Document:

EX-10.6

 Exhibit 10.6 

SELECTQUOTE, INC. 2003 STOCK INCENTIVE PLAN 

NOTICE OF STOCK OPTION AWARD 
  

			
	Grantee’s Name and Address:	  	As described on Carta
		
		  	As described on Carta
		
		  	As described on Carta

 You (the “Grantee”) have been granted an option to purchase shares of Common Stock, subject to the
terms and conditions of this Notice of Stock Option Award (the “Notice”), the SelectQuote, Inc. 2003 Stock Incentive Plan, as amended from time to time (the “Plan”) and the Stock Option Award Agreement (the “Option
Agreement”) attached hereto, as follows. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Notice. 
  

			
	Award Number	  	As described on Carta
		
	Date of Award	  	As described on Carta
		
	Vesting Commencement Date	  	As described on Carta
		
	Exercise Price per Share	  	As described on Carta
		
	Total Number of Shares Subject to the Option (the “Shares”)	  	As described on Carta
		
	Total Exercise Price	  	As described on Carta
		
	Type of Option:	  	As described on Carta (Incentive Stock Option)
		
		  	As described on Carta (Non-Qualified Stock Option) 
		
	Expiration Date:	  	As described on Carta
		
	Post-Termination Exercise Period:	  	As described on Carta

 Vesting Schedule: 

Subject to the Grantee’s Continuous Service and other limitations set forth in this Notice, the Plan and the Option Agreement, the Option
may be exercised, in whole or in part, in accordance with the following schedule: 
 One-third of
the Shares subject to the Option shall vest twelve (12) months after the Vesting Commencement Date, and 1/24 of the remaining Shares subject to the Option shall vest on each monthly anniversary of the Vesting Commencement Date thereafter, such
that 100% of 

 
the Shares subject to the Option shall be vested thirty-six (36) months after the Vesting Commencement Date. All Shares subject to the Option shall
vest and the Option shall become exercisable as to 100% of the Shares subject to the Option upon the occurrence of a Change in Control or a Corporate Transaction. 

During any authorized leave of absence, the vesting of the Option as provided in this schedule shall be suspended after the leave of absence
exceeds a period of ninety (90) days. Vesting of the Option shall resume upon the Grantee’s termination of the leave of absence and return to service to the Company or a Related Entity. The Vesting Schedule of the Option shall be extended
by the length of the suspension. 
 In the event of termination of the Grantee’s Continuous Service for Cause, the Grantee’s right
to exercise the Option shall terminate concurrently with the termination of the Grantee’s Continuous Service, except as otherwise determined by the Administrator. 

In the event of the Grantee’s change in status from Employee to Consultant or from an Employee whose customary employment is 20 hours or
more per week to an Employee whose customary employment is fewer than 20 hours per week, vesting of the Option shall continue only to the extent determined by the Administrator as of such change in status consistent with any minimum vesting
requirements set forth in the Plan. 
 IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the Option
is to be governed by the terms and conditions of this Notice, the Plan, and the Option Agreement. 
 SELECTQUOTE, INC. 

A DELAWARE CORPORATION 
  

	
	  
 By:

	Title:

 THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE
GRANTEE’S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER
UPON THE GRANTEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF THE GRANTEE’S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE’S RIGHT OR THE RIGHT OF THE COMPANY OR RELATED ENTITY TO WHICH THE GRANTEE
PROVIDES SERVICES TO TERMINATE THE GRANTEE’S CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE
GRANTEE’S STATUS IS AT WILL. 

  
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 The Grantee acknowledges receipt of a copy of the Plan and the Option Agreement, and
represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed this Notice, the Plan, and the Option Agreement in
their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Notice, and fully understands all provisions of this Notice, the Plan and the Option Agreement. The Grantee hereby agrees that all disputes arising out of
or relating to this Notice, the Plan and the Option Agreement shall be resolved in accordance with Section 17 of the Option Agreement. The Grantee further agrees to notify the Company upon any change in the residence address indicated in this
Notice. 
  

									
	Dated:	 	  
	 		 	Signed:	 	  

		 		 		 	Grantee:	 	

  
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 Award Number:    As described on Carta 

SELECTQUOTE, INC. 2003 STOCK INCENTIVE PLAN 

STOCK OPTION AWARD AGREEMENT 

1. Grant of Option. SelectQuote, Inc., a Delaware corporation (the “Company”), hereby grants to the Grantee (the
“Grantee”) named in the Notice of Stock Option Award (the “Notice”), an option (the “Option”) to purchase the Total Number of Shares of Common Stock subject to the Option (the “Shares”) set forth in the
Notice, at the Exercise Price per Share set forth in the Notice (the “Exercise Price”) subject to the terms and provisions of the Notice, this Stock Option Award Agreement (the “Option Agreement”) and the Company’s 2003
Stock Incentive Plan, as amended from time to time (the “Plan”), which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement. 

If designated in the Notice as an Incentive Stock Option, the Option is intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options which become exercisable for the first time by the Grantee
during any calendar year (under all plans of the Company or any Parent or Subsidiary of the Company) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in excess of the foregoing limitation, shall be treated as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the date
the Option with respect to such Shares is awarded. 
 2. Exercise of Option. 

(a) Right to Exercise. The Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice and
with the applicable provisions of the Plan and this Option Agreement. The Option shall be subject to the provisions of Section 11 of the Plan relating to the exercisability or termination of the Option in the event of a Corporate Transaction or
Change in Control. The Grantee shall be subject to reasonable limitations on the number of requested exercises during any monthly or weekly period as determined by the Administrator. In no event shall the Company issue fractional Shares. 

(b) Method of Exercise. The Option shall be exercisable by delivery of an exercise notice (a form of which is attached as Exhibit A) or
by such other procedure as specified from time to time by the Administrator which shall state the election to exercise the Option, the whole number of Shares in respect of which the Option is being exercised, and such other provisions as may be
required by the Administrator. The exercise notice shall be delivered in person, by certified mail, or by such other method (including electronic transmission) as determined from time to time by the Administrator to the Company accompanied by
payment of the Exercise Price. The Option shall be deemed to be exercised upon receipt by the Company of such notice accompanied by the Exercise Price, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale
and remittance procedure to pay the Exercise Price provided in Section 4(d), below. 

