Document:

EX-10.34

  	EXHIBIT 10.34

   

  [***] = INFORMATION HAS BEEN OMITTED BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT ARCUS BIOSCIENCES, INC. TREATS AS PRIVATE OR CONFIDENTIAL

   

  AMENDMENT NO. 1 TO

  OPTION, LICENSE AND COLLABORATION AGREEMENT

  This Amendment No. 1 (this “Amendment”) to the Option, License and Collaboration Agreement, dated as of May 27, 2020 (the “Agreement”), is entered into as of November 17, 2021 (the “Amendment Execution Date”), by and between Gilead Sciences, Inc. (“Gilead”), and Arcus Biosciences, Inc. (“Arcus”).  Capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Agreement to the extent defined therein.

  	Whereas, Gilead and Arcus entered into the Agreement, pursuant to which, among other things, Gilead has an Option to collaborate with and license intellectual property from Arcus with respect to each Arcus Program, including the TIGIT Program, the Adenosine Receptor Program, and the CD73 Program (collectively these three Arcus Programs, the “2021 Optioned Programs”), on the terms and conditions set forth therein;

  Whereas, Gilead desires to exercise its Option on the 2021 Optioned Programs prior to their respective Option Exercise Periods, in each case, in accordance with Section 8.3(b)(vi) of the Agreement, on the terms and conditions set forth herein; and

  	Whereas, the Parties now wish to modify the Agreement in connection with Gilead’s exercise of its Option on the 2021 Optioned Programs as set forth herein. 

  	Now, Therefore, in consideration of the mutual promises and assurances contained in the Agreement and this Amendment, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

  1.Gilead's Exercise of the 2021 Optioned Programs. 

  a.Option Exercise.  Subject to the occurrence of the Option Exercise Closing (or, if there is more than one (1) closing for the applicable Option, the Amended Initial Option Closing (as defined below) with respect to the applicable 2021 Optioned Program(s), Gilead hereby exercises its Option on each 2021 Optioned Program.  Solely with respect to each 2021 Optioned Program, the second sentence of Section 8.3(c)(i) is hereby deleted in its entirety and replaced with the following:  

  “To the extent permitted by applicable Antitrust Laws, and subject to Section 8.3(c)(iii), if the Antitrust Approvals have been obtained for the United States with respect to a 2021 Optioned Program, then (1) an Option Exercise Closing for such 2021 Optioned Program shall occur for the United States and each other jurisdiction in the Territory as to which Antitrust Approval is not required or has 

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  been obtained (such Option Exercise Closing, the “Amended Initial Option Closing”) and (2) subject to Section 8.3(e), each country for which an Antitrust Approval is still required as of the Amended Initial Option Closing shall not be included in the Gilead Royalty Territory unless and until the applicable required Antitrust Approval has been obtained for such country, as applicable.”

  b.QDP Delivery Date for Option Exercise Representations Bringdown.  For purposes of Section 8.3(c) of the Agreement, the Parties agree that [***], shall be deemed the date that the JSC determined that the data package delivered for each 2021 Optioned Program constituted a Qualifying Data Package.

  c.Antitrust Filings.  Notwithstanding the [***] Business Day time period set forth in the first sentence of Section 8.3(d)(ii) of the Agreement, both Parties shall file their respective notification and report forms with the FTC and DOJ pursuant to the HSR Act and any other Antitrust Filings required in connection with the proposed Option Exercise Closing of the 2021 Optioned Programs no later than [***].

  d.Option Exercise Closing Date.  Notwithstanding the [***] Business Day period set forth in the first sentence of Section 8.3(c)(i) of the Agreement, the Option Exercise Closing (or, if there is more than one (1) closing for the applicable Option, the Amended Initial Option Closing) with respect to each Option exercise contemplated hereby shall occur on [***] following the date on which the Antitrust Conditions applicable to such Option exercise have been satisfied.  For the avoidance of doubt, while the Parties will each submit a single notification and report form with the FTC and DOJ pursuant to the HSR Act that reports on the exercise of the Options with respect to all three (3) 2021 Optioned Programs, the Option Exercise Closing (or, as applicable, the Amended Initial Option Closing) with respect to each 2021 Optioned Program is a distinct and separate event and such closing will occur on [***] the date on which the Antitrust Conditions applicable to such 2021 Optioned Program have been satisfied even if the Antitrust Conditions for one or more of the other 2021 Optioned Programs have not also been satisfied at that time.

  e.Option Payment.  Pursuant to Section 9.2 of the Agreement (and notwithstanding anything therein to the contrary), Gilead will pay to Arcus as the applicable Option Payments for the 2021 Optioned Programs, within thirty (30) days after the applicable Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) pursuant to this Amendment, (i) an amount equal to Two Hundred Seventy-Five Million Dollars ($275,000,000) for the TIGIT Program, which, for the avoidance of doubt, includes both AB154 and AB308, (ii) an amount equal to Two Hundred Fifty Million Dollars ($250,000,000) for the Adenosine Receptor Program, and (iii) an amount equal to Two Hundred Million Dollars ($200,000,000) for the CD73 Program; provided, that [***].  For the avoidance of doubt, each such payment shall be payable by Gilead if and only if an Option Exercise Closing or, if applicable, Amended Initial Option Closing pursuant to this Amendment occurs for the 2021 Optioned Program for which such payment applies.

  f.No Effective Option Exercise Closing.  Notwithstanding Section 8.3(e)(i) of the Agreement, which Section shall not apply to the exercise of the Options contemplated herein, if the Option Exercise Closing (or, if there is more than one (1) closing for the applicable Option, the Amended Initial Option Closing) with respect to a 2021 Optioned Program has not occurred within [***] days after the Amendment Execution Date, to the extent permitted by applicable Antitrust Laws, Gilead may provide written notice to Arcus 

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  that it is rescinding the Option for such 2021 Optioned Program, and unless Arcus responds to Gilead within [***] Business Days of receiving such written notice, providing evidence that it is using reasonable efforts to secure the necessary Antitrust Approvals in the applicable jurisdictions (including in response to any additional request from Antitrust Authorities), (i) Gilead’s exercise of the Option for such 2021 Optioned Program set forth herein shall be automatically and immediately rescinded without penalty or prejudice, at 11:59 p.m. Pacific Time on such [***] Business Day and (ii) until the expiration of the Option Exercise Period for such 2021 Optioned Program, such 2021 Optioned Program shall remain subject to Section 8.3 of the Agreement, including Gilead’s right to exercise the Option with respect to such 2021 Optioned Program.  If Arcus responds within such [***] Business Day period with such evidence, then Gilead may provide written notice to Arcus that it is rescinding its exercise of the Option for such 2021 Optioned Program if the Option Exercise Closing (or, if there is more than one (1) closing for the applicable Option, the Amended Initial Option Closing) has not occurred by 11:59 p.m. Pacific Time on the [***] day after the Amendment Execution Date, in which event (A) Gilead’s exercise of the Option for such 2021 Optioned Program set forth herein shall be automatically and immediately rescinded, without penalty or prejudice, at 12:01 a.m. Pacific Time on the following day and (B) until the expiration of the Option Exercise Period for such 2021 Optioned Program, such 2021 Optioned Program shall remain subject to Section 8.3 of the Agreement, including Gilead’s right to exercise the Option with respect to such 2021 Optioned Program.  

  g.Definitions.  Effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) with respect to the first 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, Section 1 of the Agreement is hereby amended to add the following new definitions:

  “Amendment No. 1” means the Amendment No. 1 to this Agreement, dated as of November 17, 2021, between the Parties.

  “2021 Optioned Programs” mean each of the TIGIT Program (which, for the avoidance of doubt, includes both AB154 and AB308), the CD73 Program and the Adenosine Receptor Program, in each case, from and after the occurrence, if any, of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) with respect to each of the respective Arcus Programs contemplated by Amendment No. 1.

  h.Arcus Amendment Representation.  Arcus hereby represents and warrants, as of the Amendment Execution Date, that the Data Room [***] that has been made available to Gilead for diligence in connection with the transactions contemplated by this Amendment contains as of November [***], 2021:

  i.all data and other information (existing and available as of November [***], 2021) with respect to the three 2021 Optioned Programs that would be required to be included in a Qualifying Data Package; and 

  ii.all material information, including [***] the Clinical Trial Collaboration Agreement, dated as of October 28, 2020, between Arcus and MedImmune Limited. 

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  i.Option Exercise Schedules.  

  i.Attached hereto as Exhibit A are the Arcus Third Party Obligations Schedules for each of the 2021 Optioned Programs.  The Parties agree to review Exhibit A promptly following the Amendment Execution Date to make such revisions as are reasonable and necessary to appropriately reflect the Parties’ respective activities under the Agreement, as amended hereunder, and to clarify their respective responsibilities therefor.

  ii.Attached hereto as Exhibit B are the initial Arcus Option Schedules of Exceptions for each of the 2021 Optioned Programs, dated as of November 17, 2021.

