord and Tenant represent and warrant that neither party is in default
		

		
			nor has an event of default occurred nor is an event of default continuing under the Lease as of the date hereof.
		

		
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			[NEXT PAGE IS THE SIGNATURE PAGE; THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
		

		

		

		 

 

		
		

		
			IN WITNESS WHEREOF, Landlord and Tenant have hereunto set their hands and seals to this Amendment as of the day and year first above written.
		

			
					
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						LANDLORD:

				
	
					
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						PARK EAST FISHKILL LLC

				
	
					
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						By:

					
					
						 

				
	
					
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						Name:

					
					
						 

				
	
					
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						TENANT:

				
	
					
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						EMAGIN CORPORATION

				
	
					
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						By:

					
					
						/s/ Mark A Koch

				
	
					
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						Name:

					
					
						 

				
	
					
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						Its:

					
					
						acting CFO

				

		
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			EXHIBIT A
		

		
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			Expansion Space
		

		
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			eMagin- Existing
		

		
			eMagin- Expansion Storage 4,441 Sq ft
		

		
			eMagin- Expansion Clean Room 7,910 sqft
		

		
			eMagin- Expansion Office 384 sqft
		

		
			
		

		
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			EXHIBIT B
		

		
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			Landlord's Expansion Space Work
		

		
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			1.    Landlord shall perform the work to the Expansion Space:
		

		
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			A.    Landlord shall ensure that HYAC trunk lines, electric, Industrial Waste,  Compressed Air, Potable Water, DI Water, Jacket Cooling Water, Sanitary,  Heavy Electrical, High Temp, low temp, chilled water, Oxygen, Solvent and Acid Drain lines, source for make-up air to support Clean Room Expansion Space, toxic and solvent exhaust and process vacuum shall be stubbed to the perimeter of the Clean Room Expansion Space. All distribution by Tenant at its cost.
		

		
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			B.    The Clean Room Expansion Space shall be delivered in a modified vanilla shell condition,  as defined below.
		

		
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			C.    The Storage Expansion Space IV and the Storage Expansion Space V will be delivered in vanilla shell condition, as defined below.
		

		
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			D.    Demolish and demise existing hallway between existing clean room space and Clean Room Expansion Space in order to connect both premises.
		

		
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			E.    Open the ceiling in an area having approximately 6,000 square feet in the portion of the Clean Room Expansion Space  identified  in the Tenant'  s plans and  remove or relocate any obstructions as reasonably required to accommodate Tenant's machinery to a height of 13'  -6"  . Landlord and Tenant to cooperate in good faith and in all reasonable respects to reduce the obstructions to be removed and/or relocated to accommodate Tenant’s machinery in this area.
		

		
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			F.    Delivery of the Expansion Space broom clean.
		

		
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			2.    Clean Room Expansion Space Modified Vanilla Shell Definition. For avoidance of doubt, delivery of the Clean Room Expansion Space in Modified Vanilla Shell condition shall include the following items of work,  completed by Landlord, at Landlord's cost and expense:
		

		
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			a.    Remove/Demo:
		

		
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			1.    All temporary or other permanent partitions within the space,  leaving the space clear from demising wall to demising wall,  except for building columns;
		

		
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			11.   All existing flooring, including asbestos if present, leaving a level concrete floor ready for Tenant '  s finishes ;
		

		
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			n1. Branch ductwork: Remove all existing sheet metal, and flex not directly connected to the main HVAC trunk line;
		

		
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			1v. Exhaust ductwork: Remove all existing sheet metal, FRP, and stainless steel not directly connected to the main exhaust trunk line;
		

		

		

		 

 

		
		

		
			v. Wiring: Remove all power, data, low voltage that is abandoned,  including thermostats (only keep wiring passing through space from a source to another area in the building); and,
		

		
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			vr. Re-route or properly identify any remaining services/wiring that serve other tenants with the Building.
		