  
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 (c) Taxes. No Shares will be delivered to the Grantee or other person pursuant to the
exercise of the Option until the Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of applicable income tax and employment tax withholding obligations, including, without limitation, such other tax
obligations of the Grantee incident to the receipt of Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon exercise of the Option, the Company or the Grantee’s employer may offset or withhold
(from any amount owed by the Company or the Grantee’s employer to the Grantee) or collect from the Grantee or other person an amount sufficient to satisfy such tax obligations and/or the employer’s withholding obligations. 

3. Grantee’s Representations. The Grantee understands that neither the Option nor the Shares exercisable pursuant to the Option
have been registered under the Securities Act of 1933, as amended or any United States securities laws. In the event the Shares purchasable pursuant to the exercise of the Option have not been registered under the Securities Act of 1933, as amended,
at the time the Option is exercised, the Grantee shall, if requested by the Company, concurrently with the exercise of all or any portion of the Option, deliver to the Company his or her Investment Representation Statement in the form attached
hereto as Exhibit B. 
 4. Method of Payment. Payment of the Exercise Price shall be made by any of the following, or a combination
thereof, at the election of the Grantee; provided, however, that such exercise method does not then violate any Applicable Law and, provided further, that the portion of the Exercise Price equal to the par value of the Shares must be paid in cash or
other legal consideration permitted by the Delaware General Corporation Law: 
 (a) cash; 

(b) check; 
 (c) if the exercise
occurs on or after the Registration Date, surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require (including withholding of Shares otherwise deliverable upon exercise of the
Option) which have a Fair Market Value on the date of surrender or attestation equal to the aggregate Exercise Price of the Shares as to which the Option is being exercised (but only to the extent that such exercise of the Option would not result in
an accounting compensation charge with respect to the Shares used to pay the exercise price); or 
 (d) if the exercise occurs on or after
the Registration Date, payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (i) shall provide written instructions to a Company-designated brokerage firm to effect the immediate sale of some or all of the
purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (ii) shall provide written directives to the
Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction. 

  
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 5. Restrictions on Exercise. The Option may not be exercised if the issuance of the
Shares subject to the Option upon such exercise would constitute a violation of any Applicable Laws. In addition, the Option may not be exercised until such time as the Plan has been approved by the stockholders of the Company. 

6. Termination or Change of Continuous Service. In the event the Grantee’s Continuous Service terminates, other than for Cause, the
Grantee may, but only during the Post-Termination Exercise Period, exercise the portion of the Option that was vested at the date of such termination (the “Termination Date”). In the event of termination of the Grantee’s Continuous
Service for Cause, the Grantee’s right to exercise the Option shall, except as otherwise determined by the Administrator, terminate concurrently with the termination of the Grantee’s Continuous Service (also the “Termination
Date”). In no event shall the Option be exercised later than the Expiration Date set forth in the Notice. In the event of the Grantee’s change in status from Employee, Director or Consultant to any other status of Employee, Director or
Consultant, the Option shall remain in effect and vesting of the Option shall continue only to the extent determined by the Administrator as of such change in status consistent with any minimum vesting requirements set forth in the Plan; provided,
however, with respect to any Incentive Stock Option that shall remain in effect after a change in status from Employee to Director or Consultant, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated
as a Non-Qualified Stock Option on the day three (3) months and one (1) day following such change in status. Except as provided in Sections 7 and 8 below, to the extent that the Option was unvested
on the Termination Date, or if the Grantee does not exercise the vested portion of the Option within the Post-Termination Exercise Period, the Option shall terminate. 

7. Disability of Grantee. In the event the Grantee’s Continuous Service terminates as a result of his or her Disability, the
Grantee may, but only within twelve (12) months from the Termination Date (and in no event later than the Expiration Date), exercise the portion of the Option that was vested on the Termination Date; provided, however, that if such Disability
is not a “disability” as such term is defined in Section 22(e)(3) of the Code and the Option is an Incentive Stock Option, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following the Termination Date. To the extent that the Option was unvested on the Termination Date, or if the Grantee does not
exercise the vested portion of the Option within the time specified herein, the Option shall terminate. Section 22(e)(3) of the Code provides that an individual is permanently and totally disabled if he or she is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve
(12) months. 
 8. Death of Grantee. In the event of the termination of the Grantee’s Continuous Service as a result of his
or her death, or in the event of the Grantee’s death during the Post-Termination Exercise Period or during the twelve (12) month period following the Grantee’s termination of Continuous Service as a result of his or her Disability,
the Grantee’s estate, or a person who acquired the right to exercise the Option by bequest or inheritance, may exercise the portion of the Option that was vested at the date of termination, within twelve (12) months from the date of death
(but in no event later than the Expiration Date). To the extent that the Option was unvested on the date of death, or if the vested portion of the Option is not exercised within the time specified herein, the Option shall terminate. 

  
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 9. Transferability of Option. The Option, if an Incentive Stock Option, may not be
transferred in any manner other than by will or by the laws of descent and distribution and may be exercised during the lifetime of the Grantee only by the Grantee. The Option, if a Non-Qualified Stock Option,
may not be transferred in any manner other than by will or by the laws of descent and distribution, provided, however, that a Non-Qualified Stock Option may be transferred to members of the Grantee’s
Immediate Family to the extent and in the manner authorized by the Administrator. The terms of the Option shall be binding upon the executors, administrators, heirs and successors of the Grantee. 

10. Term of Option. The Option must be exercised no later than the Expiration Date set forth in the Notice or such earlier date as
otherwise provided herein. After the Expiration Date or such earlier date, the Option shall be of no further force or effect and may not be exercised. 