  2.Opt-Out Amendment.  Effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) with respect to the CD73 Program, the first sentence of Section 4.7(a) of the Agreement is hereby deleted in its entirety and replaced with the following:

  “Subject to Section 4.7(d), with respect to each Optioned Program other than the PD-1 Program, the TIGIT Program, the CD73 Program or the Adenosine Receptor Program, if Arcus desires not to (i) perform its obligations under Section 4.2 with respect to the R&D Plan and Budget for such Optioned Program and (ii) share Research and Development Costs with respect to such Optioned Program, then, in each case ((i) and (ii)), Arcus shall have the right to opt-out of performing such obligations and sharing such Research and Development Costs upon written notice to Gilead stating that Arcus is opting-out of such Optioned Program (such notice from Arcus to Gilead, with respect to any Optioned Program, an “Opt-Out Notice”).”

  3.Royalty Rate Amendment.  Effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) for the first 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, Section 9.5(a) of the Agreement is hereby deleted in its entirety and replaced with the following:

  (a)	Royalty Payments. Subject to any other terms of this Agreement relevant in this Section 9.5(a), in partial consideration of the license granted by Arcus under Section 8.4, during the applicable Royalty Term only, and on an Optioned Product-by-Optioned Product basis, Gilead shall pay to Arcus royalties in each Calendar Year on the amount of aggregate Net Sales of the applicable Optioned Product in the Gilead Royalty Territory (excluding (A) for clarity, Net Sales in any country for the period in which such country is included in the Third Party Territory or the Shared Territory and (B) Net Sales in the Access Territory) (such aggregate Net Sales, excluding the foregoing clauses (A) and (B), “Included Net Sales”) as calculated by multiplying the applicable royalty rates set forth below by the corresponding amount of incremental Included Net Sales of such Optioned Product in such Calendar Year (the “Royalties”). For clarity, if Arcus delivers an Opt-Out Notice with respect to a given Optioned Program pursuant to Section 4.7(a), the Net Sales in the U.S. for each Optioned Product included in such Optioned Program shall be included in Included Net Sales, on an Optioned Product-by-Optioned Product basis.

  With respect to (x) the PD-1 Program and (y) all Optioned Programs other than (i) the 2021 Optioned Programs and (ii) the Optioned Target Programs for which Gilead exercises its option prior to the expiration of the applicable Selected Target Option Exercise Window, 

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  the Parties agree that the following Royalty Rate Table A applies ((x) and (y), collectively, “Royalty A Programs”):

  Royalty Rate Table A

  		
	Included Net Sales of each Optioned Product in  a Royalty A Program in the Gilead Royalty Territory in a Calendar Year
	Royalty Rate

	[***]
	[***]

  With respect to each 2021 Optioned Program (the “Royalty B Programs”), the Parties agree that the following Royalty Rate Table B applies:

  Royalty Rate Table B

  		
	Included Net Sales of each Optioned Product in a Royalty B Program in the Gilead Royalty Territory in a Calendar Year
	Royalty Rate

	[***]
	[***]

  With respect to each Optioned Target Program for which Gilead exercises its option prior to expiration of the applicable Selected Target Option Exercise Window (collectively, “Royalty C Programs”), the Parties agree that the following Royalty Rate Table C applies:

  Royalty Rate Table C

  		
	Included Net Sales of each Optioned Product in a Royalty C Program in the Gilead Royalty Territory in a Calendar Year
	Royalty Rate

	[***]
	[***]

   

  [***]

   

  4.Independent Activities Criteria.  Section 4.8(a) of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following:

  (a)	Conditions for Permitting Arcus Independent Activities. For each Optioned Program, following [***], if Arcus has not undergone any Change of Control, Arcus has not exercised its opt-out pursuant to Section 4.7, and, subject to Section 4.1(a) and 7.2(a), Arcus desires to conduct Development activities (including the inclusion of such Optioned Molecule in an Optioned Combination, but not the inclusion of such Optioned Molecule in any other Combination) that Gilead does not agree to include in the applicable R&D Plan and Budget following completion of the dispute resolution process set forth in Section 2.5(b)(ii)(B) and such activities would not be reasonably expected to have a material adverse effect on the Development or Commercialization of any Optioned Molecule or 

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  Optioned Product in the Gilead Territory (any such activities, “Arcus Independent Activities”), then Section 4.8(b) shall apply.

   

  5.Addition of R&D Target Activities.  As soon as practicable after the Amendment Execution Date, Arcus and Gilead will discuss potential Targets and mutually agree in writing on a list of Targets from which Gilead may select up to two (2) Targets for which Arcus shall perform Arcus R&D Activities in accordance with Section 3.1 of the Agreement (as amended below).  Such list shall have a minimum of [***] Targets (unless otherwise agreed in writing by Gilead), and the Parties may amend such list from time to time by mutual agreement in writing.   Effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) for the second 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, Section 3.1 of the Agreement is hereby deleted in its entirety and replaced with the following.

  3.1	Arcus R&D Activities.

  (a)	Generally.  Arcus shall be solely responsible, in its discretion and at its sole cost and expense, for conducting all (a) Pre-Program Activities and (b) Development activities with respect to Arcus Programs, including, in each case ((a) and (b)) (as applicable), all applicable pre-clinical and non-clinical research activities, regulatory activities (including filing INDs) and clinical activities (collectively, the “Arcus R&D Activities”), except to the extent otherwise agreed by the Parties in writing, set forth in this Agreement or as set forth in Section 3.1(b).

   

  (b) 	Gilead Selected Targets for Arcus R&D Activities.  

  (i) 	Initial Selection.  “Selected Targets” are the Target(s) selected by Gilead for Arcus R&D Activities from the list mutually agreed by the Parties in writing pursuant to Amendment No. 1.  With respect to each Selected Target, Arcus shall use commercially reasonable efforts to conduct Arcus R&D Activities with respect to such Selected Target from the prompt initiation of Pre-Program Activities, through the establishment of an Arcus Program Directed To such Selected Target and the Completion Date of the Triggering Clinical Trial with respect to such Arcus Program.  The Parties agree that the conduct of the Arcus R&D Activities with respect to the Selected Targets shall be overseen by the Joint Research Committee previously established by the Parties. For the avoidance of doubt, subject to the terms of this Section 3.1(b), Arcus shall retain discretion over the manner in which it conducts the Pre-Program Activities for the Selected Targets.

  (ii) 	Validation Plan and Validation Data Package.  Notwithstanding Sections 2.5(b)(i)(B) and 3.1(a) with respect to the Pre-Program Activities for each Selected Target, the Parties shall mutually agree on the scope of activities [***] intended to assess a lead Arcus Molecule Directed To such Selected Target (collectively, such specific Pre-Program Activities in (A) and (B), the “Validation Activities” for such Selected Target).  With respect to each Selected Target, promptly upon completion of the Validation Activities, Arcus shall deliver to Gilead a written notice including instructions and credentials with which Gilead may access a Data Room containing all data and information arising from all Pre-Program Activities, including the Validation Activities, performed with respect to such Selected Target up to the date of such completion (such information package, a “Validation Data Package”).

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  (iii) 	Replacement of Selected Targets.  For the period of time from Gilead’s receipt of the Validation Data Package for each Selected Target until [***] days thereafter (“Target Evaluation Period”), Gilead shall have a one-time right to replace such Selected Target upon providing written notice to Arcus identifying the Selected Target to be replaced prior to expiration of the Target Evaluation Period.  If Gilead provides such notice, Gilead shall provide written notice to Arcus identifying a new Target in replacement of such Selected Target within [***] days from the expiration of the Target Evaluation Period; provided, that the new Target must be from the list of Targets mutually agreed by Arcus and Gilead in writing pursuant to Amendment No. 1.  Upon Arcus’ receipt of such written notice from Gilead identifying the replacement Target, such replacement Target shall be treated as a Selected Target, the replaced Selected Target will no longer be deemed a Selected Target under this Agreement, and Gilead shall have no further replacement right under this Section 3.1(b)(iii) with respect to any such replacement Selected Target.  For each Selected Target, if a Target Program Data Package is delivered to Gilead pursuant to Section 8.3(b)(ix) prior to delivery of a Validation Data Package for such Selected Target, Gilead’s right to replace such Selected Target shall expire concurrent with the expiration of the Selected Target Option Exercise Window for such Selected Target.  

  (iv)  Material Transfer.  If and to the extent requested by Gilead, Arcus shall provide to Gilead an amount of chemical or biological materials that have been, are being, or are proposed to be studied by Arcus with respect to such Selected Target(s) for pre-clinical and non-clinical studies to be performed by Gilead in Gilead’s sole discretion.  Any such material transfer shall be made pursuant to the terms of Section 3.5(d) of this Agreement.