		
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			b.    Construct:
		

		
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			1.    Fire rated demising walls at perimeter of all spaces;
		

		
			11. All walls taped, primed and ready for paint;
		

		
			111.   Provide 2 sets of 6080 Double Doors in the perimeter walls. Locations to be coordinated with Tenant's plans;
		

		
			1v. Sprinkler system main lines in working condition in heads-up condition, to Code, for Tenant's distribution;
		

		
			v. Temporary lights installed;
		

		
			vr. Life Safety System: provide Fire Panel connected to the Building's fire alarm system with adequate space for Tenant's installation of wiring for pull stations,  strobes, smoke/heat detectors, etc.  for the intended use of the space.
		

		
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			3.    Storage Expansion Space IV and Storage Expansion Space V Vanilla Shell Definition. For avoidance of doubt, delivery of the Storage Expansion Space IV and the Storage Expansion Space Vin Vanilla Shell condition shall include the following items of work,  completed by Land lord,  at Land lord'  s cost and expense:
		

		
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			a.    Remove/Demo:
		

		
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			1.    All temporary or other permanent partitions within the space,  leaving the space clear from demising wall to demising wall, except for building columns; and,
		

		
			11. All existing flooring, including asbestos if present, leaving a level concrete floor ready for Tenant '  s finishes.
		

		
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			b.    Construct:
		

		
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			1.    Fire rated demising walls at perimeter of all spaces;
		

		
			11. All walls taped,  primed and ready for paint;
		

		
			111. Provide Doors in the perimeter walls.  Locations to be coordinated with Tenant’s plans;
		

		
			1v. Install acoustical drop ceiling with adequate LED light troffers at a height of 10 ft AFF.
		

		
			v. Sprinkler system in working condition,  to Code;
		

		
			vr. HVAC truck line for Tenant's distribution (Tenant to install HVAC distribution in a timely manner prior to Land lord'  s installation of the drop ceiling as described in Section 3(b)(iv) hereof); and,
		

		
			v11. Life Safety System: provide Fire Panel connected to the Building'  s fire alarm system with adequate space for Tenant'  s installation of wiring for pull stations, strobes, smoke/heat detectors ,  etc. for the intended use of the space.
		

		
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			4.    Punch list. Within 60 days after substantial completion of Landlord’ s Expansion Space Work,  Tenant shall furnish to Landlord  a written  statement  setting forth  Tenant'  s schedule ,  in its reasonable opinion,  of any such uncompleted portions of Landlord's Expansion Space Work (the "Punch list").  If Landlord objects to any portion of the Punch list, Landlord shall notify Tenant. If not,  Landlord shall diligently complete the Punch list items and if Landlord  fails to diligently  pursue completion  of the  Punch list items approved by Landlord within  90 days  after  delivery  of the Punch list  to Landlord and Landlord's acceptance thereof,  Tenant shall issue to Landlord written notice of such failure and if Landlord fails to diligently pursue completion of said Punch list items within thirty (30) days thereafter,  Tenant  may  complete  any  of such  Punch list  items and Landlord shall pay Tenant any reasonable ,  actual and documented amounts incurred by Tenant within 30 days after proof of payment.
		

		

		

		 

 

		
		

		
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			EXHIBIT C
		

		
			Landlord’s Refurbishment Work
		

		
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			1.    Building 755 restrooms (located across from Tenant's break room) shall be improved to building standard with new tiles, plumbing fixtures, lighting fixture s,  ceiling and paint.
		

		
			2.    Building 755 - Additional restrooms will be provided for the production area portion of the Premises to building standard.
		

		
			3.    Break room portion of the Premises located in Building 755 to be improved with paint,  new carpet,  doors,  ceiling and kitchenette with small refrigerator and microwave to building standard.
		

		
			4.    Landlord will install new interior signage within Building 755 provided by Tenant, at Tenant’s cost,  which installation shall not impact substantial completion of Landlord '  s Expansion Space Work.
		

		
			5.    Current common area entrance to Tenant '  s main office area in Building 700 will be improved to include a renovation or replacement of the existing stone floor and a refurbishment of the stairwell leading to the 2nd floor including without limitation the treads,  risers and handrails.
		