11. Stop-Transfer Notices. In order to ensure compliance with the restrictions on transfer set forth in this Option Agreement, the
Notice or the Plan, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

 12. Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Option Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred. 
 13. Tax Consequences. Set forth below is a brief summary as of the date of this Option Agreement of some of
the federal tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE
OPTION OR DISPOSING OF THE SHARES. 
 (a) Exercise of Incentive Stock Option. If the Option qualifies as an Incentive Stock Option,
there will be no regular federal income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as income for purposes of the
alternative minimum tax for federal tax purposes and may subject the Grantee to the alternative minimum tax in the year of exercise. However, the Internal Revenue Service issued proposed regulations which would subject the Grantee to withholding at
the time the Grantee exercises an Incentive Stock Option for Social Security and Medicare based upon the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. These proposed regulations are not
currently effective and are under further study by the Internal Revenue Service. If adopted, the regulations would be effective only for the exercise of an Incentive Stock Option that occurs after January 1 of the year following the second
anniversary of the issuance of such regulations in final form. 

  
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 (b) Exercise of Incentive Stock Option Following Disability. If the Grantee’s
Continuous Service terminates as a result of Disability that is not permanent and total disability as such term is defined in Section 22(e)(3) of the Code, to the extent permitted on the date of termination, the Grantee must exercise an
Incentive Stock Option within three (3) months of such termination for the Incentive Stock Option to be qualified as an Incentive Stock Option. Section 22(e)(3) of the Code provides that an individual is permanently and totally disabled if
he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period
of not less than twelve (12) months. 
 (c) Exercise of Non-Qualified Stock Option. On
exercise of a Non-Qualified Stock Option, the Grantee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price. If the Grantee is an Employee or a former Employee, the Company will be required to withhold from the Grantee’s compensation or collect from the Grantee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise. 

(d) Disposition of Shares. In the case of a Non-Qualified Stock Option, if Shares are held for
more than one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. In the case of an Incentive Stock Option, if Shares transferred pursuant to the Option are held for more
than one year after receipt of the Shares and are disposed more than two years after the Date of Award, any gain realized on disposition of the Shares also will be treated as capital gain for federal income tax purposes and subject to the same tax
rates and holding periods that apply to Shares acquired upon exercise of a Non-Qualified Stock Option. If Shares purchased under an Incentive Stock Option are disposed of prior to the expiration of such one-year or two-year periods, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (i) the Fair Market Value of the Shares on the date of exercise, or (ii) the sale price of the Shares. 

14. Lock-Up Agreement. 

(a) Agreement. The Grantee, if requested by the Company and the lead underwriter of any public offering of the Common Stock (the
“Lead Underwriter”), hereby irrevocably agrees not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of any interest in any
Common Stock or any securities convertible into or exchangeable or exercisable for or any other rights to purchase or acquire Common Stock (except Common Stock included in such public offering or acquired on the public market after such offering)
during the 180-day period following the effective date of a registration statement of the Company filed under the Securities Act of 1933, as amended, or such shorter period of time as the Lead Underwriter
shall 

  
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specify. The Grantee further agrees to sign such documents as may be requested by the Lead Underwriter to effect the foregoing and agrees that the Company may impose stop-transfer instructions
with respect to such Common Stock subject to the lock-up period until the end of such period. The Company and the Grantee acknowledge that each Lead Underwriter of a public offering of the Company’s
stock, during the period of such offering and for the 180-day period thereafter, is an intended beneficiary of this Section 14. 

(b) No Amendment Without Consent of Underwriter. During the period from identification of a Lead Underwriter in connection with any
public offering of the Company’s Common Stock until the earlier of (i) the expiration of the lock-up period specified in Section 14(a) in connection with such offering or (ii) the
abandonment of such offering by the Company and the Lead Underwriter, the provisions of this Section 14 may not be amended or waived except with the consent of the Lead Underwriter. 

15. Entire Agreement: Governing Law. The Notice, the Plan and this Option Agreement constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s interest
except by means of a writing signed by the Company and the Grantee. Nothing in the Notice, the Plan and this Option Agreement (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties.
The Notice, the Plan and this Option Agreement are to be construed in accordance with and governed by the internal laws of the State of California without giving effect to any choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of California to the rights and duties of the parties. Should any provision of the Notice, the Plan or this Option Agreement be determined by a court of law to be illegal or unenforceable, such
provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable. 

16. Headings. The captions used in the Notice and this Option Agreement are inserted for convenience and shall not be deemed a part of
the Option for construction or interpretation. 
 17. Dispute Resolution. The provisions of this Section 17 shall be the
exclusive means of resolving disputes arising out of or relating to the Notice, the Plan and this Option Agreement. The Company, the Grantee, and the Grantee’s assignees (the “parties”) shall attempt in good faith to resolve any
disputes arising out of or relating to the Notice, the Plan and this Option Agreement by negotiation between individuals who have authority to settle the controversy. Negotiations shall be commenced by either party by notice of a written statement
of the party’s position and the name and title of the individual who will represent the party. Within thirty (30) days of the written notification, the parties shall meet at a mutually acceptable time and place, and thereafter as often as
they reasonably deem necessary, to resolve the dispute. If the dispute has not been resolved by negotiation, the parties agree that any suit, action, or proceeding arising out of or relating to the Notice, the Plan or this Option Agreement shall be
brought in the United States District Court for the Northern District of California (or should such court lack jurisdiction to hear such action, suit or proceeding, in a California state court in the County of San Francisco) and that the parties
shall submit to the jurisdiction of such court. The 

  
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parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the laying of venue for any such suit, action or proceeding brought in such court. THE
PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 17 shall for any reason be held invalid or unenforceable, it is the specific
intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable. 

18. Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal
delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in the United States mail by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed to
the other party at its address as shown in these instruments, or to such other address as such party may designate in writing from time to time to the other party. 

19. Confidentiality. The Company shall provide to the Grantee, during the period the Option is outstanding, copies of financial
statements of the Company at least annually. The Grantee understands and agrees that such financial statements are confidential and shall not be disclosed by the Grantee, to any entity or person, for any reason, at any time, without the prior
written consent of the Company, unless required by law. If disclosure of such financial statements is required by law, whether through subpoena, request for production, deposition, or otherwise, the Grantee promptly shall provide written notice to
Company, including copies of the subpoena, request for production, deposition, or otherwise, within five (5) business days of their receipt by the Grantee and prior to any disclosure so as to provide Company an opportunity to move to quash or
otherwise to oppose the disclosure. Notwithstanding the foregoing, the Grantee may disclose the terms of such financial statements to his or her spouse or domestic partner, and for legitimate business reasons, to legal, financial, and tax advisors.