  6.Option Exercise for Selected Target(s).  Effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) with respect to the second 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, the following is added to the Agreement as a new Section 8.3(b)(ix):

  (ix) For each Selected Target, subject to Section 8.3(d), Arcus hereby grants to Gilead an exclusive option to obtain the exclusive licenses and other rights described in Section 8.4 with respect to all Arcus Molecules Directed to such Selected Target and any Related Arcus Molecules with respect to such Arcus Molecules, and any Arcus Products containing such Arcus Molecules or such Related Arcus Molecules (a “Target Program”).  Following [***], Arcus shall promptly deliver to Gilead a written notice including instructions and credentials with which Gilead may access a Data Room containing the [***] to the extent then existing with respect to such Target Program (a “Target Program Data Package”).  With respect to a Target Program, during the window beginning with the date of Gilead’s selection of a Selected Target and ending [***] days after receipt of such notice (the “Selected Target Option Exercise Window”), Gilead shall have the right to exercise such option for such Target Program by providing Arcus written notice thereof during such window.  During the Selected Target Option Exercise Window for a Target Program, Arcus may continue with any Pre-Program Activities and Development Activities, but, in no event shall [***].  If Gilead exercises such option for a Target Program during the Selected Target Option Exercise Window, the option closing process set forth in Sections 8.3(c) and (d) applicable to an Arcus Program shall apply to the Target Program, mutatis mutandis, and, from and after the Option Exercise Closing (or, if there is more than one (1) closing for the Target Program, the Initial Option Closing), the Target Program shall be deemed an Optioned Program (each, an “Optioned Target Program”) and shall thereafter be 

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  subject to all of the terms and conditions of the Agreement applicable to Optioned Programs.  If Gilead does not exercise such option for a Target Program during the Selected Target Option Exercise Window, such Target Program shall be deemed an Arcus Program from and after at least one (1) Molecule included in such Target Program becomes the subject of an IND filed with a Regulatory Authority in any jurisdiction and shall thereafter be subject to all of the terms and conditions of the Agreement applicable to Arcus Programs, including Gilead’s right to exercise the Option with respect to such Target Program pursuant to Section 8.3.  If Gilead exercises its option for a Target Program during the applicable Selected Target Option Exercise Window, responsibilities for the conduct of activities under the applicable R&D Plan and Budget shall be assigned to Arcus and Gilead in accordance with the terms and conditions of the Agreement, including as contemplated by Section 4.2(a) and Section 5.2(c)(i).  By way of example, the applicable R&D Plan and Budget may [***].

  7.Allocation of Development Activities to Arcus.  

  a.The initial R&D Plan and Budget for [***] is attached hereto as Exhibit C, which, for clarity, may be amended by the JDC and JSC pursuant to the existing process set forth in the Agreement for Optioned Programs, including Article 2 and Section 4.1(a).  The (i) preliminary R&D Plan and Budget and (ii) [***] are set forth on Exhibit D and Exhibit E, respectively.  The Parties expect the initial R&D Plan and Budget for each of [***] to include (A) the preliminary R&D Plan and Budget set forth on Exhibit D and Exhibit E, respectively, and (B) [***].  For the avoidance of doubt, these preliminary R&D Plan and Budget and [***] are subject to further discussion between the Parties and subject to the existing process set forth in the Agreement with respect to the preparation and approval of the initial R&D Plan and Budget for such Optioned Programs.  Effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) with respect to the first 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, the following sentences are hereby added to the end of Section 4.1(a) of the Agreement:

  “Without limiting any of Gilead’s rights under this Agreement, Arcus acknowledges and agrees that, as contemplated by Section 4.2(a), responsibility for the activities under each R&D Plan and Budget shall be allocated between Arcus and Gilead.  If and to the extent requested by Gilead via the JDC, the JDC may assign to Arcus, and Arcus shall perform, at least fifty percent (50%) of the clinical activities for each 2021 Optioned Program in accordance with the R&D Plan and Budget for such 2021 Optioned Program.  If such assignment is made, the Parties shall promptly amend the R&D Plan and Budget as necessary to reflect the assignment of such activities to Arcus.”

  b.Effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) with respect to the second 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, for purposes of Gilead’s obligation to use Commercially Reasonable Efforts to Develop and obtain Regulatory Approval with respect to each applicable 2021 Optioned Programs in accordance with Section 4.2(a) of the Agreement, the activities [***].  For the avoidance of doubt, for each Optioned Program, including the 2021 Optioned Programs, each Party shall remain obligated to conduct the Optioned Program R&D Activities in accordance with Section 4.2(a) of the Agreement.  

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  8.Addition of Option Payments for Selected Targets.  Effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) for the second 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, Section 9.2 of the Agreement is hereby deleted in its entirety and replaced with the following:

  9.2	Option Payments.

  (a)	Option Payment for Arcus Programs.  (i) For each Optioned Program other than the PD-1 Program, the TIGIT Program, the Adenosine Receptor Program, the CD73 Program and any Target Program, Gilead shall pay to Arcus an amount equal to One Hundred Fifty Million Dollars ($150,000,000), (ii) for the TIGIT Program, if Gilead exercises its Option during the Option Exercise Period for AB154, then Gilead shall pay to Arcus an amount equal to Two Hundred Seventy-Five Million Dollars ($275,000,000), and if Gilead exercises its Option during the Option Exercise Period for AB308, then Gilead shall pay to Arcus an amount equal to One Hundred Fifty Million Dollars ($150,000,000), (iii) for the Adenosine Receptor Program, Gilead shall pay to Arcus an amount equal to Two Hundred Fifty Million Dollars ($250,000,000), and (iv) for the CD73 Program, Gilead shall pay to Arcus an amount equal to Two Hundred Million Dollars ($200,000,000) (each such payment, an “Option Payment”), in each case, within thirty (30) days after the applicable Arcus Program has become an Optioned Program pursuant to Section 8.3.

  (b)	Option Payment for Target Programs.  For each Target Program, if Gilead exercises its option during the Selected Target Option Exercise Window, Gilead shall pay to Arcus an amount equal to Sixty Million Dollars ($60,000,000), in each case, within thirty (30) days after the applicable Target Program has become an Optioned Program pursuant to Section 8.3 of the Agreement.

  9.Removal of 2022 Option Continuation Payment.  

  a.Subject to Sections 10.b and 10.c of this Amendment, effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) with respect to the first 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, Section 9.3 of the Agreement is hereby deleted in its entirety and replaced with the following:

  9.3	Option Continuation Payments.  Until the earlier termination of this Agreement pursuant to ARTICLE XIV, (i) within [***] days of either (x) unless the following clause (y) applies, the second (2nd) anniversary of the Effective Date (if applicable) or (y) if, as of the second (2nd) anniversary of the Effective Date, Gilead’s right to rescind its exercise of the Options for the other two (2) 2021 Optioned Programs has not expired, the earlier of (A) Gilead’s rescission of the Option exercise for the other two (2) 2021 Optioned Programs in accordance with Section 1.f of Amendment No. 1 and (B) [***] (the applicable date ((x) or (y)), the “Payment Date”), Gilead shall pay to Arcus a payment of Sixty-Seven Million Dollars ($67,000,000) in partial consideration of the Options granted to Gilead pursuant to Section 8.3 for the two (2) subsequent years, and (ii) within [***] days of each of the fourth (4th), sixth (6th) and eighth (8th) anniversaries of the Effective Date (if applicable), Gilead shall pay to Arcus a payment of One Hundred Million Dollars ($100,000,000) in partial consideration of the Options granted to Gilead pursuant to Section 8.3 for the corresponding two (2) subsequent years (each ((i) and (ii)), 

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  an “Option Continuation Payment”).  Notwithstanding anything to the contrary herein, (a) in the event that Gilead exercises its rights to terminate its obligations for making any further Option Continuation Payments pursuant to Section 14.3(b)(i), Gilead’s payment obligations under this Section 9.3 shall terminate on the effective date of such termination; provided, that [***].

  b.Subject to Section 10.c of this Amendment, effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) with respect to the second 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, Section 9.3 of the Agreement is hereby deleted in its entirety and replaced with the following:

  9.3	Option Continuation Payments.  Until the earlier termination of this Agreement pursuant to ARTICLE XIV, (i) within [***] days of either (x) unless the following clause (y) applies, the second (2nd) anniversary of the Effective Date (if applicable) or (y) if, as of the second (2nd) anniversary of the Effective Date, Gilead’s right to rescind its exercise of the Option for one (1) of the Optioned Programs has not expired, the earlier of (A) Gilead’s rescission of the Option exercise for such 2021 Optioned Program in accordance with Section 1.f of Amendment No. 1 and (B) [***] (the applicable date ((x) or (y)), the “Payment Date”), Gilead shall pay to Arcus a payment of Thirty-Four Million Dollars ($34,000,000) in partial consideration of the Options granted to Gilead pursuant to Section 8.3 for the two (2) subsequent years, and (ii) within [***] days of each of the fourth (4th), sixth (6th) and eighth (8th) anniversaries of the Effective Date (if applicable), Gilead shall pay to Arcus a payment of One Hundred Million Dollars ($100,000,000) in partial consideration of the Options granted to Gilead pursuant to Section 8.3 for the corresponding two (2) subsequent years (each ((i) and (ii)), an “Option Continuation Payment”).  Notwithstanding anything to the contrary herein, (a) in the event that Gilead exercises its rights to terminate its obligations for making any further Option Continuation Payments pursuant to Section 14.3(b)(i), Gilead’s payment obligations under this Section 9.3 shall terminate on the effective date of such termination; provided, that [***]. 

  c.Effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) with respect to the third 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, Section 9.3 of the Agreement is hereby deleted in its entirety and replaced with the following:

  9.3	Option Continuation Payments.  Until the earlier termination of this Agreement pursuant to ARTICLE XIV, within [***] days of each of the fourth (4th), sixth (6th) and eighth (8th) anniversaries of the Effective Date (if applicable), Gilead shall pay to Arcus a payment of One Hundred Million Dollars ($100,000,000) in partial consideration of the Options granted to Gilead pursuant to Section 8.3 for the corresponding two (2) subsequent years (each an “Option Continuation Payment”).  Notwithstanding anything to the contrary herein, (a) in the event that Gilead exercises its rights to terminate its obligations for making any further Option Continuation Payments pursuant to Section 14.3(b)(i), Gilead’s payment obligations under this Section 9.3 shall terminate on the effective date of such termination; provided, that [***].