		
			6.    Current 2nd floor entrance lobby and surrounding corridors will be painted and improved to the building standard and screened from currently unused adjacent premises.
		

		
			7.    Create new entrance to Premises in location identified in Exhibit Din Building 710 to building standard, including installation of  a canopy over the steps/walkway thereto.
		

		
			8.    Current manufacturing entrance in Building 755 at H24 will be painted and improved to the building standard and new  interior signage will be installed by  Landlord,  such signage provided by Tenant,  at Tenant '  s cost.
		

		
			9.    The roof shall be repaired at Buildings 700 and 755 to eliminate the multiple water leaks that are present.
		

		
			10.    Appropriate equipment will be installed by  Landlord to eliminate the Fish smoke returning into air handlers resulting in odors into Tenant’s Premises.
		

		

		

		 

 

		
		

		
			
		

		

		

		 

 

		
		

		
			
		

		
			﻿Exhibit 4.2

 

DESCRIPTION OF SHARES

 

We
were incorporated under the laws of the State of Maryland. Your rights are governed by Maryland law, our charter and our bylaws.
The following summary of the terms of our stock is only a summary and you should refer to our charter and bylaws for a full description.

 

Authorized Stock

 

Our charter provides that we may issue up
to 60,000,000 shares of common stock and 10,000,000 shares of preferred stock.

 

Our charter contains a provision permitting
our Board of Directors, without any action by the stockholders, to amend the charter to increase or decrease the aggregate number
of shares of common stock or preferred stock that we are authorized to issue and to change the aggregate number of shares, change
the number of shares of any class or series of stock we have the authority to issue, and classify or reclassify any unissued common
stock or preferred stock into one or more classes or series by setting or changing the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such stock.

 

We believe that the power of the Board of
Directors to issue additional authorized but unissued shares of common stock or preferred stock and to classify or reclassify unissued
shares of common stock or preferred stock and thereafter to cause us to issue such classified or reclassified shares of stock will
provide us with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs which
might arise. The additional common stock or preferred stock will generally be available for issuance without further action by
our stockholders.

 

Common Stock

 

All of our common stock will be duly authorized,
fully paid and nonassessable. Subject to the preferential rights of any other class or series of stock and to the provisions of
our charter regarding the restriction on the ownership and transfer of shares of our stock, holders of our common stock will be
entitled to receive distributions if authorized by our Board of Directors and to share ratably in our assets available for distribution
to the stockholders in the event of a liquidation, dissolution or winding-up.

 

Each outstanding share of our common stock
entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors. There
is no cumulative voting in the election of directors, which means that the holders of a majority of the outstanding common stock
can elect all of the directors then standing for election, and the holders of the remaining common stock will not be able to elect
any directors.

 

Holders of our common stock have no conversion,
sinking fund, redemption or exchange rights, and have no preemptive rights to subscribe for any of our securities. Maryland law
provides that a stockholder has appraisal rights in connection with some transactions. However, our charter provides that the holders
of our stock do not have appraisal rights unless a majority of the Board of Directors determines that such rights shall apply.
Shares of our common stock have equal dividend, distribution, liquidation and other rights.

 

Under our charter, we cannot make some material
changes to our business form or operations without the approval of stockholders holding at least a majority of the shares of our
stock entitled to vote on the matter. These include (1) amendment of our charter, (2) our liquidation or dissolution, (3) our reorganization,
and (4) our merger, consolidation or the sale or other disposition of all or substantially all of our assets. Share exchanges in
which we are the acquirer, however, do not require stockholder approval.

 

Our bylaws provide that the election of directors
requires a majority of all the votes cast at a meeting of our stockholders at which a quorum is present. Our charter provides that
the affirmative vote of the holders of a majority of our outstanding stock entitled to vote generally in the election of directors
may remove any director with or without cause.

 

Our registrar and transfer agent is DST Systems, Inc.