  
 10Exhibit 4.1 

 

DESCRIPTION
OF CAPITAL STOCK

 

The following is
a summary of the material terms of our securities registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), as of December 31, 2019, and provisions of our charter and bylaws. The summary is subject
to and qualified in its entirely by reference to the charter and bylaws, each of which is incorporated by reference as an exhibit
to the Annual Report on Form 10-K of which this exhibit is a part. The following also summarizes certain provisions of the
Maryland General Corporation Law (the “MGCL”) and is subject to and qualified in its entirely by reference to the MGCL.

 

General

 

Pursuant
to our charter, we are currently authorized to designate and issue up to 500,000,000 shares of common stock, $0.01 par value per
share (our “common stock”), and 100,000,000 shares of preferred stock, $0.01 par value per share (our “preferred
stock”). A majority of our entire board of directors has the power, without stockholder approval, to amend our charter to
increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we are
authorized to issue.

 

As
of February 14, 2020, we had 7,904,006 shares of our common stock outstanding.

 

Description
of Common Stock

 

General

 

Our charter provides
that we have authority to issue up to 500,000,000 shares of common stock. Under Maryland law, stockholders generally are not liable
for a corporation’s debts or obligations solely as a result of their status as stockholders.

 

Distribution, Liquidation and Other
Rights

 

Stockholders
are entitled to receive distributions when authorized by our board of directors and declared by us out of assets legally available
for the payment of dividends. Stockholders are also entitled to share ratably in our assets legally available for distribution
to our stockholders in the event of our liquidation, dissolution, or winding up, after payment of, or adequate provision for, all
of our known debts and liabilities. These rights are subject to the preferential rights of any other class or series of our stock,
including any shares of preferred stock we may issue, and to the provisions of our charter regarding restrictions on ownership
and transfer of our stock. See “Restrictions on Ownership and Transfer.”

 

Our
common stockholders have no preference, conversion, exchange, sinking fund or redemption rights and have no preemptive rights to
subscribe for any of our capital stock. Our charter provides that our stockholders generally have no appraisal rights unless our
board of directors determines that appraisal rights will apply to one or more transactions in which our common stockholders would
otherwise be entitled to exercise such rights. Subject to our charter restrictions on ownership and transfer of our stock, holders
of shares of our common stock have equal dividend, liquidation and other rights.

 

Voting Rights

 

Subject
to our charter restrictions on ownership and transfer of our stock and the terms of any other class or series of our stock, each
outstanding share of our common stock entitles the holder thereof to one vote on all matters submitted to a vote of stockholders,
including the election of directors. Cumulative voting in the election of directors is not permitted. Directors will be elected
by a plurality of the votes cast at the meeting in which directors are being elected and at which a quorum is present. This means
that the holders of a majority of the outstanding shares of our common stock can effectively elect all of the directors then standing
for election, and the holders of the remaining shares will not be able to elect any directors.

 

     

     

    

 

Power to Classify and Reclassify
Unissued Stock

 

Our
charter authorizes our board of directors to reclassify any unissued shares of our common stock into other classes or series of
stock, including classes or series of preferred stock, and to establish the designation and number of shares of each such class
or series and to set, subject to the provisions of our charter regarding the restrictions on ownership and transfer of our stock,
the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications
or terms or conditions of redemption of each such class or series. Thus, our board of directors could authorize the issuance of
shares of common stock or preferred stock with terms and conditions which could have the effect of delaying, deferring or preventing
a transaction or a change in control that might involve a premium price for our common stock or that our common stockholders otherwise
believe to be in their best interests.

 

Listing

 

Our
common stock is listed on the New York Stock Exchange under the trading symbol “PINE.”

 

Transfer Agent and Registrar

 

The transfer agent
and registrar for our common stock is Computershare Trust Company, N.A.

 

Certain Provisions of Maryland Law and
of Our Charter and Bylaws

 

Our Board of Directors

 

Under
our charter and bylaws, the number of directors of our company may be established, increased or decreased only by a majority of
our entire board of directors but may not be fewer than the minimum number required under the MGCL (which is one) nor, unless our
bylaws are amended, more than 15.

 

Removal of Directors

 

Our
charter provides that, subject to the rights of holders of one or more classes or series of preferred stock to elect or remove
one or more directors, a director may be removed only for cause (as defined in our charter) and only by the affirmative vote of
at least two-thirds of the votes entitled to be cast generally in the election of directors.

 

Business Combinations

 

Under
the MGCL, certain “business combinations” (including a merger, consolidation, statutory share exchange or, in certain
circumstances specified under the statute, an asset transfer or issuance or reclassification of equity securities) between a Maryland
corporation and any 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. Maryland law defines an interested
stockholder as:

 

	·	any person who beneficially owns, directly or indirectly, 10% 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
prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding voting stock
of the corporation.

 

A
person is not an interested stockholder under the MGCL if the board of directors approved in advance the transaction by which the
person otherwise would have become an interested stockholder. In approving a transaction, the board of directors may provide that
its approval is subject to compliance, at or after the time of the approval, with any terms and conditions determined by it.

 

    2 

     

    

 

After
such five-year period, any such business combination must be recommended by the board of directors of the 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
supermajority approval requirements do not apply if, among other conditions, the corporation’s common stockholders receive
a minimum price (as defined in the MGCL) 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 the MGCL do not apply, however, to business combinations that are approved or exempted by a corporation’s board
of directors prior to the time that the interested stockholder becomes an interested stockholder. As permitted by the MGCL, our
board of directors has adopted a resolution exempting any business combination between us and any other person from the provisions
of this statute. Consequently, the five-year prohibition and the supermajority vote requirements will not apply to business combinations
involving us. As a result, any person will be able to enter into business combinations with us that may not be in the best interests
of our stockholders, without compliance with the supermajority vote requirements and other provisions of the statute. However,
our board of directors may repeal or modify this resolution at any time in the future, in which case the applicable provisions
of the MGCL will become applicable to business combinations between us and interested stockholders.