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  10.Structures of Arcus Molecules.  Effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) with respect to the second 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, Section 11.5(e) of the Agreement is hereby deleted in its entirety and replaced with the following:  

  (e)	Structures of Arcus Molecules.  [***].

  11.Termination at Will.  Effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) with respect to the second 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, each instance of the term “Arcus Program” in Section 14.3(a) is hereby deleted and replaced with “Arcus Program or Target Program”.

  12.Consequences of Termination of the Collaboration Term.  Effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) with respect to the second 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, Section 14.3(b)(iii) of the Agreement is hereby deleted in its entirety and replaced with the following:  

  (iii) Consequences of Expiration or Termination of the Collaboration Term.  

  (A)Initial Disclosure.  Within [***] days after expiration or termination of the Collaboration Term, Arcus shall deliver to Gilead, with respect to each Arcus Program or Target Program, a written notice including instructions and credentials with which Gilead may access a Data Room containing the data and information (existing and available as of the date of Arcus’s notice) with respect to each Arcus Molecule.  

  (B)Interim Disclosure of Qualifying Data Package(s).  With respect to each Arcus Molecule, if the data and information provided pursuant to Section 14.3(b)(iii)(A) do not constitute a Qualifying Data Package (as determined by the JSC, including pursuant to Section 2.5(b)(i)(C) or Section 15.2(b)), then, until [***] months after expiration or termination of the Collaboration Term, Arcus shall deliver to Gilead via the applicable Data Room a Qualifying Data Package (as determined by the JSC, including pursuant to Section 2.5(b)(i)(C) or Section 15.2(b)) promptly upon the required data and information for such Qualifying Data Package becoming available to Arcus.  In addition, with respect to each Arcus Molecule Directed To a Selected Target, if the data and information provided pursuant to Section 14.3(b)(iii)(A) do not constitute a Target Program Data Package (as determined by the JSC, including pursuant to Section 2.5(b)(i)(C) or Section 15.2(b)), then, until [***] months after expiration or termination of the Collaboration Term, Arcus shall deliver to Gilead via the applicable Data Room a Target Program Data Package (as determined by the JSC, including pursuant to Section 2.5(b)(i)(C) or Section 15.2(b)) promptly upon the required data and information for such Target Program Data Package becoming available to Arcus.

  (C)Final Disclosure.  With respect to each Arcus Molecule, if Arcus has not delivered a Qualifying Data Package to Gilead pursuant to Section 14.3(b)(iii)(A) or Section 14.3(b)(iii)(B) as of [***] months after expiration or termination of the Collaboration Term, Arcus shall deliver to Gilead via the applicable Data Room all data and information with respect to such Arcus Molecule in the possession or Control of Arcus at such time.  With respect to each Arcus Molecule Directed To a Selected Target, if Arcus 

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  has not delivered a Target Program Data Package to Gilead pursuant to Section 14.3(b)(iii)(A) or Section 14.3(b)(iii)(B) as of [***] months after expiration or termination of the Collaboration Term, Arcus shall deliver to Gilead via the applicable Data Room all data and information with respect to such Arcus Molecule Directed to a Selected Target in the possession or Control of Arcus at such time.

  (D)Option Exercise.  With respect to each Arcus Program, the Option Exercise Period shall be deemed to begin upon the earlier of (1) the date of the JSC’s determination (including pursuant to Section 2.5(b)(i)(C) or Section 15.2(b)) that Arcus has delivered to Gilead a Qualifying Data Package pursuant to Section 14.3(b)(iii)(A) or Section 14.3(b)(iii)(B), and (2) [***] months after expiration or termination of the Collaboration Term, provided, that as of such time Arcus has delivered to Gilead of the data and information required pursuant to Section 14.3(b)(iii)(C) and end upon the earlier to occur of the events set forth in Sections 8.3(b)(ii)(A) and 8.3(b)(ii)(B) (provided, that the delivery to Gilead of the data and information required pursuant to Section 14.3(b)(iii)(C) shall be deemed delivery of a Qualifying Data Package for purposes of Section 8.3(b)(ii)(B)).  During such Option Exercise Period, Gilead shall have the right to exercise the Option for the applicable Arcus Program in accordance with ARTICLE VIII.  With respect to each Target Program, the Selected Target Option Exercise Window shall be deemed to begin upon the earlier of (I) the date of the JSC’s determination (including pursuant to Section 2.5(b)(i)(C) or Section 15.2(b)) that Arcus has delivered to Gilead a Target Program Data Package pursuant to Section 14.3(b)(iii)(A) or Section 14.3(b)(iii)(B), and (II) [***] months after expiration or termination of the Collaboration Term, provided, that as of such time Arcus has delivered to Gilead of the data and information required pursuant to Section 14.3(b)(iii)(C) and end upon the earlier to occur of (x) Gilead’s written exercise notice to Arcus or (y) [***] days after the occurrence of (I) or (II) (provided, that the delivery to Gilead of the data and information required pursuant to Section 14.3(b)(iii)(C) shall be deemed delivery of a Target Program Data Package for purposes of Section 8.3(b)(ix).  During such Selected Target Option Exercise Window, Gilead shall have the right to exercise the Option for the applicable Arcus Program in accordance with ARTICLE VIII.  

  (E)Exception for Certain Pre-Clinical Programs.  Notwithstanding Sections 14.3(b)(iii)(A), 14.3(b)(iii)(B) and 14.3(b)(iii)(C), Arcus shall not be obligated pursuant to this Section 14.3(b) to provide any information or data developed, created or otherwise made from any program that was not an Arcus Program or Target Program as of the expiration or termination of the Collaboration Term.

  13.Target Program Data Package Decision Making.  Effective as of the Option Exercise Closing (or, if there is more than one closing for the applicable Option, the Amended Initial Option Closing) with respect to the second 2021 Optioned Program for which an Option Exercise Closing or Amended Initial Option Closing, as applicable, has occurred, each instance of the term “Qualifying Data Package” in Section 2.5(b)(i)(C) or Section 15.2(b) is hereby deleted and replaced with “Qualifying Data Package or Target Program Data Package”.   

  14.Press Release; Publication of Data.  The Parties agree that the terms of this Amendment are the Confidential Information of both Parties, subject to the special authorized disclosure provisions set forth in Section 13.2 and Section 13.3 of the Agreement. The Parties have agreed to make a joint press release of the execution of this Amendment in the mutually agreed form attached hereto as Exhibit F.  From and after the Amendment Execution Date until the earlier of (a) the Amended Initial Option Closing for the applicable 2021 Optioned Program or (b) the date Gilead’s option 

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  exercise is rescinded pursuant to Section 1(f) of this Amendment, for purposes of Section 13.4 of the Agreement, each 2021 Optioned Program shall be considered an “Optioned Program” and not an “Arcus Program.”  

  15.Entire Agreement.  This Amendment (including the Exhibits hereto), together with the Agreement (including the Appendices and Schedules thereto) and the Ancillary Agreements, sets forth the complete, final and exclusive agreement and all the covenants, promises, agreements, warranties, representations, conditions and understandings between the Parties with respect to the subject matter hereof and thereof and supersedes all prior agreements and understandings between the Parties existing as of the Amendment Execution Date with respect to the subject matter hereof and thereof.  There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the Parties other than as are set forth herein and therein. No subsequent alteration, amendment, change or addition to this Amendment shall be binding upon the Parties unless reduced to writing and signed by an authorized representative of each Party.

  16.Miscellaneous.  This Amendment shall be made part of the Agreement and governed by all of its terms (as specifically amended by this Amendment), including, without limitation, Sections 15.1(a) and (b), 15.2(a), (c) and (e), 15.3 – 15.6, 17.2, 17.4, 17.5, 17.8 – 17.13 of the Agreement which are incorporated herein by reference (treating any reference to “Agreement” therein as a reference to “Amendment” instead).  Except as specifically amended by this Amendment, the terms and conditions of the Agreement shall remain in full force and effect.  This Amendment may be executed by facsimile (including a PDF image delivered via e-mail) or electronically transmitted signatures and such signatures shall be deemed to bind each Party hereto as if they were original signatures.

  [Signature page follows]

   

   

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  In Witness Whereof, the Parties have executed this Amendment as of the Amendment Execution Date.

   

  		
	Gilead Sciences, Inc.
	Arcus Biosciences, Inc.