 

Preferred Stock

 

Shares of preferred stock may be issued in
the future in one or more series as authorized by our Board of Directors. Prior to the issuance of shares of any series, the Board
of Directors is required by our charter to fix the number of shares to be included in each series and the terms, preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions
of redemption for each series. Because our Board of Directors has the power to establish the preferences, powers and rights of
each series of preferred stock, it may provide the holders of any series of preferred stock with preferences, powers and rights,
voting or otherwise, senior to the rights of holders of our common stock. The issuance of preferred stock could have the effect
of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender
offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our common stock.

 

    1

     

    

 

Issuance of Additional Securities and Debt Instruments

 

Our directors are authorized to issue additional
stock or other convertible securities for cash, property or other consideration on such terms as they may deem advisable. Subject
to restrictions in our charter, our directors may cause us to issue debt obligations on such terms and conditions as they may determine,
including debt with the right to convert into stock. Subject to certain restrictions, our directors may also cause us to issue,
options and rights to buy our common stock on such terms as they deem advisable to our stockholders, as part of a financing arrangement,
or pursuant to stock option plans. Our directors may cause us to issue warrants, options and rights to buy our common stock even
though their exercise could result in dilution in the value of our outstanding common stock.

 

Restrictions on Issuance of Securities

 

Our charter provides that we will not issue:

 

	 	●	equity securities which are redeemable solely at the option of the holder;

 

	 	●	debt securities unless the historical debt service coverage in the most recently completed fiscal year is sufficient to properly service the higher level of debt;

 

	 	●	options or warrants to purchase stock to our advisor, Sponsor, director(s) or any affiliates of our advisor, Sponsor or directors except on the same terms as sold to the general public and in an amount not to exceed 10% of our outstanding common or preferred stock on the date of grant of any options or warrants; or

 

	 	●	equity securities on a deferred payment basis or similar arrangement.

  

Restrictions on Ownership and Transfer

 

The resale of our shares may be restricted
by limitations on transferability of shares imposed by state suitability standards or blue sky laws. Specifically, the REIT Sponsors
must establish minimum income and net worth standards for purchasers of shares in REITs such as us, for which there is not likely
to be a substantial and active secondary market, such as us. The NASAA REIT Guidelines require a Sponsor to propose minimum income
and net worth standards that are reasonable given the type of REIT and risk associated with the purchase of shares. REITS with
greater investor risk must have minimum standards with a substantial net worth requirement. Generally, unless a particular state
regulator decides otherwise, stockholders must have a minimum annual gross income of $70,000 and a minimum net worth of $70,000,
or a minimum net worth of $250,000. For specific states with increased minimum income and net worth requirements.

 

In order to qualify as a REIT under the Code,
among other purposes, our charter provides that, subject to exceptions described below, no person may beneficially or constructively
own, or be deemed to beneficially or constructively own by virtue of the attribution provisions of the Code, (i) more than 9.8%
in value of our aggregate outstanding shares of capital stock or (ii) our capital stock to the extent that such ownership would
result in us being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership
interest is held during the last half of a taxable year), or otherwise failing to qualify as a REIT (including, but not limited
to, ownership that would result in us owning (actually or constructively) an interest in a tenant that is described in Section
856(d)(2)(B) of the Code if the income derived by the Company from such tenant would cause us to fail to satisfy any of the gross
income requirements of Section 856(c) of the Code). Our charter further provides that any transfer of our common stock or preferred
stock that would result in our common stock and preferred stock being beneficially owned by fewer than 100 persons shall be null
and void, and the intended transferee will not acquire any rights in the common stock or preferred stock intended to be transferred.

 

    2

     

    

 

Subject to the exceptions described below,
to the extent that any person beneficially or constructively owns our common or preferred stock in excess of the 9.8% ownership
limit or that would cause us to be “closely held” within the meaning of the Code or would otherwise cause us to fail
to qualify as a REIT, such shares will be transferred automatically by operation of law, to a trust, the beneficiary of which will
be a qualified charitable organization selected by us. The trustee will be a person unaffiliated with us who is designated by us.
The automatic transfer will be effective as of the close of business on the business day prior to the date of the transfer. Within
20 days of receiving notice from us of the transfer of shares to the trust, the trustee of the trust shall sell the shares held
in the trust to a person or entity who could own such shares without violating the ownership limits. Upon such sale, the trustee
will distribute to the prohibited transferee an amount equal to the lesser of the price paid by the prohibited transferee for the
shares held in the trust or the sales proceeds received by the trust for such shares.