 

Control Share Acquisitions

 

The
MGCL provides that a holder of “control shares” of a Maryland corporation acquired in a “control share acquisition”
has no voting rights with respect to those shares except to the extent approved by the affirmative vote of at least two-thirds of
the votes entitled to be cast by stockholders entitled to exercise or direct the exercise of the voting power in the election of
directors generally but excluding: (1) the person who has made or proposes to make the control share acquisition; (2) any
officer of the corporation; or (3) any employee of the corporation who is also a director of the corporation. “Control
shares” are voting shares of stock that, if aggregated with all other such shares of stock previously acquired by the acquirer
or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable
proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges:

 

	·         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 that the acquiring person is then entitled to vote as a result of having previously obtained stockholder
approval. A “control share acquisition” means the acquisition, directly or indirectly, of ownership of, or the power
to direct the exercise of voting power with respect to, issued and outstanding control shares, subject to certain exceptions.

 

A
person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions (including an undertaking
to pay expenses and making an “acquiring person statement” as described in the MGCL), may compel the board of directors
of the company 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 special meeting is made, the corporation may itself present the question at any stockholders
meeting.

 

    3 

     

    

 

If
voting rights of control shares 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 certain 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, if a meeting of stockholders at which the voting rights of such shares are considered and not approved is held,
as of the date of such meeting. 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 (1) to shares acquired in a merger, consolidation or statutory share exchange
if the corporation is a party to the transaction or (2) 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 control share acquisitions by any person
of shares of our stock. There can be no assurance that such provision will not be amended or eliminated at any time in the future
by our board of directors.

 

Subtitle 8

 

Subtitle
8 of Title 3 of the MGCL permits a Maryland corporation with a class of equity securities registered under the Exchange Act and
at least three independent directors to elect, by provision in its charter or bylaws or a resolution of its board of directors
and notwithstanding any contrary provision in the charter or bylaws, to be subject to any or all of the following five provisions:

 

	·	a classified board;

 

	·	a two-thirds vote requirement for removing a director;

 

	·	a requirement that the number of directors be fixed only by vote of the directors;

 

	·	a requirement that a vacancy on the board be filled
only by a vote of the remaining directors (whether or not they constitute a quorum) and for the remainder of the full term of
the class of directors in which the vacancy occurred and until a successor is elected and qualifies; or

 

	·	a majority requirement for the calling of a special meeting of stockholders.

 

Our
charter provides that, effective at such time as we are able to make a Subtitle 8 election, vacancies on our board of directors
may be filled only by the remaining directors (whether or not they constitute a quorum) and that a director elected by the board
of directors to fill a vacancy will serve for the remainder of the full term of the directorship. We have not elected to be subject
to any of the other provisions of Subtitle 8, including the provisions that would permit us to classify our board of directors
without stockholder approval. Moreover, our charter provides that, without the affirmative vote of a majority of the votes cast
on the matter by stockholders entitled to vote generally in the election of directors, we may not elect to be subject to any of
these additional provisions of Subtitle 8. Through provisions in our charter and bylaws unrelated to Subtitle 8, we
(1) vest in our board of directors the exclusive power to fix the number of directors, (2) require, unless called by
our chairman, our chief executive officer, our president or our board of directors, the request of stockholders entitled to cast
not less than a majority of all the votes entitled to be cast at the meeting to call a special meeting of stockholders and (3) provide
that a director may be removed only for cause and by the affirmative vote of two-thirds of the votes entitled to be cast
generally in the election of directors.

 

    4 

     

    

 

Amendments to Our Charter and Bylaws

 

Except
as described herein and as provided in the MGCL, amendments to our charter must be advised by our board of directors and approved
by the affirmative vote of our stockholders entitled to cast a majority of all of the votes entitled to be cast on the matter.
Our board of directors has the exclusive power to amend our bylaws.

 

Meetings of Stockholders

 

Under
our bylaws and pursuant to Maryland law, annual meetings of stockholders will be held each year at a date and at the time and place
determined by our board of directors. Special meetings of stockholders may be called by our board of directors, the chairman of
our board of directors, our president or our chief executive officer. Additionally, subject to the provisions of our bylaws, special
meetings of the stockholders to act on any matter must be called by our secretary upon the written request of stockholders entitled
to cast a majority of all the votes entitled to be cast on such matter at such meeting who have requested the special meeting in
accordance with the procedures set forth in, and provided the information and certifications required by, our bylaws. Only matters
set forth in the notice of the special meeting may be considered and acted upon at such a meeting. Our secretary will inform the
requesting stockholders of the reasonably estimated cost of preparing and delivering the notice of meeting (including our proxy
materials), and the requesting stockholder must pay such estimated cost before our secretary may prepare and deliver the notice
of the special meeting.

 

Corporate Opportunities

 

Our
charter provides that, to the maximum extent permitted by Maryland law, each of Consolidated-Tomoka Land Co., a Florida corporation
(“CTO”), its affiliates, each of their representatives, and each of our directors or officers who is also an officer,
employee, agent, affiliate or designee of CTO or any of CTO’s affiliates has the right to, and has no duty not to, (x) directly
or indirectly engage in the same or similar business activities or lines of business as us, including those deemed to be competing
with us, or (y) directly or indirectly do business with any of our clients, customers or suppliers. In the event that CTO or any
of its affiliates or employees, or any of their representatives or designees, acquires knowledge of a potential transaction or
matter that may be a corporate opportunity for us, CTO, its affiliates and employees and any of their representatives or designees
shall have no duty to communicate or present such corporate opportunity to us or any of our affiliates and shall not be liable
to us or any of our affiliates, subsidiaries, stockholders or other equity holders for breach of any duty by reason of the fact
that CTO or any of its affiliates or employees, or any of their representatives or designees, directly or indirectly, pursues or
acquires such opportunity for themselves, directs such opportunity to another person, or does not present such opportunity to us
or any of our affiliates; provided, however, that such corporate opportunity is not presented to such person in his or her capacity
as a director or officer of us.