	 
By: /s/ Andrew Dickinson
	 
By: /s/ Terry Rosen

	Name: Andrew Dickinson
	Name: Terry Rosen 

	Title: Chief Financial Officer 
	Title: CEO

	Date: November 17, 2021 
	Date: November 17, 2021 

   

  [Signature Page to Amendment No. 1 to Option, License and Collaboration Agreement]Document

Exhibit 4.16

DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934

The following description sets forth certain material terms and provisions of AGNC Investment Corp.’s securities that are registered under Section 12 of the Securities Exchange Act of 1934, as amended.
The description below does not purport to be complete and is qualified in its entirety by reference to our Amended and Restated Certificate of Incorporation, as filed with the Secretary of State of Delaware on April 23, 2020 (the “Charter”), our Amended and Restated Bylaws (the “Bylaws”), as in effect since September 30, 2016 and each prospectus, prospectus supplement and certificate of designations which was filed with the U.S. Securities and Exchange Commission (“SEC”), as applicable, at or prior to the time of sale of the related security. If so indicated in the applicable prospectus supplement, the terms of any such security may differ from the terms set forth below. If there are differences between the prospectus supplement relating to a particular security and the applicable prospectus, the prospectus supplement controls. When used in this exhibit, the terms “AGNC,” “we,” “our” and “us” refer solely to AGNC Investment Corp. and not to its subsidiaries. We urge you to read our Charter, as amended, our Bylaws and each prospectus, prospectus supplement and certificate of designations applicable to the related security in their entirety.
As of December 31, 2021, we had five classes of registered securities listed on The Nasdaq Global Select Market, our common stock and 7.000% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, 6.875% Series D Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, 6.50% Series E Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, and 6.125% Series F Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock.
DESCRIPTION OF EQUITY SECURITIES
General
Our Charter provides that we may issue up to 1,500,000,000 shares of common stock and 10,000,000 shares of preferred stock, both having a par value of $0.01 per share. Of these shares of preferred stock, 13,800 shares have been designated as our 7.00% Series C Fixed-to-Floating Cumulative Redeemable Preferred Stock (“Series C Preferred Stock”), 10,350 shares have been designated as our 6.875% Series D Fixed-to-Floating Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”), 16,100 shares have been designated as our 6.50% Series E Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (“Series E Preferred Stock”) and 23,000 shares have been designated as our 6.125% Series F Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (“Series F Preferred Stock”). As of December 31, 2021, 522,223,792 shares of our common stock, 13,000 shares of our Series C Preferred Stock, 9,400 shares of our Series D Preferred Stock, 16,100 shares of our Series E Preferred Stock and 23,000 shares of our Series F Preferred Stock were issued and outstanding.
Common Stock
Voting Rights
Subject to the restrictions contained in our Charter regarding the transfer and ownership of our capital stock and except as may otherwise be specified in the terms of any class or series of common stock, our common stockholders are entitled to one vote per share. Our common stockholders are not entitled to cumulate their votes in the election of directors. Generally, all matters to be voted on by stockholders must be approved by a majority of the votes entitled to be cast by all holders of our common stock present in person or represented by proxy, voting together as a single class; provided, that if the number of nominees for director exceeds the number of directors to be elected at our annual meeting, each director shall be elected by a plurality of the votes cast. Except as otherwise provided by law, amendments to our Charter must be approved by a majority or, with respect to provisions relating to the powers, numbers, classes, elections, terms and removal of our directors, the ability to fill vacancies on our Board of 

Directors and our election to qualify as a REIT, 66% of the combined voting power of all shares of all classes of capital stock entitled to vote generally in the election of directors, voting together as a single class.
Dividend Rights
Subject to the restrictions contained in our Charter regarding the transfer and ownership of our capital stock, our common stockholders will share ratably (based on the number of common shares held) if and when any dividend is declared by our Board of Directors.
Liquidation Rights
On our liquidation, dissolution or winding up, each of our common stockholders will be entitled to a pro rata dividend of any assets available for distribution to common stockholders.
Other Matters
In the event of our merger or consolidation with or into another company in connection with which shares of common stock are converted into or exchangeable for shares of stock, other securities or property (including cash), all of our common stockholders will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash). 
Preferred Stock
Description of Series C Preferred Stock Underlying Our Depositary Shares
On August 17, 2017, we filed a certificate of designations (the “Series C Certificate of Designations”) with the Secretary of State of the State of Delaware to designate 13,800 shares of our Series C Preferred Stock with the powers, designations, preferences and other rights set forth in the Series C Certificate of Designations. The Series C Certificate of Designations became effective upon filing on August 17, 2017. On August 22, 2017, we issued 13,000 shares of the Series C Preferred Stock, which shares were deposited with Computershare Inc. and Computershare Trust Company, N.A., jointly as depositary, against which depositary receipts evidencing 13,000,000 depositary shares were issued, all of which remain outstanding as of December 31, 2021. Each depositary share represents 1/1,000th of a share of Series C Preferred Stock. The depositary shares underlying the Series C Preferred Stock are listed on the Nasdaq Global Select Market under the symbol “AGNCN.”
Ranking. The Series C Preferred Stock ranks, with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, (1) senior to all classes or series of our common stock and to all other equity securities issued by us other than equity securities referred to in clauses (2) and (3); (2) on a parity with all equity securities issued by us with terms specifically providing that those equity securities rank on a parity with the Series C Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; (3) junior to all equity securities issued by us with terms specifically providing that those equity securities rank senior to the Series C Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; and (4) effectively junior to all of our existing and future indebtedness (including indebtedness convertible to our common stock or preferred stock) and to the indebtedness of our existing subsidiary and any future subsidiaries.
Distributions. Holders of shares of the Series C Preferred Stock are entitled to receive, when, as and if declared by our Board of Directors, out of funds legally available for the payment of dividends, cumulative cash dividends. The initial dividend rate for the Series C Preferred Stock from and including the date of original issuance to, but not including, October 15, 2022 (the “Fixed Rate Period”) is at the rate of 7.00% of the $25,000 liquidation preference per share of Series C Preferred Stock per annum (equivalent to $1,750 per annum per share of Series C Preferred Stock or $1.75 per annum per depositary share). On and after October 15, 2022 (the “Floating Rate Period”), dividends on the Series C Preferred Stock will accumulate at a percentage of the $25,000 liquidation preference per share of Series C Preferred Stock equal to an annual floating rate of the Three-Month LIBOR Rate plus a spread of 5.111%. Dividends on the Series C Preferred Stock accumulate daily and are cumulative from, and including, the date of original issue (August 22, 2017) and are payable quarterly in arrears on the 15th day of each January, April, July and October; provided that if any dividend payment date is not a business day, then the dividend which would otherwise have been payable on that dividend payment date may be paid on the next succeeding business day. Dividends accumulate and are cumulative from, and including, the date of original issuance. Dividends payable for 

any dividend period during the Fixed Rate Period will be calculated on the basis of a 360-day year consisting of twelve 30-day months, and dividends payable for any dividend period during the Floating Rate Period will be calculated on the basis of a 360-day year and the number of days actually elapsed. Dividends will be payable to holders of record as they appear in our stock records for the Series C Preferred Stock at the close of business on the applicable record date, which shall be the first day of the calendar month, in which the applicable dividend payment date falls.
Liquidation Preference. In the event of our voluntary or involuntary liquidation, dissolution or winding up, holders of the Series C Preferred Stock will be entitled to be paid out of the assets we have legally available for distribution to our stockholders, subject to the preferential rights of the holders of any class or series of our capital stock we may issue ranking senior to the Series C Preferred Stock with respect to the distribution of assets upon liquidation, dissolution or winding up, a liquidation preference of $25,000 per share ($25.00 per depositary share), plus an amount equal to any accumulated and unpaid dividends to, but not including, the date of payment, before any distribution of assets is made to holders of our common stock or any other class or series of our stock that we may issue that ranks junior to the Series C Preferred Stock as to liquidation rights.
Redemption. The Series C Preferred Stock will not be redeemable by us prior to October 15, 2022, except under circumstances intended to preserve our qualification as a REIT for federal income tax purposes and except upon the occurrence of a Change of Control (as defined in the Series C Certificate of Designations). On or after October 15, 2022, we may, at our option, redeem any or all of the shares of the Series C Preferred Stock at $25,000 per share ($25.00 per depositary share) plus any accumulated and unpaid dividends to, but not including, the redemption date. In addition, upon the occurrence of a Change of Control, we may, at our option, redeem any or all of the shares of Series C Preferred Stock within 120 days after the first date on which such Change of Control occurred at $25,000 per share ($25.00 per depositary share) plus any accumulated and unpaid dividends to, but not including, the redemption date.
Maturity. The Series C Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless repurchased or redeemed by us or converted into our common stock in connection with a Change of Control by the holders of Series C Preferred Stock.
Voting Rights. Holders of Series C Preferred Stock will generally have no voting rights. However, if we do not pay dividends on the Series C Preferred Stock for six or more quarterly dividend periods (whether or not consecutive), the holders of the Series C Preferred Stock (voting separately as a class with the holders of all other classes or series of our preferred stock we may issue upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series C Preferred Stock in the election referred to below) will be entitled to vote for the election of two additional directors to serve on our Board of Directors until we pay, or declare and set aside funds for the payment of, all dividends that we owe on the Series C Preferred Stock, subject to certain limitations. In addition, the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series C Preferred Stock is required for us to authorize or issue any class or series of stock ranking senior to the Series C Preferred Stock with respect to the payment of dividends or the distribution of assets on liquidation, dissolution or winding up, to amend any provision of our Charter so as to materially and adversely affect any rights of the Series C Preferred Stock or to take certain other actions.
Conversion. Upon the occurrence of a Change of Control, each holder of Series C Preferred Stock will have the right (subject to our election to redeem the Series C Preferred Stock in whole or in part, as described above, prior to the Change of Control Conversion Date (as defined in the Series C Certificate of Designations)) to convert some or all of the Series C Preferred Stock held by such holder on the Change of Control Conversion Date into a number of shares of our common stock per share of Series C Preferred Stock determined by a formula, in each case, on the terms and subject to the conditions described in the Series C Certificate of Designations, including provisions for the receipt, under specified circumstances, of alternative consideration.