 

In the case of any shares held in the trust
resulting from any event other than a transfer or from a transfer for no consideration, such as a gift, the trustee will be required
to sell the shares held in the trust to a qualified person or entity and distribute to the prohibited owner an amount equal to
the lesser of the market price of the shares held in the trust as of the date of the event causing the shares to be held in the
trust or the sales proceeds received by the trust for the shares held in the trust. In either case, any proceeds in excess of the
amount distributable to the prohibited transferee or prohibited owner, as applicable, will be distributed to the charitable beneficiary.
Prior to a sale of any of the shares by the trust, the trustee will be entitled to receive, in trust for the charitable beneficiary,
all dividends and other distributions paid by us with respect to the shares, and also will be entitled to exercise all voting rights
with respect to the shares. Subject to the MGCL, effective as of the date that such shares have been transferred to the trust,
the trustee shall have the authority, in its sole discretion to:

 

	 	●	rescind as void any vote cast by a prohibited transferee or prohibited owner, as applicable, prior to the discovery by us that such shares have been transferred to the trust; and

 

	 	●	recast such vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary.

 

However, if we have already taken irreversible
corporate action, then the trustee shall not have the authority to rescind and recast such vote. Any dividend or other distribution
paid to the prohibited transferee or prohibited owner prior to the discovery by us that such shares had been automatically transferred
to a trust as described above, will be required to be repaid to the trustee upon demand for distribution to the charitable beneficiary.
In the event that the transfer to the trust as described above is not automatically effective for any reason to prevent violation
of the ownership limits or such other limit as provided in the charter or as otherwise permitted by the Board of Directors, our
charter provides that the transfer of the shares will be null and void.

 

In addition, our shares which are held in
trust shall be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser of:

 

	 	●	the price per share on the transaction that resulted in such transfer to the trust, or, in the case of a gift, the market price at the time of the gift; and

 

	 	●	the market price on the date we accept such offer.

 

We shall have the right to accept such offer
until the trustee has sold the shares of stock held in the trust. Upon such a sale to us, the interest of the charitable beneficiary
in the shares sold shall terminate and the trustee shall distribute the net proceeds of the sale to the prohibited transferee or
prohibited owner.

 

Our charter requires all persons who directly
or indirectly beneficially own more than 5%, or any lower percentage as required pursuant to regulations under the Internal Revenue
Code, of our outstanding shares of common and preferred stock, within 30 days after December 31 of each year, to provide to us
a written statement stating their name and address, the number of shares of common and preferred stock they beneficially own directly
or indirectly, and a description of how the shares are held. In addition, each beneficial owner must provide to us any additional
information as we may request in order to determine the effect, if any, of their beneficial ownership on our status as a REIT and
to ensure compliance with the 9.8% ownership limit.

 

Our Board of Directors may exempt prospectively
or retroactively a person from the 9.8% ownership limit upon certain conditions. However, our Board of Directors may not grant
an exemption from the 9.8% ownership limit to any proposed transferee whose beneficial ownership of our common and preferred stock
in excess of the ownership limit would result in the termination of our status as a REIT.

 

Prior to the listing of our shares on a national
stock exchange or the trading of our shares in the over-the-counter market, we will not issue stock certificates except to stockholders
who make a written request to us therefor. Until such time, ownership of our shares will be recorded by us in book-entry form.
Once issued, all certificates representing any shares of our common or preferred stock will bear a legend referring to the restrictions
described above.

 

    3

     

    

 

Provisions of Maryland Law and Our Charter and Bylaws

 

The following paragraphs summarize material
provisions of Maryland law and of our charter and bylaws. The following summary does not purport to be complete, and you should
review our charter and bylaws.