 

Charter
Amendments and Extraordinary Transactions

 

Under
Maryland law, a Maryland corporation generally cannot dissolve, amend its charter, merge, sell all or substantially all of its
assets, convert into another form of entity, engage in a statutory share exchange or engage in similar transactions unless such
transaction is declared advisable by the board of directors and approved by the affirmative vote of stockholders entitled to cast
at least two-thirds of all of the votes entitled to be cast on the matter unless a lesser percentage (but not less than a majority
of the votes entitled to be cast on the matter) is set forth in the corporation’s charter. Our charter provides for approval
of these matters by the affirmative vote of stockholders entitled to cast a majority of the votes entitled to be cast on such matter,
except that the affirmative vote of stockholders holding at least two-thirds of the shares entitled to vote on such matter is required
to amend the provisions of our charter relating to the removal of directors or the vote required to amend the removal provisions.
Maryland law also permits a corporation to transfer all or substantially all of its assets without the approval of its stockholders
to an entity all of the equity interests of which are owned, directly or indirectly, by the corporation. Because our operating
assets may be held by our operating partnership subsidiary or its wholly-owned subsidiaries, these subsidiaries may be able to
merge or transfer all or substantially all of their assets without the approval of our stockholders.

 

    5 

     

    

 

Advance Notice of Director Nominations
and New Business

 

Our
bylaws provide that:

 

	·	with respect to an annual meeting of stockholders, nominations of individuals for election to our
board of directors and the proposal of business to be considered by stockholders at the annual meeting may be made only:

 

	·	pursuant to our notice of the meeting;

 

	· 	by or at the direction of our board of directors; or
	 
	·	by a stockholder who was a stockholder of record at the record date set by the board of directors
for the meeting, at the time of giving of the notice of the meeting and at the time of the annual meeting (and any postponement
or adjustment thereof), who is entitled to vote at the meeting in the election of each individual so nominated or on such other
business and who has complied with the advance notice procedures set forth in, and provided the information and certifications
required by, our bylaws; and

 

	·	with respect to special meetings of stockholders, only the business specified in our company’s
notice of meeting may be brought before the special meeting of stockholders, and nominations of individuals for election to our
board of directors may be made only:

 

	·	by or at the direction of our board of directors; or

 

	·	provided that the special meeting has been called in accordance with our bylaws for the purpose
of electing directors, by any stockholder who is a stockholder of record at the record date set by the board of directors for
the special meeting, at the time of giving of the notice required by our bylaws and at the time of the meeting (and any postponement
or adjustment thereof), who is entitled to vote at the meeting in the election of each individual so nominated and who has complied
with the advance notice provisions set forth in, and provided the information and certifications required by, our bylaws.

 

The
purpose of requiring stockholders to give advance notice of nominations and other proposals is to afford our board of directors
and our stockholders the opportunity to consider the qualifications of the proposed nominees or the advisability of the other proposals
and, to the extent considered necessary by our board of directors, to inform stockholders and make recommendations regarding the
nominations or other proposals. Although our bylaws do not give our board of directors the power to disapprove timely stockholder
nominations and proposals, our bylaws may have the effect of precluding a contest for the election of directors or proposals for
other action if the proper procedures are not followed, and of discouraging or deterring a third party from conducting a solicitation
of proxies to elect its own slate of directors to our board of directors or to approve its own proposal.

 

Anti-takeover Effect of Certain Provisions
of Maryland Law and of Our Charter and Bylaws

 

The
restrictions on ownership and transfer of our stock discussed below, the supermajority vote required to remove directors, our election
to be subject to the provision of Subtitle 8 vesting in our board of directors the exclusive power to fill vacancies on our board
of directors, and the advance notice provisions of our bylaws could delay, defer or prevent a transaction or a change of control
of our company. Likewise, if our board of directors were to elect to be subject to the business combination provisions of the MGCL
(which would also require the affirmative vote of a majority of the votes cast on the matter by stockholders entitled to vote generally
in the election of directors) or if the provision in our bylaws opting out of the control share acquisition provisions of the MGCL
were amended or rescinded, these provisions of the MGCL could have similar anti-takeover effects.

 

    6 

     

    

 

Further,
a majority of our entire board of directors has the power to increase or decrease the aggregate number of authorized shares
of stock or the number of shares of any class or series of stock that we are authorized to issue, to classify and reclassify
any unissued shares of our stock into other classes or series of stock and to authorize us to issue the newly classified
shares, as discussed under the captions “Description of Capital Stock—General” and “Description of
Capital Stock—Description of Common Stock—Power to Classify and Reclassify Unissued Stock,” and could
authorize the issuance of shares of common stock or another class or series of stock, including a class or series of
preferred stock, that could have the effect of delaying, deferring or preventing a change in control of us. These actions may
be taken without stockholder approval unless such approval is required by applicable law, the terms of any other class or
series of our stock or the rules of any stock exchange or automated quotation system on which any of our stock is listed or
traded. We believe that the power of our board of directors to increase or decrease the number of authorized shares of stock
and to classify or reclassify unissued shares of our common stock or preferred stock and thereafter to cause us to issue such
shares of stock will provide us with increased flexibility in structuring possible future financings and acquisitions and in
meeting other needs which might arise.

 

Our
charter and bylaws also provide that the number of directors may be established only by our board of directors, which prevents
our stockholders from increasing the number of our directors and filling any vacancies created by such increase with their own
nominees. The provisions of our bylaws discussed above under the captions “—Meetings of Stockholders” and “—Advance
Notice of Director Nominations and New Business” require stockholders seeking to call a special meeting, nominate an individual
for election as a director or propose other business at an annual or special meeting to comply with certain notice and information
requirements. We believe that these provisions will help to assure the continuity and stability of our business strategies and
policies as determined by our board of directors and promote good corporate governance by providing us with clear procedures for
calling special meetings, information about a stockholder proponent’s interest in us and adequate time to consider stockholder
nominees and other business proposals. However, these provisions, alone or in combination, could make it more difficult for our
stockholders to remove incumbent directors or fill vacancies on our board of directors with their own nominees and could delay,
defer or prevent a change in control, including a proxy contest or tender offer that might involve a premium price for our common
stockholders or otherwise be in the best interest of our stockholders.

 

Exclusive
Forum

 

Our
bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City,
Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore
Division, will be the sole and exclusive forum for (a) any Internal Corporate Claim, as such term is defined in the MGCL, (b) any
derivative action or proceeding brought on our behalf other than actions arising under the federal securities laws, (c) any action
asserting a claim of breach of any duty owed by any of our directors, officers or other employees to us or to our stockholders,
(d) any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision
of the MGCL or our charter or bylaws or (e) any action asserting a claim against us or any of our directors, officers or other
employees that is governed by the internal affairs doctrine.