Description of Series D Preferred Stock Underlying Our Depositary Shares
On March 5, 2019, we filed a certificate of designations (the “Series D Certificate of Designations”) with the Secretary of State of the State of Delaware to designate 10,350 shares of our Series D Preferred Stock with the powers, designations, preferences and other rights set forth in the Series D Certificate of Designations. The Series D 

Certificate of Designations became effective upon filing on March 5, 2019. On March 6, 2019, we issued 9,000 shares of the Series D Preferred Stock, which shares were deposited with Computershare Inc. and Computershare Trust Company, N.A., jointly as depositary, against which depositary receipts evidencing 9,000,000 depositary shares were issued, and on March 20, 2019, we subsequently issued an additional 400 shares of the Series D Preferred Stock, which shares were deposited with Computershare Inc. and Computershare Trust Company, N.A., jointly as depositary, against which depositary receipts evidencing 400,000 depositary shares were issued, all of which remain outstanding as of December 31, 2021. Each depositary share represents 1/1,000th of a share of Series D Preferred Stock. The depositary shares underlying the Series D Preferred Stock are listed on the Nasdaq Global Select Market under the symbol “AGNCM.”
Ranking. The Series D Preferred Stock ranks, with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, (1) senior to all classes or series of our common stock and to all other equity securities issued by us other than equity securities referred to in clauses (2) and (3); (2) on a parity with all equity securities issued by us with terms specifically providing that those equity securities rank on a parity with the Series D Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, including the Series D Preferred Stock; (3) junior to all equity securities issued by us with terms specifically providing that those equity securities rank senior to the Series D Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; and (4) effectively junior to all of our existing and future indebtedness (including indebtedness convertible to our common stock or preferred stock) and to the indebtedness of our existing subsidiary and any future subsidiaries.
Distributions. Holders of shares of the Series D Preferred Stock are entitled to receive, when, as and if declared by our Board of Directors, out of funds legally available for the payment of dividends, cumulative cash dividends. The initial dividend rate for the Series D Preferred Stock from and including the date of original issuance to, but not including, April 15, 2024 (the “Fixed Rate Period”) is at the rate of 6.875% of the $25,000 liquidation preference per share of Series D Preferred Stock per annum (equivalent to $1,718.75 per annum per share of Series D Preferred Stock or $ 1.71875 per annum per depositary share). On and after April 15, 2024 (the “Floating Rate Period”), dividends on the Series D Preferred Stock will accumulate at a percentage of the $25,000 liquidation preference per share of Series D Preferred Stock equal to an annual floating rate of the Three-Month LIBOR Rate plus a spread of 4.332%. Dividends on the Series D Preferred Stock accumulate daily and are cumulative from, and including, the date of original issue (March 6, 2019) and are payable quarterly in arrears on the 15th day of each January, April, July and October; provided that if any dividend payment date is not a business day, then the dividend which would otherwise have been payable on that dividend payment date may be paid on the next succeeding business day. Dividends accumulate and are cumulative from, and including, the date of original issuance. Dividends payable for any dividend period during the Fixed Rate Period will be calculated on the basis of a 360-day year consisting of twelve 30-day months, and dividends payable for any dividend period during the Floating Rate Period will be calculated on the basis of a 360-day year and the number of days actually elapsed. Dividends will be payable to holders of record as they appear in our stock records for the Series D Preferred Stock at the close of business on the applicable record date, which shall be the first day of the calendar month, in which the applicable dividend payment date falls.
Liquidation Preference. In the event of our voluntary or involuntary liquidation, dissolution or winding up, holders of the Series D Preferred Stock will be entitled to be paid out of the assets we have legally available for distribution to our stockholders, subject to the preferential rights of the holders of any class or series of our capital stock we may issue ranking senior to the Series D Preferred Stock with respect to the distribution of assets upon liquidation, dissolution or winding up, a liquidation preference of $25,000 per share ($25.00 per depositary share), plus an amount equal to any accumulated and unpaid dividends to, but not including, the date of payment, before any distribution of assets is made to holders of our common stock or any other class or series of our stock that we may issue that ranks junior to the Series D Preferred Stock as to liquidation rights.
Redemption. The Series D Preferred Stock will not be redeemable by us prior to April 15, 2024, except under circumstances intended to preserve our qualification as a REIT for federal income tax purposes and except upon the occurrence of a Change of Control (as defined in the Series D Certificate of Designations). On or after April 15, 2024, we may, at our option, redeem any or all of the shares of the Series D Preferred Stock at $25,000 per share 

($25.00 per depositary share) plus any accumulated and unpaid dividends to, but not including, the redemption date. In addition, upon the occurrence of a Change of Control, we may, at our option, redeem any or all of the shares of Series D Preferred Stock within 120 days after the first date on which such Change of Control occurred at $25,000 per share ($25.00 per depositary share) plus any accumulated and unpaid dividends to, but not including, the redemption date.
Maturity. The Series D Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless repurchased or redeemed by us or converted into our common stock in connection with a Change of Control by the holders of Series D Preferred Stock.
Voting Rights. Holders of Series D Preferred Stock will generally have no voting rights. However, if we do not pay dividends on the Series D Preferred Stock for six or more quarterly dividend periods (whether or not consecutive), the holders of the Series D Preferred Stock (voting separately as a class with the holders of all other classes or series of our preferred stock we may issue upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series D Preferred Stock in the election referred to below) will be entitled to vote for the election of two additional directors to serve on our Board of Directors until we pay, or declare and set aside funds for the payment of, all dividends that we owe on the Series D Preferred Stock, subject to certain limitations. In addition, the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series D Preferred Stock is required for us to authorize or issue any class or series of stock ranking senior to the Series D Preferred Stock with respect to the payment of dividends or the distribution of assets on liquidation, dissolution or winding up, to amend any provision of our Charter so as to materially and adversely affect any rights of the Series D Preferred Stock or to take certain other actions.
Conversion. Upon the occurrence of a Change of Control, each holder of Series D Preferred Stock will have the right (subject to our election to redeem the Series D Preferred Stock in whole or in part, as described above, prior to the Change of Control Conversion Date (as defined in the Series D Certificate of Designations)) to convert some or all of the Series D Preferred Stock held by such holder on the Change of Control Conversion Date into a number of shares of our common stock per share of Series D Preferred Stock determined by a formula, in each case, on the terms and subject to the conditions described in the Series D Certificate of Designations, including provisions for the receipt, under specified circumstances, of alternative consideration.
Description of Series E Preferred Stock Underlying Our Depositary Shares
On October 2, 2019, we filed a certificate of designations (the “Series E Certificate of Designations”) with the Secretary of State of the State of Delaware to designate 16,100 shares of our Series E Preferred Stock with the powers, designations, preferences and other rights set forth in the Series E Certificate of Designations. The Series E Certificate of Designations became effective upon filing on October 2, 2019. On October 3, 2019, we issued 16,100 shares of the Series E Preferred Stock, which shares were deposited with Computershare Inc. and Computershare Trust Company, N.A., jointly as depositary, against which depositary receipts evidencing 16,100,000 depositary shares were issued, all of which remain outstanding as of December 31, 2021. Each depositary share represents 1/1,000th of a share of Series E Preferred Stock. The depositary shares underlying the Series E Preferred Stock are listed on the Nasdaq Global Select Market under the symbol “AGNCO.”
Ranking. The Series E Preferred Stock ranks, with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, (1) senior to all classes or series of our common stock and to all other equity securities issued by us other than equity securities referred to in clauses (2) and (3); (2) on a parity with all equity securities issued by us with terms specifically providing that those equity securities rank on a parity with the Series E Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, including the Series E Preferred Stock; (3) junior to all equity securities issued by us with terms specifically providing that those equity securities rank senior to the Series E Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; and (4) effectively junior to all of our existing and future indebtedness (including indebtedness convertible to our common stock or preferred stock) and to the indebtedness of our existing subsidiary and any future subsidiaries.
Distributions. Holders of shares of the Series E Preferred Stock are entitled to receive, when, as and if declared by our Board of Directors, out of funds legally available for the payment of dividends, cumulative cash dividends. The 