 

Business Combinations.  Under
Maryland law, some business combinations (including a merger, consolidation, share exchange or, under some circumstances, an asset
transfer or issuance or reclassification of equity securities) between a Maryland corporation and any person who beneficially owns
ten percent or more of the voting power of the corporation’s outstanding voting stock or an affiliate or associate of the
corporation who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of
ten percent or more of the voting power of the then-outstanding stock of the corporation (an interested stockholder) or an affiliate
of such an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder
becomes an interested stockholder. A person is not an interested stockholder under the statute if, the Board of Directors of the
corporation approved in advance the transaction which otherwise would have resulted in the person becoming an interested stockholder.
The Board of Directors may provide that its approval is subject to compliance with any terms and conditions determined by the Board
of Directors. Thereafter, any such business combination generally must be recommended by the Board of Directors of such corporation
and approved by the affirmative vote of at least:

 

	 	●	80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and

 

	 	●	two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom (or with whose affiliate) the business combination is to be effected or held by an affiliate or associate of the interested stockholder. These super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price (as defined in the Maryland business combination statute) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares.

 

These provisions of Maryland law do not apply,
however, to business combinations that are approved or exempted by our Board of Directors prior to the time that the interested
stockholder becomes an interested stockholder. Our board, by resolution, has exempted any business combinations involving us and
The Lightstone Group or any of its affiliates from these provisions. As a result, the five-year prohibition and the super-majority
vote requirements will not apply to any business combinations between any affiliate of The Lightstone Group and us. As a result,
any affiliate of The Lightstone Group may be able to enter into business combinations with us, which may or may not be in the best
interests of our stockholders.

 

Control Share Acquisition.  With
some exceptions, Maryland law provides that holders of control shares of a Maryland corporation acquired in a control share acquisition
have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding
shares (1) owned by the acquiring person, (2) owned by officers, and (3) owned by employees who are also directors. Control shares
mean voting shares of stock which, if aggregated with all other shares of stock owned by an acquiring person or in respect of which
the acquiring person can exercise or direct the exercise of voting power, would entitle the acquiring person to exercise voting
power in electing directors within one of the following ranges of voting power:

 

	 	●	one-tenth or more but less than one-third;

 

	 	●	one-third or more but less than a majority; or

 

	 	●	a majority or more of all voting power.

 

Control shares do not include shares the
acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A control share acquisition
occurs when, subject to some exceptions, a person directly or indirectly acquires ownership or the power to direct the exercise
of voting power (except solely by virtue of a revocable proxy) of issued and outstanding control shares. A person who has made
or proposes to make a control share acquisition, upon satisfaction of some specific conditions, including an undertaking to pay
expenses, may compel our Board of Directors to call a special meeting of stockholders to be held within 50 days of demand to consider
the voting rights of the control shares. If no request for a meeting is made, we may present the question at any stockholders’
meeting.

 

    4

     

    

 

If voting rights are not approved at the
meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then, subject to
some conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights
have previously been approved) for fair value determined, without regard to the absence of voting rights for the control shares,
as of the date of the last control share acquisition by the acquirer or of any meeting of stockholders at which the voting rights
of such shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and
the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal
rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price
per share paid by the acquirer in the control share acquisition.

 

The control share acquisition statute does
not apply to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or to
acquisitions approved or exempted by the charter or bylaws of the corporation.

 

Our bylaws contain a provision exempting
from the control share acquisition statute any and all acquisitions of our shares of stock. We cannot assure that such provision
will not be amended or eliminated at any time in the future.

 

Tender Offers

 

At our stockholders’ annual meeting
held on September 16, 2010, an amendment to our charter to add a new section regarding tender offers was approved by our stockholders.
Under our amended charter, any tender offer made by any person, including any “mini-tender” offer, must comply with
most of the provisions of Regulation 14D of the Exchange Act, including the notice and disclosure requirements. Among other things,
the offeror must provide notice of such tender offer at least ten business days before initiating the tender offer. If the offeror
does not comply with the provisions set forth above, we will have the right to redeem that offeror’s shares of stock, including
shares acquired in the tender offer. Additionally, the non-complying offeror would be responsible for our related expenses.

 

    5

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