 

Limitation
of Liability and Indemnification of Directors and Officers

 

Maryland
law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to
the corporation and its stockholders for money damages except for liability resulting from actual receipt of an improper benefit
or profit in money, property or services or active and deliberate dishonesty that is established by a final judgment and is material
to the cause of action. Our charter contains such a provision that eliminates such liability to the maximum extent permitted by
Maryland law.

 

The
MGCL requires a Maryland corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director
or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made or
threatened to be made a party by reason of his or her service in that capacity. The MGCL permits a Maryland corporation to indemnify
its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which they may be made or are threatened to be made a party by reason
of their service in those or other capacities unless it is established that:

 

    7 

     

    

 

		·	the act or omission of the director or officer was material to the matter giving rise to the proceeding
and:

 

		o	was committed in bad faith; or

 

		o	was the result of active and deliberate dishonesty;

 

		·	the director or officer actually received an improper personal benefit in money, property or services;
or

 

		·	in the case of any criminal proceeding, the director or officer had reasonable cause to believe
that the act or omission was unlawful.

 

However,
under the MGCL, a Maryland corporation may not indemnify a director or officer for an adverse judgment in a suit by or on behalf
of the corporation or if the director or officer was adjudged liable on the basis that personal benefit was improperly received,
unless, in either case, a court orders indemnification and then only for expenses. A court may order indemnification if it determines
that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not
meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received.

 

In
addition, the MGCL permits a Maryland corporation to advance reasonable expenses to a director or officer upon the corporation’s
receipt of:

 

		·	a written affirmation by the director or officer of his or her good faith belief that he or she
has met the standard of conduct necessary for indemnification by the corporation; and

 

		·	a written undertaking, which may be unsecured, by the director or officer or on the director’s
or officer’s behalf to repay the amount paid if it shall ultimately be determined that the standard of conduct has not been
met.

 

Our
charter obligates us, to the maximum extent permitted by Maryland law in effect from time to time, to indemnify and to pay or reimburse
reasonable expenses in advance of final disposition of a proceeding without requiring a preliminary determination of the director’s
or officer’s ultimate entitlement to indemnification to:

 

		·	any present or former director or officer who is made or threatened to be made a party to or witness
in the proceeding by reason of his or her service in that capacity; or

 

		·	any individual who, while a director or officer of our company and at our request, serves or has
served as a director, officer, partner, member, manager, trustee, employee or agent of another corporation, real estate investment
trust, partnership, limited liability company, joint venture, trust, employee benefit plan or any other enterprise and who is made
or threatened to be made a party to or witness in the proceeding by reason of his or her service in that capacity.

 

Our
charter also permits us, with the approval of our board of directors, to indemnify and advance expenses to any person who served
a predecessor of ours in any of the capacities described above and to any employee or agent of our company or a predecessor of
our company.

 

Indemnification
Agreements

 

We
have entered into indemnification agreements with each of our directors and executive officers that obligate us to indemnify
them to the maximum extent permitted by Maryland law as discussed above under “Certain Provisions of Maryland Law and
of Our Charter and Bylaws— Limitation of Liability and Indemnification of Directors and Officers.” The
indemnification agreements provide that, if a director or executive officer is a party to, or witness in, or is threatened to
be made a party to, or witness in, any proceeding by reason of his or her service as a director, officer, employee or agent
of our company or as a director, officer, partner, member, manager, fiduciary, employee, agent or trustee of any other
foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust,
employee benefit plan or other enterprise that he or she is or was serving in such capacity at our request, or the request of
our external manager, we must indemnify the director or executive officer for all expenses and liabilities actually and
reasonably incurred by him or her, or on his or her behalf, to the maximum extent permitted under Maryland law, including in
any proceeding brought by the director or executive officer to enforce his or her rights under the indemnification agreement,
to the extent provided by the agreement. The indemnification agreements also require us to advance reasonable expenses
incurred by the indemnitee within ten days of the receipt by us of a statement from the indemnitee requesting the advance,
provided the statement evidences the expenses and is accompanied or preceded by:

 

    8 

     

    

 

		·	a written affirmation of the indemnitee’s good faith belief that he or she has met the standard
of conduct necessary for indemnification; and

 

		·	a written undertaking, which may be unsecured, by the indemnitee or on his or her behalf to repay
the amount paid if it shall ultimately be established that the standard of conduct has not been met.

 

The
indemnification agreements also provide for procedures for the determination of entitlement to indemnification, including requiring
such determination be made by independent counsel after a change of control of us.

 

REIT Qualification

 

Our
charter provides that our board of directors may revoke or otherwise terminate our election to be taxed as a real estate investment
trust (“REIT”) for U.S. federal income tax purposes, without approval of our stockholders, if it determines that it
is no longer in our best interest to continue to qualify as a REIT.

 

Restrictions
on Ownership and Transfer

 

For
us to qualify and maintain our qualification as a REIT for each taxable year commencing with our taxable year ending December 31,
2020, our shares of stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months
or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of our outstanding shares of stock
may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code of 1986, as amended
(the “Code”), to include certain entities) during the last half of a taxable year commencing with our taxable year
ending December 31, 2020.

 

Because
our board of directors believes it is at present essential for us to qualify as a REIT, our charter, subject to certain exceptions,
restricts the amount of our shares of stock that a person may beneficially or constructively own. Our charter provides that, subject
to certain exceptions, no person may beneficially or constructively own more than 9.8% in value or in number of shares, whichever
is more restrictive, of the outstanding shares of any class or series of our capital stock.