initial dividend rate for the Series E Preferred Stock from and including the date of original issuance to, but not including, October 15, 2024 (the “Fixed Rate Period”) is at the rate of 6.50% of the $25,000 liquidation preference per share of Series E Preferred Stock per annum (equivalent to $1,625 per annum per share of Series E Preferred Stock or $1.625 per annum per depositary share). On and after October 15, 2024 (the “Floating Rate Period”), dividends on the Series E Preferred Stock will accumulate at a percentage of the $25,000 liquidation preference per share of Series E Preferred Stock equal to an annual floating rate of the Three-Month LIBOR Rate plus a spread of 4.993%. Dividends on the Series E Preferred Stock accumulate daily and are cumulative from, and including, the date of original issue (October 3, 2019) and are payable quarterly in arrears on the 15th day of each January, April, July and October; provided that if any dividend payment date is not a business day, then the dividend which would otherwise have been payable on that dividend payment date may be paid on the next succeeding business day. Dividends accumulate and are cumulative from, and including, the date of original issuance. Dividends payable for any dividend period during the Fixed Rate Period will be calculated on the basis of a 360-day year consisting of twelve 30-day months, and dividends payable for any dividend period during the Floating Rate Period will be calculated on the basis of a 360-day year and the number of days actually elapsed. Dividends will be payable to holders of record as they appear in our stock records for the Series E Preferred Stock at the close of business on the applicable record date, which shall be the first day of the calendar month, in which the applicable dividend payment date falls.
Liquidation Preference. In the event of our voluntary or involuntary liquidation, dissolution or winding up, holders of the Series E Preferred Stock will be entitled to be paid out of the assets we have legally available for distribution to our stockholders, subject to the preferential rights of the holders of any class or series of our capital stock we may issue ranking senior to the Series E Preferred Stock with respect to the distribution of assets upon liquidation, dissolution or winding up, a liquidation preference of $25,000 per share ($25.00 per depositary share), plus an amount equal to any accumulated and unpaid dividends to, but not including, the date of payment, before any distribution of assets is made to holders of our common stock or any other class or series of our stock that we may issue that ranks junior to the Series E Preferred Stock as to liquidation rights.
Redemption. The Series E Preferred Stock will not be redeemable by us prior to October 15, 2024, except under circumstances intended to preserve our qualification as a REIT for federal income tax purposes and except upon the occurrence of a Change of Control (as defined in the Series E Certificate of Designations). On or after October 15, 2024, we may, at our option, redeem any or all of the shares of the Series E Preferred Stock at $25,000 per share ($25.00 per depositary share) plus any accumulated and unpaid dividends to, but not including, the redemption date. In addition, upon the occurrence of a Change of Control, we may, at our option, redeem any or all of the shares of Series E Preferred Stock within 120 days after the first date on which such Change of Control occurred at $25,000 per share ($25.00 per depositary share) plus any accumulated and unpaid dividends to, but not including, the redemption date.
Maturity. The Series E Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless repurchased or redeemed by us or converted into our common stock in connection with a Change of Control by the holders of Series E Preferred Stock.
Voting Rights. Holders of Series E Preferred Stock will generally have no voting rights. However, if we do not pay dividends on the Series E Preferred Stock for six or more quarterly dividend periods (whether or not consecutive), the holders of the Series E Preferred Stock (voting separately as a class with the holders of all other classes or series of our preferred stock we may issue upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series E Preferred Stock in the election referred to below) will be entitled to vote for the election of two additional directors to serve on our Board of Directors until we pay, or declare and set aside funds for the payment of, all dividends that we owe on the Series E Preferred Stock, subject to certain limitations. In addition, the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series E Preferred Stock is required for us to authorize or issue any class or series of stock ranking senior to the Series E Preferred Stock with respect to the payment of dividends or the distribution of assets on liquidation, dissolution or winding up, to amend any provision of our Charter so as to materially and adversely affect any rights of the Series E Preferred Stock or to take certain other actions.
Conversion. Upon the occurrence of a Change of Control, each holder of Series E Preferred Stock will have the right (subject to our election to redeem the Series E Preferred Stock in whole or in part, as described above, prior to 

the Change of Control Conversion Date (as defined in the Series E Certificate of Designations)) to convert some or all of the Series E Preferred Stock held by such holder on the Change of Control Conversion Date into a number of shares of our common stock per share of Series E Preferred Stock determined by a formula, in each case, on the terms and subject to the conditions described in the Series E Certificate of Designations, including provisions for the receipt, under specified circumstances, of alternative consideration.
Description of Series F Preferred Stock Underlying Our Depositary Shares
On February 10, 2020, we filed a certificate of designations (the “Series F Certificate of Designations”) with the Secretary of State of the State of Delaware to designate 23,000 shares of our Series F Preferred Stock with the powers, designations, preferences and other rights set forth in the Series F Certificate of Designations. The Series F Certificate of Designations became effective upon filing on February 10, 2020. On February 11, 2020, we issued 23,000 shares of the Series F Preferred Stock, which shares were deposited with Computershare Inc. and Computershare Trust Company, N.A., jointly as depositary, against which depositary receipts evidencing 23,000,000 depositary shares were issued, all of which remain outstanding as of December 31, 2021. Each depositary share represents 1/1,000th of a share of Series F Preferred Stock. The depositary shares underlying the Series F Preferred Stock are listed on the Nasdaq Global Select Market under the symbol “AGNCP.”
Ranking. The Series F Preferred Stock ranks, with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, (1) senior to all classes or series of our common stock and to all other equity securities issued by us other than equity securities referred to in clauses (2) and (3); (2) on a parity with all equity securities issued by us with terms specifically providing that those equity securities rank on a parity with the Series F Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, including the Series F Preferred Stock; (3) junior to all equity securities issued by us with terms specifically providing that those equity securities rank senior to the Series F Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; and (4) effectively junior to all of our existing and future indebtedness (including indebtedness convertible to our common stock or preferred stock) and to the indebtedness of our existing subsidiary and any future subsidiaries.
Distributions. Holders of shares of the Series F Preferred Stock are entitled to receive, when, as and if declared by our Board of Directors, out of funds legally available for the payment of dividends, cumulative cash dividends. The initial dividend rate for the Series F Preferred Stock from and including the date of original issuance to, but not including, April 15, 2025 (the “Fixed Rate Period”) is at the rate of 6.125% of the $25,000 liquidation preference per share of Series F Preferred Stock per annum (equivalent to $1,531.25 per annum per share of Series F Preferred Stock or $ 1.53125 per annum per depositary share). On and after April 15, 2025 (the “Floating Rate Period”), dividends on the Series F Preferred Stock will accumulate at a percentage of the $25,000 liquidation preference per share of Series F Preferred Stock equal to an annual floating rate of the Three-Month LIBOR Rate plus a spread of 4.697%. Dividends on the Series F Preferred Stock accumulate daily and are cumulative from, and including, the date of original issue (February 11, 2020) and are payable quarterly in arrears on the 15th day of each January, April, July and October; provided that if any dividend payment date is not a business day, then the dividend which would otherwise have been payable on that dividend payment date may be paid on the next succeeding business day. Dividends accumulate and are cumulative from, and including, the date of original issuance. Dividends payable for any dividend period during the Fixed Rate Period will be calculated on the basis of a 360-day year consisting of twelve 30-day months, and dividends payable for any dividend period during the Floating Rate Period will be calculated on the basis of a 360-day year and the number of days actually elapsed. Dividends will be payable to holders of record as they appear in our stock records for the Series F Preferred Stock at the close of business on the applicable record date, which shall be the first day of the calendar month, in which the applicable dividend payment date falls.
Liquidation Preference. In the event of our voluntary or involuntary liquidation, dissolution or winding up, holders of the Series F Preferred Stock will be entitled to be paid out of the assets we have legally available for distribution to our stockholders, subject to the preferential rights of the holders of any class or series of our capital stock we may issue ranking senior to the Series F Preferred Stock with respect to the distribution of assets upon liquidation, dissolution or winding up, a liquidation preference of $25,000 per share ($25.00 per depositary share), plus an amount equal to any accumulated and unpaid dividends to, but not including, the date of payment, before any 

distribution of assets is made to holders of our common stock or any other class or series of our stock that we may issue that ranks junior to the Series F Preferred Stock as to liquidation rights.

Redemption. The Series F Preferred Stock will not be redeemable by us prior to April 15, 2025, except under circumstances intended to preserve our qualification as a REIT for federal income tax purposes and except upon the occurrence of a Change of Control (as defined in the Series F Certificate of Designations). On or after April 15, 2025, we may, at our option, redeem any or all of the shares of the Series F Preferred Stock at $25,000 per share ($25.00 per depositary share) plus any accumulated and unpaid dividends to, but not including, the redemption date. In addition, upon the occurrence of a Change of Control, we may, at our option, redeem any or all of the shares of Series F Preferred Stock within 120 days after the first date on which such Change of Control occurred at $25,000 per share ($25.00 per depositary share) plus any accumulated and unpaid dividends to, but not including, the redemption date.
Maturity. The Series F Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless repurchased or redeemed by us or converted into our common stock in connection with a Change of Control by the holders of Series F Preferred Stock.
Voting Rights. Holders of Series F Preferred Stock will generally have no voting rights. However, if we do not pay dividends on the Series F Preferred Stock for six or more quarterly dividend periods (whether or not consecutive), the holders of the Series F Preferred Stock (voting separately as a class with the holders of all other classes or series of our preferred stock we may issue upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series F Preferred Stock in the election referred to below) will be entitled to vote for the election of two additional directors to serve on our Board of Directors until we pay, or declare and set aside funds for the payment of, all dividends that we owe on the Series F Preferred Stock, subject to certain limitations. In addition, the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series F Preferred Stock is required for us to authorize or issue any class or series of stock ranking senior to the Series F Preferred Stock with respect to the payment of dividends or the distribution of assets on liquidation, dissolution or winding up, to amend any provision of our Charter so as to materially and adversely affect any rights of the Series F Preferred Stock or to take certain other actions.
Conversion. Upon the occurrence of a Change of Control, each holder of Series F Preferred Stock will have the right (subject to our election to redeem the Series F Preferred Stock in whole or in part, as described above, prior to the Change of Control Conversion Date (as defined in the Series F Certificate of Designations)) to convert some or all of the Series F Preferred Stock held by such holder on the Change of Control Conversion Date into a number of shares of our common stock per share of Series F Preferred Stock determined by a formula, in each case, on the terms and subject to the conditions described in the Series F Certificate of Designations, including provisions for the receipt, under specified circumstances, of alternative consideration.
Restrictions on Ownership and Transfer of Our Capital Stock
In order to qualify as a REIT under the Internal Revenue Code, our shares of capital 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, no more than 50% of the value of our outstanding shares of capital stock may be owned, directly or constructively, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) during the second half of any calendar year.
Our Charter, subject to certain exceptions, contains restrictions on the number of shares of our common stock and our capital stock that a person may own and may prohibit certain entities from owning our shares. Our Charter provides that (subject to certain exceptions described below) no person may beneficially or constructively own, or be deemed to own by virtue of the attribution provisions of the Internal Revenue Code, more than 9.8% in value or in number of shares, whichever is more restrictive, of either our common stock or our capital stock. Pursuant to our Charter, our Board of Directors has the power to increase or decrease the percentage of our common stock and our capital stock that a person may beneficially or constructively own. However, any decreased stock ownership limit will not apply to any person whose percentage ownership of our common stock or our capital stock, as the case may be, is in excess of such decreased stock ownership limit until that person’s percentage ownership of our common stock or our capital stock, as the case may be, equals or falls below the decreased stock ownership limit. Until such 

a person’s percentage ownership of our common stock or our capital stock, as the case may be, falls below such decreased stock ownership limit, any further acquisition of common stock will be in violation of the decreased stock ownership limit. If our Board of Directors changes the stock ownership limit, it will (i) notify each stockholder of record of any such change, and (ii) publicly announce any such change, in each case at least 30 days prior to the effective date of such change.
Our Charter also prohibits any person from beneficially or constructively owning shares of our capital stock that would result in our being “closely held” under Section 856(h) of the Internal Revenue Code or otherwise cause us to fail to qualify as a REIT and from transferring shares of our capital stock if the transfer would result in our capital stock being beneficially owned by fewer than 100 persons. In addition, no such person may own an interest in any tenant that would cause us to own, actually or constructively, more than a 9.9% interest in such tenant. 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 who is the intended transferee of shares of our capital stock that are transferred to the trust (as described below), is required to give written notice immediately to us 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.
Our Board of Directors, in its sole discretion, may exempt a person from the foregoing restrictions. The person seeking an exemption must provide to our Board of Directors such conditions, representations and undertakings as our Board of Directors may deem reasonably necessary to conclude that granting the exemption will not cause us to lose our qualification as a REIT. Our Board of Directors may also require a ruling from the Internal Revenue Service (the “IRS”) or an opinion of counsel in order to determine or ensure our qualification as a REIT in the context of granting such exemptions.
Any attempted transfer of our capital stock which, if effective, would result in a violation of the foregoing restrictions will cause 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, and 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 (as defined in our Charter) prior to the date of the transfer. If, for any reason, the transfer to the trust does not occur or would not prevent a violation of the restrictions on ownership contained in our Charter, our Charter provides that the purported transfer will be void ab initio. Shares of our capital stock held in the trust will be issued and outstanding shares. The proposed transferee will not benefit economically from ownership of any shares of our capital stock held in the trust, will have no rights to dividends and no rights to vote or other rights attributable to the shares of capital stock 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 of capital stock have been transferred to the trust will be paid by the recipient to the trustee upon demand. Any dividend or other distribution authorized but unpaid will be paid when due to the trustee. Any dividend or distribution paid to the trustee will be held in trust for the charitable beneficiary. Subject to Delaware law, the trustee will have the authority 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 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 limitations. Upon such 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 (1) 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 (2) the price received by the trustee from the sale or other disposition of the shares. 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 (1) the shares shall be deemed to have been sold on behalf of the trust and (2) to the extent that the proposed transferee received an amount for the shares that exceeds the amount the proposed transferee 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 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 the market price on the date we, or our designee, accept the offer. 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.
Every owner of more than 5% (or such lower percentage as required by the Internal Revenue Code or the regulations promulgated thereunder) in number or in value of all classes or series of our capital stock, including shares of our common stock, within 30 days after the end of each taxable year, will be required to give written notice to us stating the name and address of such owner, the number of shares of each class and series of shares of our capital stock that the owner beneficially owns and a description of the manner in which the shares are held. Each owner shall provide to us such additional information as we may request to determine the effect, if any, of the beneficial ownership on our qualification as a REIT and to ensure compliance with the ownership limitations. In addition, each such owner shall, upon demand, be required to provide to us such information as we may request, in good faith, to determine our qualification 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 9.8% ownership limitations in our Charter.
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 might otherwise be in the best interests of our stockholders.
Anti-Takeover Effects of Delaware Law and Our Charter and Bylaws
Our Charter and Bylaws contain provisions that are intended to enhance the likelihood of continuity and stability in the composition of the Board of Directors and that may have the effect of delaying, deferring or preventing a future takeover or change in control of our Company unless the takeover or change in control is approved by our Board of Directors. In addition to the above-described restrictions regarding the transfer and ownership of our capital stock, these provisions include the following:
Stockholder Action by Written Consent
Our Charter provides that stockholder action may not be taken by written consent in lieu of a meeting and that stockholder action may be taken only at an annual or special meeting of stockholders.
Elimination of the Ability to Call Special Meetings
Our Bylaws provide that, except as otherwise required by law, special meetings of our stockholders can only be called by our chief executive officer, pursuant to a resolution adopted by a majority of our Board of Directors or a committee of the Board of Directors that has been duly designated by the Board of Directors and whose powers and authority include the power to call such meetings, or by the chair of our Board of Directors. Stockholders are not permitted to call a special meeting or to require our Board of Directors to call a special meeting.
Removal of Directors; Board of Directors Vacancies
Our Charter provides that members of our Board of Directors may only be removed for cause, and only with the affirmative vote of the holders of at least 66% of the combined voting power of all the shares of all classes of our capital stock entitled to vote generally in the election of directors. Our Bylaws provide that only our Board of Directors may fill vacant directorships. These provisions would prevent a stockholder from gaining control of our Board of Directors by removing incumbent directors and filling the resulting vacancies with such stockholder’s own nominees.
Amendment of Certificate of Incorporation and By-laws

The General Corporation Law of the State of Delaware, or DGCL, provides generally that the affirmative vote of a majority of the outstanding shares entitled to vote is required to amend or repeal a corporation’s certificate of incorporation or by-laws, unless the certificate of incorporation requires a greater percentage. Our Charter generally requires the approval of both a majority of the combined voting power of all the classes of shares of our capital stock entitled to vote generally in the election of directors and a majority of the members of our Board of Directors to amend any provisions of our Charter except that provisions of our Charter relating to the powers, numbers, classes, elections, terms and removal of our directors, the ability to fill vacancies on our Board of Directors and our election to qualify as a REIT requires the affirmative vote of at least 66% of the combined voting power of all the shares of all classes of our capital stock entitled to vote generally in the election of directors. In addition, our Charter (i) grants our Board of Directors the authority to amend and repeal our Bylaws without a stockholder vote in any manner not inconsistent with the DGCL and (ii) requires that stockholders may only amend our Bylaws with the affirmative vote of 66% of the combined voting power of all the shares of all classes of our capital stock entitled to vote generally in the election of directors.
The foregoing provisions of our Charter and Bylaws could discourage potential acquisition proposals and could delay or prevent a change in control. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our Board of Directors and in the policies formulated by our Board of Directors and to discourage certain types of transactions that may involve an actual or threatened change of control. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our common stock that could result from actual or rumored takeover attempts. Such provisions also may have the effect of preventing changes in our management or delaying or preventing a transaction that might benefit you or other minority stockholders.
Section 203 of the DGCL
We will not be subject to Section 203 of the DGCL, an anti-takeover law. In general, Section 203 prohibits a publicly- held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the date the person became an interested stockholder, unless (with certain exceptions) the “business combination” or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status, did own) 15% or more of a corporation’s voting stock. In our original certificate of incorporation, we elected not to be bound by Section 203.

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