 

Our
charter also prohibits any person from (i) beneficially owning shares of our capital stock to the extent that such beneficial ownership
would result in our 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 the taxable year), (ii) transferring shares of our capital stock to the
extent that such transfer would result in shares of our capital stock being beneficially owned by less than 100 persons (determined
under the principles of Section 856(a)(5) of the Code), (iii) beneficially or constructively owning shares of our capital stock
to the extent such beneficial or constructive ownership would cause us to constructively own 10% or more of the ownership interests
in a tenant (other than a taxable REIT subsidiary (as defined in Section 856(l) of the Code)) of our real property within the meaning
of Section 856(d)(2)(B) of the Code or (iv) beneficially or constructively owning or transferring shares of our capital stock if
such ownership or transfer would otherwise cause us to fail to qualify as a REIT. Any person who acquires or attempts or intends
to acquire beneficial or constructive ownership of shares of our capital stock that will or may violate any of the foregoing restrictions
on transferability and ownership, or any person who would have owned shares of our capital stock that resulted in a transfer of
shares of our capital stock to a charitable trust, is required to give written notice immediately to us, or in the case of a proposed
or attempted transaction, to give at least 15 days’ prior written notice, and provide us with such other information as we
may request in order to determine the effect of such transfer on our qualification as a REIT. The foregoing restrictions on transferability
and ownership will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify,
or to continue to qualify, as a REIT.

 

    9 

     

    

 

Our
board of directors, in its sole discretion, may prospectively or retroactively exempt a person from the limits described above
and may establish or increase an excepted holder percentage limit for such person. The person seeking an exemption must provide
to our board of directors such representations, covenants and undertakings as our board of directors may deem appropriate in order
to conclude that granting the exemption will not cause us to fail to qualify as a REIT. Our board of directors may not grant such
an exemption to any person if such exemption would result in our failing to qualify as a REIT. Our board of directors may require
a ruling from the Internal Revenue Service or an opinion of counsel, in either case in form and substance satisfactory to the board
of directors, in its sole discretion, in order to determine or ensure our status as a REIT.

 

Any
attempted transfer of shares of our capital stock which, if effective, would violate any of the restrictions described above will
result in the number of shares causing the violation (rounded up to the nearest whole share) to be automatically transferred to
a trust for the exclusive benefit of one or more charitable beneficiaries, except that any transfer that results in the violation
of the restriction relating to shares of our capital stock being beneficially owned by fewer than 100 persons will be void ab
initio. In either case, the proposed transferee will not acquire any rights in such shares. The automatic transfer will be
deemed to be effective as of the close of business on the business day prior to the date of the purported transfer or other event
that results in the transfer to the trust. Shares held in the trust will be issued and outstanding shares. The proposed transferee
will not benefit economically from ownership of any shares held in the trust, will have no rights to dividends or other distributions
and will have no rights to vote or other rights attributable to the shares held in the trust. The trustee of the trust will have
all voting rights and rights to dividends or other distributions with respect to shares held in the trust. These rights will be
exercised for the exclusive benefit of the charitable beneficiary. Any dividend or other distribution paid prior to our discovery
that shares have been transferred to the trust will be paid by the recipient to the trustee upon demand. Any distribution authorized
but unpaid will be paid when due to the trustee. Any dividend or other distribution paid to the trustee will be held in trust for
the charitable beneficiary. Subject to Maryland law, the trustee will have the authority (i) to rescind as void any vote cast by
the proposed transferee prior to our discovery that the shares have been transferred to the trust and (ii) to recast the 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 will not have the authority to rescind and recast the vote.

 

Within
20 days of receiving notice from us that shares of our capital stock have been transferred to the trust, the trustee will sell
the shares to a person designated by the trustee, whose ownership of the shares will not violate the above ownership and transfer
limitations. Upon the sale, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute
the net proceeds of the sale to the proposed transferee and to the charitable beneficiary as follows. The proposed transferee will
receive the lesser of (i) the price paid by the proposed transferee for the shares or, if the proposed transferee did not give
value for the shares in connection with the event causing the shares to be held in the trust (e.g., a gift, devise or other similar
transaction), the market price (as defined in our charter) of the shares on the day of the event causing the shares to be held
in the trust and (ii) the price received by the trustee (net of any commission and other expenses of sale) from the sale or other
disposition of the shares. The trustee may reduce the amount payable to the proposed transferee by the amount of dividends or other
distributions paid to the proposed transferee and owed by the proposed transferee to the trustee. Any net sale proceeds in excess
of the amount payable to the proposed transferee will be paid immediately to the charitable beneficiary. If, prior to our discovery
that shares of our capital stock have been transferred to the trust, the shares are sold by the proposed transferee, then (i) the
shares shall be deemed to have been sold on behalf of the trust and (ii) to the extent that the proposed transferee received an
amount for the shares that exceeds the amount he or she was entitled to receive, the excess shall be paid to the trustee upon demand.

 

In
addition, shares of our capital stock held in the trust will be deemed to have been offered for sale to us, or our designee, at
a price per share equal to the lesser of (i) the price per share in the transaction that resulted in the transfer to the trust
(or, in the case of a devise or gift, the market price at the time of the devise or gift) and (ii) the market price on the date
we, or our designee, accept the offer, which we may reduce by the amount of dividends and distributions paid to the proposed transferee
and owed by the proposed transferee to the trustee. We will have the right to accept the offer until the trustee has sold the shares.
Upon a sale to us, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute
the net proceeds of the sale to the proposed transferee.

 

    10 

     

    

 

If
a transfer to a charitable trust, as described above, would be ineffective for any reason to prevent a violation of a restriction,
the transfer that would have resulted in such violation will be void ab initio, and the proposed transferee shall acquire
no rights in such shares.

 

Every
owner of more than 5% (or such lower percentage as required by the Code or the regulations promulgated thereunder) of shares of
our capital stock, within 30 days after the end of each taxable year, is required to give us written notice, stating his or her
name and address, the number of shares of each class and/or series of our stock that he or she beneficially owns and a description
of the manner in which the shares are held. Each such owner must provide us with such additional information as we may request
in order to determine the effect, if any, of his or her beneficial ownership on our status as a REIT and to ensure compliance with
the ownership limits. In addition, each stockholder will upon demand be required to provide us with such information as we may
request in order to determine our status as a REIT and to comply with the requirements of any taxing authority or governmental
authority or to determine such compliance and to ensure compliance with the ownership limit.

 

These
ownership limitations could delay, defer or prevent a transaction or a change in control that might involve a premium price for
our common stock or otherwise be in the best interest of our stockholders.

 

    11

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